Client was hired as a consultant for a job in Europe last year. Spent a little over two months on the job. While there, the company paid for him to stay in a hotel. Turned out that they considered him a subcontractor and not an employee (he filed an SS-8, but has yet to hear anything). They issued him a 1099 for the earnings and another one for the cost of the lodging. I am thinking he will have to include the lodging as income and pay SE tax on it as well. Anyone have other opinions on this?
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It's odd that they issued two 1099-Misc forms, and I assume the amounts were both in box 7? If they paid for his lodging as part of his total compensation then it is what it is. I agree with you that it's SE earnings.Originally posted by KBTS View Post -
Europe??
That opens a real can of worms...
Setting aside the European question, you wrote that the company "paid for him to stay in a hotel." So the money went right from the "employer" to the hotel, and your client gets a 1099? That doesn't make sense.
If that money was income to your client, then yes, he should report it on Schedule C. But if he had actually received the money (which he didn't), he would have turned right around and paid it to the hotel. So the same amount should become a travel expense for your client.
Coming back to the European question: Maybe your client qualifies for the Foreign Earned Income Exclusion, or the Foreign Housing Exclusion. Is the company an American entity? Does the 1099-MISC show an address for the payer in the US, or in Europe?
BMKBurton M. Koss
koss@usakoss.net
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The map is not the territory...
and the instruction book is not the process.Comment
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More Info
On second look, the 1099's were issued by two different companies - both US based and box 7 on both 1099s. I remember him telling me the company he was working for (Company A) was a subcontractor for another company (Company B). The 1099 in question was from Company B.
Client does qualify for the foreign income exclusion, but the dates for the exclusion do not include the dates for the above job. The 330 day period will not work if I include the dates for the 1099 job. Based on the information at the bottom of the right column on page 15 of Pub 54, I do not believe I can use the exclusion for the 1099 job as well.Comment
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This sounds like a job for the tresury secretary and Turbo Tax."The only function of economic forecasting is to make astrology look respectful" - John Kenneth GalbraithComment
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Client is not in line for a cabinet position -perhaps if he was, I could be more creative with his return ; )
Any more suggestions on this situation?Comment
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