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Old 01-15-2014, 01:38 AM
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Need help with box 17-18 on 1099 MISC for Independent Contractor in different state

Hi. I need help understanding how to fill out boxes 17 & 18 on form 1099 MISC. There's a lot of conflicting info out on the web so I'd greatly appreciate a detailed answer to clear up my growing confusion.

Let's say ACME Corp based in California hires an independent contractor named John in Utah. ACME pays John $1000 for his services, which he performs remotely from his home in Utah. ACME doesn't have an office in Utah, just California.

ACME does not withhold any taxes on the $1000 they pay John.

Box 7 = $1000 total paid by ACME to John
Box 16 = $0 withholding
Box 17 = ?
Box 18 = ?

Is Box 17 meant for ACME's California Employment ID number? Does Utah also have to be reported in box 17 since John did his work in Utah? (Box 17 allows for 2 states) Since ACME doesn't have a Utah presence or ID number I don't understand what Utah ID would go in box 17 even though John did the work in Utah.

If box 16 is zero, what goes in Box 18? $1000? $0? If both states have to be filled out in box 17, how much should be input for each state??

Are box 17 & 18 even required if there was zero withholding on John's $1000 earnings?

Thanks



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Old 01-15-2014, 03:37 AM
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Quote:
Originally Posted by ConfusedinCA View Post


#1;Let's say ACME Corp based in California hires an independent contractor named John in Utah. ACME pays John $1000 for his services, which he performs remotely from his home in Utah. ACME doesn't have an office in Utah, just California.

ACME does not withhold any taxes on the $1000 they pay John.

Box 7 = $1000 total paid by ACME to John
Box 16 = $0 withholding
Box 17 = ?
Box 18 = ?

#2;Is Box 17 meant for ACME's California Employment ID number?


#3;Does Utah also have to be reported in box 17 since John did his work in Utah? (Box 17 allows for 2 states) Since ACME doesn't have a Utah presence or ID number I don't understand what Utah ID would go in box 17 even though John did the work in Utah.


#4;If box 16 is zero, what goes in Box 18? $1000? $0? If both states have to be filled out in box 17, how much should be input for each state??

#5;Are box 17 & 18 even required if there was zero withholding on John's $1000 earnings?

Thanks
#1;IN GENERAL, as the contractor receives a 1099 from a party,ACME, in CA state but didn't physically work in that state, the contractor is not liable for any taxes in CA.however, the contractor may wtrongfully receive notice from CA asking for taxes; then,he needs to explain Ihe has been a utah resident full-time and that his income from CA was earned working in utah, without any time at all in CA.



ACME does not withhold any taxes on the $1000 they pay John.

Box 7 = $1000 total paid by ACME to John
Box 16 = $0 withholding
Box 17 = ?
Box 18 = ?

#2;Correct; in box 17, you, as a payer, need to enter the abbreviated name of the state and the payer's ,your, state identification number.
The state that the payer is located is irrelevant. Also, the state of California doesn't use that information unless there is state tax withheld.. since you are not withholding any state taxes from the contactor’s1099 , you don't need to fill it.



#3; No not utah’s ID number needed as Utah is not a payer.If CA state tax was withheld, you would enter the identification number of CA the company that withheld the tax here.

#4; correct.in box 17 and 18 indicated California payer and state income.

#5;As mentioned above; box 17 is needed ONLY if CA state tax was withheld.
You do no t need to fill out boxes 16-18 on the 1099 MISC for CA since you never withheld CA state taxes.



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Old 01-16-2014, 02:12 AM
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Thanks so much for your response @Wnhough. Ok so boxes 16-18 become irrelevant if nothing is withheld at a state level from the contractor.

In your response to #2 you write "The state that the payer is located is irrelevant"

This may sound like a dumb question, but if ACME Corp ever had to withhold taxes would they do that with California or Utah?

Someone elsewhere said Box 17 would be Utah and the Payer's ID number. But that seems like a mismatch to me because the state code would be Utah but the ID number would be a California Employment ID. Utah isn't going to know what a California ID number is or what business it belongs to. Unless ACME was withholding with Utah and thus had to create a Utah ID or register their CA Id number with Utah??

Seems like this should be so easy to understand but I just get so confused.

Thanks for your help!


Last edited by ConfusedinCA : 01-16-2014 at 02:14 AM.


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Old 01-16-2014, 04:06 AM
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so boxes 16-18 become irrelevant if nothing is withheld at a state level from the contractor.======>>Correct. I guess you can contact CA FTB and Utah Dept of Rev. for sure.

In your response to #2 you write "The state that the payer is located is irrelevant"This may sound like a dumb question, but if ACME Corp ever had to withhold taxes would they do that with California or Utah?”==>Utah. As said previously, IN GENERAL, since the contractor receiving a 1099 from ACME in CA state but he didn't physically work in CA(but the work was done remotely in Utah), the contractor is not liable for any taxes in CA. however, the contractor may wtrongfully receive notice from CA asking for taxes; then,he needs to explain he has been a utah resident full-time and that his income from CA was earned working in utah, without any time at all in CA. Is there a reason why you are withholding CA state tax from a contractor? Unless there is some requirement that you withhold tax, it is rarely done.
Note; you can imagine that CA thinks they can collect CA state tax on ALL your income even if you physically worked an hour in CA. They, of course, can not legally do this but they DO try.Even if this is not your case( I mean your contractor remotely worked only in UtahNOT in CA)
However, CA may still send CA income tax forms. As an independent contract who works from his own location in Utah, he wouldn't file CA taxes. He has no "business presence" in CA. If the company required him to come to CA for meetings or training,then, he might have a different consideration.

Someone elsewhere said Box 17 would be Utah and the Payer's ID number. But that seems like a mismatch to me because the state code would be Utah but the ID number would be a California Employment ID. Utah isn't going to know what a California ID number is or what business it belongs to. Unless ACME was withholding with Utah and thus had to create a Utah ID or register their CA Id number with Utah??=====>>>Correct;the contactor needs to order a CA state income tax reporting form from CA in question or download the forms online IF/ASLONGA he received a 1099 from a state and physically worked thereunless his state of residence has a reciprocity agreement with CA. He is liable to CA to pay taxes on income earned during his time working there.he needs to file his federal taxes as he normally would. He should include the Form 1099 incoem in his 1040 . He needs to fill out CA tax reporting form as long as he physically worked in CA he received the 1099 for, using the information supplied on the 1099.The bottomline: he needs to pay taxes on income from all sources to the federal govt (of course) and to the state where he resides, Utah, NOT CA. So if he earned income from CA, a different state, every bit of it is reported on his Utah state tax return in the state where he resides. It's nice to live in a state with no state income tax if he gets income from other sources! So as he lives in, say Utah, he should pay taxes to Utah on the CA income since he is Not subject to CA tax in this particular case. So box 17 is needed ONLY if CA state tax was withheld. Please contact the Utah Dept of Rev for more info in detail.



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Old 01-26-2014, 03:37 PM
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I just encountered the exact same situation and here's something I discovered which might be helpful to others. In box 17, which asks for the payer's state tax ID number, it means for the state in which the recipient did the work. So in the above example, box 17 wants the Utah tax ID number for the payer, who lives in CA.

I suspect some payers actually do have state tax ID numbers in multiple states, especially if they employ residents of those states, or pay state sales tax on goods sold in those states.

In my situation, I did not have a tax ID number in my independent contractor's state. I was using FileTaxes.com, and for box 17, I used the drop down menu to enter the recipient's state (different than my own), and then entered all zeros for my own payer tax ID number in the recipient's state (FileTaxes.com offered me a reconciliation form to do this).

In box 18, I entered the total amount I paid the recipient, which was the same value as box 7. I suppose if the independent contractor had done work for me in multiple states, I would have broken out the amounts per state, so the sum of the different states would have totaled the amount in box 7.

I hope this helps someone!



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Old 01-27-2014, 03:25 AM
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Quote:
Originally Posted by CAsoleproprietor View Post


#1;In box 17, which asks for the payer's state tax ID number, it means for the state in which the recipient did the work.

#2; So in the above example, box 17 wants the Utah tax ID number for the payer, who lives in CA.



I suspect some payers actually do have state tax ID numbers in multiple states, especially if they employ residents of those states, or pay state sales tax on goods sold in those states.

In my situation, I did not have a tax ID number in my independent contractor's state. I was using FileTaxes.com, and for box 17, I used the drop down menu to enter the recipient's state (different than my own), and then entered all zeros for my own payer tax ID number in the recipient's state (FileTaxes.com offered me a reconciliation form to do this).

In box 18, I entered the total amount I paid the recipient, which was the same value as box 7. I suppose if the independent contractor had done work for me in multiple states, I would have broken out the amounts per state, so the sum of the different states would have totaled the amount in box 7.

I hope this helps someone!

#1;correct;however, the recipient ., John,did work in his home state, Utah, NOT in CA. The OP states QUOTE,”Let's say ACME Corp based in California hires an independent contractor named John in Utah. ACME pays John $1000 for his services, which he performs remotely from his home in Utah. ACME doesn't have an office in Utah, just California.”




#2;Possible; as far as I knoe, in reality, there is NO law requiring an ER to withhold income tax from the EE’s home state if the ER has no physical presence in that state, most ER do this as a courtesy to their out of state EEs.
For more accuarate info , the recipient needs to contact Utah Dept of Rev for sure.



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