Sch C line 11?

[SueBaby]

When client pay cash for contract labor worker, only $4000; Can I put that on line 11 without a 1099 given to them? I always thought they had to give a 1099 to their workers on that line. He said it was only a one time thing.
THANKS

[JohnH]

He must provide a 1099 to the worker for any amount over $600, even if it's a one-time payment. FOr that much paid in cash, I hope he has some sort of receipt in case the worker squawks.

[RitaB]

He shoulda done it

When client pay cash for contract labor worker, only $4000; Can I put that on line 11 without a 1099 given to them? I always thought they had to give a 1099 to their workers on that line. He said it was only a one time thing.
THANKS

He should have issued the 1099, and this year you gotta answer that question, so he'll probably get a letter and/or penalty, but yes, you put contract labor on line 11.

[Burke]

I always told 'em they couldn't deduct it if they couldn't prove it.

[manyhappyreturns]

It's quite possible that the person he hired didn't have an SSN, in which case he couldn't 1099 him. I had a client last year who was a contractor, and he wanted to hire someone to help him for a few weeks, and when he gave him a W-9, the worker told him if he wanted him to fill out the W-9, he would have to charge twice as much for the labor.

[taxea]

When client pay cash for contract labor worker, only $4000; Can I put that on line 11 without a 1099 given to them? I always thought they had to give a 1099 to their workers on that line. He said it was only a one time thing.
THANKS

I include the name/ssn and ein if available. If it was a one-time thing he still needs to issue a 1099 to the receiver of the money.

[taxea]

It's quite possible that the person he hired didn't have an SSN, in which case he couldn't 1099 him. I had a client last year who was a contractor, and he wanted to hire someone to help him for a few weeks, and when he gave him a W-9, the worker told him if he wanted him to fill out the W-9, he would have to charge twice as much for the labor.

He should have told the guy nevermind and found someone legit!

[JG EA]

I always told 'em they couldn't deduct it if they couldn't prove it.

Two different issues. One is a reporting issue and one is a deduction issue. If a client has a canceled check, bill etc that would be proof enough for a deduction. If it truly was cash I would have the client send the 1099 now. You can send them without the ID #. He would have some proof would he not? A bill from the guy? If absolutely nothing to prove it and he doesn't want to send a 1099 now then I would consider not using it as an expense as you said. The client has to take some responsibility for operating in a business-like manner.

[Burke]

Absolutely right. Reporting labor expense on a 1099 with or without SSN --which can be done -- does not a deduction make, if it was in cash with no other record.

[oceanlovin'ea]

SueBaby

Does he have any proof that he paid the guy that much in cash? When he gave him the money did he have him sign a receipt that he paid him?
You have to have some proof. Just cash withdrawals wouldn't be proof.

Linda, EA

[SueBaby]

Does he have any proof that he paid the guy that much in cash? When he gave him the money did he have him sign a receipt that he paid him?
You have to have some proof. Just cash withdrawals wouldn't be proof.

Linda, EA

No only but what he Said ==and you know how Said goes.

[JohnH]

If he's telling me he paid a one-time payment of $4,000 in cash, I'm looking at the other items on his return more cautiously.

After all, why would he need to pay an individual $4,000 in cash?
1) The worker doesn't trust him (and maybe I shouldn't either);
2) He was trying to participate in an amateurish transaction to scam the tax system;
3) Other?

I'm lookig at everything else he tells me/gives me to back up his income & deductions. Depending on what my instincts tell me about the rest of his return, I might decide to hand him his no-charge extension and tell him he needs to take his return to HRB. If his $4,000 deduction happens to gain him some EIC, it's a slam dunk he's going elsewhere.

[SueBaby]

If he's telling me he paid a one-time payment of $4,000 in cash, I'm looking at the other items on his return more cautiously.

After all, why would he need to pay an individual $4,000 in cash?
1) The worker doesn't trust him (and maybe I shouldn't either);
2) He was trying to participate in an amateurish transaction to scam the tax system;
3) Other?

I'm lookig at everything else he tells me/gives me to back up his income & deductions. Depending on what my instincts tell me about the rest of his return, I might decide to hand him his no-charge extension and tell him he needs to take his return to HRB. If his $4,000 deduction happens to gain him some EIC, it's a slam dunk he's going elsewhere.

YES, he got EIC and YES I told him about the risk I would be taking so YES he did take it somewhere else. The headache afterwards is NOT worth the money he was paying me (probably to lie with him).

[JohnH]

Good call.