1099 Misc

[Donanita]

There has been several post on a 1099 misc that is not subject to se tax if the taxpayer is not in the business pertaining to the 1099 income.Have a client with two 1099 misc.One for $900 & another for $1096.Do you need to include a statement to the IRS that the income is not subject to se tax.

[Joe Btfsplk]

SE tax on 1099

If he got a 1099 he either needs to pay the SE tax or modify Form 4137 by substituting "Wages" where Cash and Charge Tips" are shown on line 1 and disregard line 4. At top of form cross out 'tip' and replace with 'wages'.

The income should then be reported as wages.

If he ever wants to work again for the employer involved, then he will be out of luck if he files the Form 4137 and the employer gets stuck with the tax.

[Unregistered]

Don't agree

A taxpayer must be involved in an activity with continuity, regularity and with profit objective to be considered engaged in a trade or business.Does anyone else agree with this.

[RLymanC]

Guest

Don't agree with what????

[Donanita]

This is what

A taxpayer must be involved in an activity with continuity, regularity and with profit objective to be considered engaged in a trade or business.Does anyone else agree with this.

my question was in reference to.I thought I saw the dissussion on this message board but it could have been the "other board".Guess I'll check over there as to a statement sent in explaining the 1099 income.

[Unregistered]

Don't agree with

Joe Btfsplk about form 4137

[Gene V]

1099 misc and SE

Donanita,
There was a discussion on this a while back, go to page 10 and look under tread SE Tax?

[Donanita]

Thanks Gene V

but would you report the inc on line 21 with a 4137 as was suggested or line 21 and add a supporting statement as to the fact that the taxpayer is not in business for this income.

[Gene V]

SE tax

Donanita,
If you think this is truly not subject to SE tax, then I would just put it on line 21 with two or three word explanation. Like 1099-MISC non-business or something like that. I ‘ve done this many times; never have been reprimanded.
Now if this 1099 is from your client employer and you think the employer should pay the SE, then I would go the 4137 route.

[RLymanC]

1099 Reporting

I usally break down a 1099-MISC box 7 income as follows:

If the person receiving the 1099 box 7 income is actually working and preforming a service, and can be classified as an employee, I'll do as Joe suggestd and go to form 4137 and pay half the SE tax. and include the 1099 income on line 7 of 1040 "wages"

On the other side of the coin, if a person owns some equipment and rents that equipment to his employer, he is not in the equipment rental business. that 1099 income goes on line 21 and call it PPR (personal property rental), and take the expenses on schedule A (2106). No SE tax.

If the taxpayer can't get on Schedule A so be it. That's the way the ball bounces. That's the way the guy renting the equipment stiffs the taxpayer, and the taxpayer that is renting out his equipment takes it in the shorts..

Just want to add that the full amount of 1099 needs to go on line 21, you cannot deduct the expenses on that line, expenses must be deducted on Schedule A.

If truely self-employed, well that's a no brainer.