Does IRS match 1099-Misc to MFJ Individual or just to the tax return?

[dmj4]

Does IRS match 1099-Misc amounts to the individual taxpayer or spouse or do they just match to make sure all 1099-Misc forms are included in the joint return?

It is the husband's business. All income from 1099-Misc plus additional income that is not reported on a 1099-Misc is included on his Sch C. Client reports his total income to me and I put it on the return. It is always much more than his 1099's.

This year since 1099-Misc forms arrived before they filed their taxes, I noticed one was in wife's name and social security number. It is not her income. They have no idea how many years it has been done that way. They have not received any letters, so I am hoping IRS matches to the tax return and not the individual.

What is your experience?

Thanks!

[Burke]

Since all of this matching is done by computer, it is going to follow the SSN that is on the return. Since they file jointly and both SSN's are on the return, it "sees" that income exceeds the amount reported. If they file separately, might be a different story.

[Roland Slugg]

What Burke wrote above is true, but I realize, of course, that you were asking if there will be a mismatch because the SSN on the 1099-MISC does not match the H's SSN associated with his Schedule C. You said this has been going on for several years, and that no IRS letters about it have been received. That history is more telling than anything people can speculate about here. Even if the IRS sends a CP-2000 (or some other) letter about it, it will be very easy for you or the taxpayer to explain it away. You may wish to suggest to your client that he ask the woman to use his SSN in the future and not his wife's. I wonder how the payer even got the wife' SSN in the first place?

This post reminds me of a something that happened to a client of mine about 20 years ago. He (the client) owned a nice shopping center with 3 anchor tenants and about 40 or 50 small stores. His gross rental income was about $1,500,000 annually, and all the rents were paid to his property management company. 1099-MISC forms were not required, but a few tenants didn't realize that and issued them anyway. When I prepared his tax return I put everything on Schedule E, describing the property as a 170,000 sf retail shopping center.

One year ... and only in that one year ... the taxpayer got a CP-2000 letter from the IRS saying that it could not match to the T/P's return an amount of rents reported on a 1099-MISC. The amount in question was around $12,000, as I recall, and the notice proposed additional tax of $3,000 plus P&I. I wrote a letter to the IRS for my client pointing out that the 1099-MISC form was issued by one of the many tenants in the shopping center reported in Schedule E, and asking, rhetorically, if the IRS thinks it is possible that the $12,000 in question might possibly be included in the $1,500,000 reported on that form. Never heard from 'em again.

The IRS's matching system seems to work fairly well for 1099-INT and 1099-DIV forms, but for the rest it leaves a lot to be desired. I even wonder if IRS really does any matching at all for certain types of 1099s, such as the real estate form 1099-S.

[taxea]

How were these 1099's input in the past. It looks like the IRS checks Ln 21 and the Sch C for amount reported 1099misc. I don't know that they would question that there was only one SCH C. And the SSN is accounted for on the 1099misc. It is not input on the Sch C. They may or may not match the issuers EFIN.

[dmj4]

Reported on Schedule C in 1040 return

The income was reported on his Schedule C in 1040 joint return.
The amount reported was more than all 1099's received for both taxpayer and spouse.

Thanks!

[dmj4]

I had something similar happen on my Dad's return probably 20-22 years ago.
I sent a letter telling them the 1099 was reported on Schedule C along with XXX $$$ for which no 1099 was received. I never heard from them again, either.

In regards to 1099-S, my area seems to report all sales on 1099-S. At least until a new closing company came to town. I always report sales as 1099-S sales for property even if taxpayer swears there was no 1099 S and closing company swears the same.

I really detest when they send double 1099 S forms for both taxpayer and spouse and when they put one number at the top but two sellers for the full amount. It seems the 1099-S substitute forms can be configured in a number of ways.

Thanks!!!

What Burke wrote above is true, but I realize, of course, that you were asking if there will be a mismatch because the SSN on the 1099-MISC does not match the H's SSN associated with his Schedule C. You said this has been going on for several years, and that no IRS letters about it have been received. That history is more telling than anything people can speculate about here. Even if the IRS sends a CP-2000 (or some other) letter about it, it will be very easy for you or the taxpayer to explain it away. You may wish to suggest to your client that he ask the woman to use his SSN in the future and not his wife's. I wonder how the payer even got the wife' SSN in the first place?

This post reminds me of a something that happened to a client of mine about 20 years ago. He (the client) owned a nice shopping center with 3 anchor tenants and about 40 or 50 small stores. His gross rental income was about $1,500,000 annually, and all the rents were paid to his property management company. 1099-MISC forms were not required, but a few tenants didn't realize that and issued them anyway. When I prepared his tax return I put everything on Schedule E, describing the property as a 170,000 sf retail shopping center.

One year ... and only in that one year ... the taxpayer got a CP-2000 letter from the IRS saying that it could not match to the T/P's return an amount of rents reported on a 1099-MISC. The amount in question was around $12,000, as I recall, and the notice proposed additional tax of $3,000 plus P&I. I wrote a letter to the IRS for my client pointing out that the 1099-MISC form was issued by one of the many tenants in the shopping center reported in Schedule E, and asking, rhetorically, if the IRS thinks it is possible that the $12,000 in question might possibly be included in the $1,500,000 reported on that form. Never heard from 'em again.

The IRS's matching system seems to work fairly well for 1099-INT and 1099-DIV forms, but for the rest it leaves a lot to be desired. I even wonder if IRS really does any matching at all for certain types of 1099s, such as the real estate form 1099-S.

[Snaggletooth]

Voice from the Past

Donna, haven't heard from you on this board in a long time. Would love for you to visit more.

My son is now in Fairview. I keep threatening to send him to you so he could argue taxes with someone other than me!!

[dmj4]

Sometimes, I think the longer I do taxes the less I know. Or maybe I know enough now to realize just how much I don't know.

I read more than I answer on here. I usually only post when I have one of those things that makes my eyes pop wide open in the middle of the night and can't go back to sleep. Who else dreams of taxes for two weeks after tax season is over? I love this board more than any others because everyone is so nice and willing to help. Kudos to all for that!

I have quite a few clients from Fairview. I hope he likes it there.

Nice to hear from you!

Donna, haven't heard from you on this board in a long time. Would love for you to visit more.

My son is now in Fairview. I keep threatening to send him to you so he could argue taxes with someone other than me!!