1099 reporting

[JoshinNC]

If a company pays certain expenses from a subcontractor's anticipated income do they reduce the 1099 by that amount, or give the contractor a 1099 for the entire amount due to them and an itemized listing of the expenses withheld for reporting on the Sch. C?

Example:

Securities broker receives commissions on sale of mutual funds from broker/dealer. Broker/dealer pays, on the broker's behalf, E&O insurance, state registration fees, etc out of expected commissions, and pays the remainder to broker.

At year end, broker/dealer sends out 1099 to broker for amount broker actually recieved (total commissions - expenses). Is this correct reporting? I say no, because the broker could actually take those deductions on his/her Sch. C, effectively getting double deductions.

How does HD Vest handle it for those of you involved with them?

[veritas]

If a company pays certain expenses from a subcontractor's anticipated income do they reduce the 1099 by that amount, or give the contractor a 1099 for the entire amount due to them and an itemized listing of the expenses withheld for reporting on the Sch. C?

Example:

Securities broker receives commissions on sale of mutual funds from broker/dealer. Broker/dealer pays, on the broker's behalf, E&O insurance, state registration fees, etc out of expected commissions, and pays the remainder to broker.

At year end, broker/dealer sends out 1099 to broker for amount broker actually recieved (total commissions - expenses). Is this correct reporting? I say no, because the broker could actually take those deductions on his/her Sch. C, effectively getting double deductions.

How does HD Vest handle it for those of you involved with them?

Vest reports the gross amount paid and does not net expenses.

[JoshinNC]

I ask, because my B/D did it the other way

This is my first year working as a rep, and got my 1099 today, net of expenses. Is this even able to be done? I've never seen any other sales type position with this done in my experience.

[sandysea]

It can and is done in many instances...

The 1099-MISC is for compensation....yes, many times expenses are grouped into it, but most often, the 1099 should be net of expenses....the expenses are either deductible to the payor or payee depending on who is paying it...yes, it could cause double dipping, but help them if they are audited, no? hehehe

[ChEAr$]

1099'

I must disagree about the amount to be reported on 1099's.

I'ts gross that counts. A 1099-misc for a subcontractor would have gross
reported, even if the contractor had withheld an amount for workmen's comp
insurance.

A 1099 to a landlord reports all payments in connection with the property,
even reimbursements for utilities.

[S T]

But I have also seen this

In Calif, some Realty Brokerage houses, will deduct E&O, and some other items, and then net on the 1099 forms to their Realtors. I have had to really watch for this to make sure that some of the deductions were not duplicated on the Schedule C.


Sandy

[Snaggletooth]

Personal Services

The 1099-MISC should strip out everything except personal services.

And focus on personal services actually PAID FOR on a cash basis. Should not reflect services applied, backcharged, etc.

[veritas]

From HD Vest website

"The amount reported on your Form 1099-MISC is NOT reduced by amounts deducted from your commission statement for expenses, such as renewal fees and trade losses. Therefore, the amount reported on your 1099 will NOT equal the total of your commission checks because the 1099 reflects GROSS earnings while your commission checks reflect net payments."