1099 Misc

[Bonnie]

Taxpayer is a truck driver and receives W2 for this income. This year he gets a 1099 Misc for about 2100 and when I ask what this income is for, he says it was a test program they were having some of the driver's wear a monitor for during a 3 month period and he was compensated for doing this. My thinking is he is not trying to make a business out of doing testing (it's a one time thing, not on going). Feel I can put this income on line 21 as other income not subject to FICA tax, but they did put it on the 1099 Misc in box 7 as non-employee compensation. What are others thoughts on this? Should it go on a Sch C. This is first time in over 20 years I've even considered putting any income from a 1099-Misc in Box 7 on line 21. Just feels right to me, but don't want to create any issues for the trucker.

[ATSMAN]

Taxpayer is a truck driver and receives W2 for this income. This year he gets a 1099 Misc for about 2100 and when I ask what this income is for, he says it was a test program they were having some of the driver's wear a monitor for during a 3 month period and he was compensated for doing this. My thinking is he is not trying to make a business out of doing testing (it's a one time thing, not on going). Feel I can put this income on line 21 as other income not subject to FICA tax, but they did put it on the 1099 Misc in box 7 as non-employee compensation. What are others thoughts on this? Should it go on a Sch C. This is first time in over 20 years I've even considered putting any income from a 1099-Misc in Box 7 on line 21. Just feels right to me, but don't want to create any issues for the trucker.

I have about 6 car salespeople as clients and all of them at some point in time received "Spiffs". These are Manufacturer's incentive payments. These people get W2 but also receive a 1099-Misc for the Spiff. I back out the 1099-Misc on Sch C as an expense reported on line 21 and then on line 21 the amount is reported NOT subject to SE.

I am assuming you can do the same with this payment.

[Gene V]

Don't use schedule C

I have about 6 car salespeople as clients and all of them at some point in time received "Spiffs". These are Manufacturer's incentive payments. These people get W2 but also receive a 1099-Misc for the Spiff. I back out the 1099-Misc on Sch C as an expense reported on line 21 and then on line 21 the amount is reported NOT subject to SE.

I am assuming you can do the same with this payment.

See Publication 3204 on how to report the 1099-misc for car salespeople

https://www.irs.gov/pub/irs-pdf/p3204.pdf

[ATSMAN]

See Publication 3204 on how to report the 1099-misc for car salespeople

https://www.irs.gov/pub/irs-pdf/p3204.pdf

Thanks for the info but what that IRS flyer fails to inform is that the 1099-Misc has the amount in box 7 generally! I think it should be reported on Box 3. How do you distinguish that from your run of the mill 1099-Misc subject to SE?

In my early days I would just report the income on line 21 without backing out on sch C to make the C zero and in 99% of the returns a CP2000 would follow and we had to send copies of the 1099-Misc, write an explanation etc. Ever since I zeroed out the Sch C, a box 7 amount does not trigger a CP2000. Taxpayers get a little upset when they receive a CP2000 and you have to fix it!

[Burke]

It should be reported in Box 3. But good luck getting a corrected 1099! I would use the back-out method and then report on Line 21. Deal with any issues later, they may not come up.

[dktax]

Tire dept mgr

Client received 1099misc with box 3 $6000 other income from one of the tire distributors. He is a W-2 employee. I am wondering if this income should be subject to SE?

[taxea]

Just put it on Ln 21 not subject to SE with a detail statement of facts. Sch C backout is a waste of time

[ATSMAN]

Client received 1099misc with box 3 $6000 other income from one of the tire distributors. He is a W-2 employee. I am wondering if this income should be subject to SE?

Because the income is reported on Box 3, it is not subject to SE and can be reported on Line 21 directly. The Sch C back out is necessary when it is reported in box 7 and you believe that it is not subject to SE.