Sch C Wages Or Contract Labor?

[SueBaby]

Client has over $24,000 paid to a worker. They said that was on contract labor, which I did put on contract labor.

My question is: . Isn't contract labor for that much require a 1099 for that worker? Should I have put that on wages without a 1099. They did not give him a 1099 or nothing but a check throughout the year. Was it suspose to go on wages?

[fliszt]

SueBaby, I would have

thought that they would have issued a 1099-MISC, but that doesn't change the way you will report the income. IF he is a contract worker, (comes and goes, does the work the way he wants to, not much direction from the company, etc) then just enter his income on his sched C and put in the expenses as appropriate. Then after expenses are entered, the "profit" will be subject to social security tax.
I believe if he were a W2 employee, then they would have withholding from all his checks. s/s/ and the like.
I hope I've answered your question.

[SueBaby]

thought that they would have issued a 1099-MISC, but that doesn't change the way you will report the income. IF he is a contract worker, (comes and goes, does the work the way he wants to, not much direction from the company, etc) then just enter his income on his sched C and put in the expenses as appropriate. Then after expenses are entered, the "profit" will be subject to social security tax.
I believe if he were a W2 employee, then they would have withholding from all his checks. s/s/ and the like.
I hope I've answered your question.

My client has a business that hired a man to do business for them. They have the sch C and paid a worker for the labor $23.500. That much labor for my clients sch C goes on contract labor or wages for their worker?

I thought my client was to give a 1099 to that worker for that much money being on that line contract labor.

[fliszt]

If your client's

company hired a person, periodically, to do work for them, then I don't see where he would fall into the W2 catagory. If he was hired and worked say 8 hrs/day for the entire year, then yes he would be considered a W2 employee and a W2 should have been issued.

[Questionguy101]

They are required to and should have given the worker a Form 1099-Misc and also filed it with the Form 1096 to the IRS (assuming that the worker fits the definition of an independent contractor).

But like Larry has said, that doesn't change the way you will report the income.

I'd explain the definition of an independent contractor vs an employee to the client and also the requirement to file a Form 1099-Misc (and the Form 1096). I'd also advise them to file the Form 1099-Misc and the Form 1096 (assuming that the worker fits the definition of an independent contractor) as soon as possible if they still haven't filed them yet.

[bertrans]

(This reply not for QuestionGuy)


Some philosophers describe the absence of cogitation as bliss. Merely ruminating.

[SueBaby]

company hired a person, periodically, to do work for them, then I don't see where he would fall into the W2 catagory. If he was hired and worked say 8 hrs/day for the entire year, then yes he would be considered a W2 employee and a W2 should have been issued.

Do you think they would get audit because of the $23,500 that I put on contract labor and NOT for them to give him a 1099? And no they did not nor send nothing in to the IRS either for this.

[bertrans]

I shall keep reminding myself that I am not a native English speaker.

[taxxcpa]

No 1099

Two wrongs don't make a right. If someone pays you as an independent contractor and fails to issue a 1099, he is in error. His failure to issue the 1099 has no bearing on how you should report it. If it was genuine 1099-type income, then you should report it just as if he had given you the 1099.

[Burke]

My client has a business that hired a man to do business for them. They have the sch C and paid a worker for the labor $23.500. That much labor for my clients sch C goes on contract labor or wages for their worker? I thought my client was to give a 1099 to that worker for that much money being on that line contract labor.

He should have given him a 1099. Since you are doing the business return (Sche C) for the client, go ahead and do the 1099 and charge him for it.

[S T]

1099

Sue Baby,

All I can share with you is that on an audit in 2006, the auditor disallowed the sub-contract or independent contractor deductions, since 1099 forms were not filed.

Please file the 1099 forms for this independent contractor, even if there are late penalties for filing the 1099 form.

That is what is required from the taxpayer.

Sandy

[JoshinNC]

Are you saying what I think you are saying?

I shall keep reminding myself that I am not a native English speaker.

If so I have been thinking something similar for about the last 2 weeks ever since one particular poster began posting multiple posts, but I haven't said anything.

If you aren't saying what I think you are saying then I believe I have just outed myself. Oh well!

[SueBaby]

He should have given him a 1099. Since you are doing the business return (Sche C) for the client, go ahead and do the 1099 and charge him for it.

I thought the 1099s were suspose to go out on Jan 31st. Can I do it now after I already transmitted him? Amend it or wait. If I put my name on it will I get in trouble for being late on the 1099s? I have never done a 1099 only in Jan when I am suspose to. So what do I have to do if it is this late and I already transmitted him?

[S T]

File the 1099 forms

Prepare the 1099 forms, have the client sign the 1096 transmittal, and advise the client that it is possible he might receive a penalty notice.

I don't have time to look it up, but you could go to the 1099 form instructions online and I do believe they will not assess any penalties as long as the forms are filed by 3/1/08(corrected 2/28 or 2/29/08 for this year) or 3/31/08(Matt posted for electronic filing) for tax year 2007. (Found the info, if 30 days late $15 penalty, then penalty increases from that point).

There is a lot of leeway granted on filing these forms, as long as they are filed. If you don't prepare the returns and insist that your t/p do so, then his entire contract labor amount on the business form could be jeopardized.

Sandy

[Snaggletooth]

Make It Stick

If I know someone has not issued a 1099, I won't take a deduction for the amount.

Other than ignorance, there are some reasons for not issuing a 1099. The recipient might be on disability - collecting $$$ every month because they are not able to work. Then they go out and collect $3000 for doing someone's roof. Another possible reason is they don't want to file a return -- or don't want to show the money as income.

I don't have any sympathy on these situations. If my client wants to deduct the expense, he has to issue a 1099. If he hasn't done this, then I will prepare one for him and charge him to do it. If it's late, then so be it.

If the payment is not in the course of business, there is no requirement to issue one. Of course, if it is not in the course of business, it's not deductible either.