Wrong SE income

[AccTaxMan]

Wife received a Form 1099-misc in 2009. But it was reported on a Schedule C of the husband by mistake. Since they filed a joint return, their income and tax would be the same. But the problem is now the SE income shows up on the Social Security record of the husband.

Can they just write to the Social Security Administration, explain the mistake and request them to make the correction? Or do they have to file a Form 1040X?

[solomon]

Wife received a Form 1099-misc in 2009. But it was reported on a Schedule C of the husband by mistake. Since they filed a joint return, their income and tax would be the same. But the problem is now the SE income shows up on the Social Security record of the husband.

Can they just write to the Social Security Administration, explain the mistake and request them to make the correction? Or do they have to file a Form 1040X?

Amend..................

[Super Mom]

yuck! I was hoping for an easier way too, I've got one that needs to be fixed too for the SS record to be right, wondering if it's worth the trouble!

[Peachie]

Always worth the trouble

to have correct tax returns. The way things are today, I would hate to try to explain a discrepancy further down the road especially now that you know it's incorrect.

Peachie

[Burke]

It's not just the SSA. Remember that the 1099 was in the spouse's name & SSN. So they will be looking for a Sche SE for HER. The TP's will probably get a CP2000 for unreported income eventually.

[PIGLEE]

I did this several years ago. I had to amend the tax return. Was simple no money involved, but you need to correct the 1040 SE. It took a long time to get it corrected, but it was finally done. I had great clients, and they were very undersatanding.

[AccTaxMan]

I did this several years ago. I had to amend the tax return. Was simple no money involved, but you need to correct the 1040 SE. It took a long time to get it corrected, but it was finally done. I had great clients, and they were very undersatanding.

How did you prepare the 1040X? Did you attach a new Schedule C and Schedule SE of the spouse to it. I am worried that the one who process the amended return will be confused and incorrectly think it is additional income that they now want to add to their tax return.

[Gary2]

How did you prepare the 1040X? Did you attach a new Schedule C and Schedule SE of the spouse to it. I am worried that the one who process the amended return will be confused and incorrectly think it is additional income that they now want to add to their tax return.

I've seen things like that happen. When you talk to the IRS on the phone, you treat them with respect and get respect back. But when you write the explanations on a 1040X, you spell things out as if they were primitive robots.

You'd attach both the new Schedules C and SE and the corrected Schedules C and SE. Then spell out the changes in detail:

This amendment doesn't change the tax due, but makes necessary corrections to the original return, as follows:
1. Add a new Schedule C for spouse (SSN:xxx, business code/name:.....), and corresponding new Schedule SE.
2. Remove $nnn income erroneously reported on original Schedule C and SE. The attached Schedule C for primary (SSN:xxx, business code/name) totally replaces the original version of this schedule. Likewise, the attached Schedule SE for primary totally replaces the original Schedule SE for the primary.
3. These changes do not change the AGI, taxable income, or tax, but are still necessary. This amendment is being filed to ensure that the SE tax gets assigned to the proper individual with the Social Security administration, as well as to ensure that the return matches the 1099-MISC that has been reported to the IRS.

[FEDUKE404]

And then consider....

http://www.thetaxbook.com/forums/showthread.php?t=16506

[AccTaxMan]

http://www.thetaxbook.com/forums/showthread.php?t=16506

Very different situations.

As for the thread of your link, it is about a dishonest taxpayer who wants to manipulate the reporting in order to cheat on the unemployment benefits. Of course it is wrong and no one should even touch such a tax return.

About the situation that I mentioned in the original post, it is a honest mistake by the tax preparer last year. The income does belong to the wife and the Form 1099-misc is issued to the wife. Now they want to do the correction in order to make it right.

So I wouldn't even compare the two situations.

[FEDUKE404]

Further explanation

Very different situations.

As for the thread of your link, it is about a dishonest taxpayer who wants to manipulate the reporting in order to cheat on the unemployment benefits. Of course it is wrong and no one should even touch such a tax return.

About the situation that I mentioned in the original post, it is a honest mistake by the tax preparer last year. The income does belong to the wife and the Form 1099-misc is issued to the wife. Now they want to do the correction in order to make it right.

So I wouldn't even compare the two situations.

No one was "comparing"....but it does give an example of what could be going on with some (many??) people out there, as well as how a reputable tax person might have to address such issues. Stranger things have happened.............

As for your original post, obviously you need to amend the original tax return ASAP and hope any forthcoming deficiency notices can be headed off at the pass.

I am worried that the one who process the amended return will be confused and incorrectly think it is additional income that they now want to add to their tax return.

The explanation section of the Form 1040X is there for a reason. I have amended many tax returns where there is no change in income and/or taxes.

FE