1099-misc

[jerome]

The original post said the "Elderly mother paid them for their services." If it was payment for services, it was income. You can't just change it to "gift" just because there would be less tax.

If kids take care of elderly mother in their home, and elderly mother "gifts" them cash, no court in the land is going to call that taxable income for services. Do you file a tax return for your kids when you give them an allowance for doing the dishes and cleaning their room?

It’s done all the time. It is expected that family should take care of family. It’s also expected that family members freely and often "gift" each other money for any reason whatsoever without IRS sticking their nose into it.

[Luis Mopeo]

If kids take care of elderly mother in their home, and elderly mother "gifts" them cash, no court in the land is going to call that taxable income for services. Do you file a tax return for your kids when you give them an allowance for doing the dishes and cleaning their room?

There's also no court in the land when the person goes in and says "I paid money for services" will say "No, we'll call it a gift."

As I said before, we don't really know what's going on. All we can count on is that (1) we don't know the real situation, and (2) payment for services rendered is taxable gross receipts.

You can disagree with the original question and say "It was a gift, not payment for services," but I don't see any basis for disagreeing with the original statement.

In fact there is confirmation that it wasn't a gift. A 1099 was issued. Even if the 1099 was issued in error, it is evidence of non-gift intent. There's a good chance there's bad blood somewhere. These family situations get really stupid sometimes. Why is it so impossible that the payment of the money is the result of some kind of family feud or pressure by the kids? Going by the information we have, there's no reason to void the original statement.

I'll admit that I do report income to my kids when they do chores around the house, but not 1099's. I issue W2s because they are household employees. I also told my youngest I couldn't hire her until she provided her social security number and proof of citizenship.

If a client comes in and tells of mom living in their house and paying them money, I'm like everyone else. Of course I'm going to try to confirm gift status. However, hearing "payment for services" and seeing a 1099 makes that much more difficult. I'd need more information before I'd be comfortable calling it a gift, especially since I know the return is going to kick back from the IRS because the 1099 is not reported as income.

I'm not going to automatically assume that the issuing accountant was a simpleton. I think it's very possible he or she merely did what was instructed by one side in a feuding family.

[taxea]

1099-misc

Here is another example of possible tax cheating...the accountant should be taken to task. Mother was supporting herself in her son's house...if she provided more than half of her own support then the couple cannot take her as a dependent for the year.
My suggestion is:
Do they have documentation that the accountant deducted the funds as medical expenses on the mother's return?
Did they sign a care giver contract with the mother for compensation? What does it say?
They should request a detailed account of what the proceeds paid for, for their records.
They should request that the accountant provide them with a corrected 1099 that is zeroed out , if there is no contract for care, and advise the accountant that the mother was providing for her own support.
If they can sustantiate the error of his/her ways, they should report the accountant's actions to the proper authorities.
If there was a contract then they should prepare a Sch C and take all expenses incurred by them.
taxea

[Luis Mopeo]

Here is another example of possible tax cheating...the accountant should be taken to task. Mother was supporting herself in her son's house...if she provided more than half of her own support then the couple cannot take her as a dependent for the year.
My suggestion is:
Do they have documentation that the accountant deducted the funds as medical expenses on the mother's return?
Did they sign a care giver contract with the mother for compensation? What does it say?
They should request a detailed account of what the proceeds paid for, for their records.
They should request that the accountant provide them with a corrected 1099 that is zeroed out , if there is no contract for care, and advise the accountant that the mother was providing for her own support.
If they can sustantiate the error of his/her ways, they should report the accountant's actions to the proper authorities.
If there was a contract then they should prepare a Sch C and take all expenses incurred by them.
taxea

Whoa Nellie!

Why are you making all thses assumptions.

[taxea]

1099-misc

no assumptions, without detailed info about the questions I asked, I can only opine on what is there...I stand by my reply, if this, if that, if the other....
based on the info this is only a question of dependent or not and the 1099 should not have been issued unless they had contracted their services to the mom taxea

[FRAZZLED]

1099-misc

I want to thank everyone for their input. My clients don't want to cause any family trouble so they are going to just claim themoney as is. They are both in their late sixtys and mother is in her early 90s. I guess I'll put it on a sch c and use daycare formulas. This was I can defer some of the income. One thing everyone agreed on is that they should have never been issued 1099. Again Thank You
Frazzled