We got a 1099-Misc with $5000 in Box 3 Other Income. This was a reimbursement for auto expenses of an employee. I understand how to deduct the employee expenses on Sch A but not sure if the $5000 goes on Other Income Line 21 on the front of my 1040. Someone said it had to go on Sch C. Advice? They reimburse at the fed 48.5 We loose out with the limitation on Sch A where it goes. IF it somehow went on Sch C it would be a wash.
It was incorrect. The $5,000 should have been included in Box 1 wages of the W-2. I'll be charitable and say that the employer is confused, but there's also the chance that the employer is trying to avoid the employer's share of FICA and Medicare (and perhaps FUTA).
If the employer won't correct the W-2, do the following:
"SMF" wrote
If you "account" to your employer, meaning you turn in mileage records, etc, then they are doing it wrong. It's not income to you at all.
If they just give you $100 a week (and you're on vacation for two weeks, that comes to $5,000 even) then it's a non-accountable plan and it is income to you.
It shouldn't be reported on the 1099 though, as it should be reported as additional wages and reported through your W-2.
In a non-accountable plan you would then deduct your actual expenses on Schedule A.
Get your employer to correct this if it's wrong, and may see if they'll change plans to an accountable plan (if you don't have one now) which benefits you with no real downside to him.
If this year's from 2106 (Line 7 - I haven't done one of those in a while) has a line for employer reimbursement, that's really where it should go. Form 8919 would be applicable to the extent there was EXCESS reimbursement. That does produce a different (lower) answer of tax due.
You should file the form 2106 even if you DON'T have a Schedule A - because it has to show the reimbursement.
I disagree. What you are talking about would be the treatment of excess payments under an accountable plan.
reimbursement plan. All payments to the employee are fully taxable as wages and reported on the W-2 ( Pub 15). The employee is stuck will the Schedule A employee business expense deduction.
If you are an employee, then you should not be getting a 1099 from your employer. All income belongs on the W2. It belongs in the box labeled wages & other income. The tax treatment of the reimbursement can vary depending on whether it qualifies as an accountable plan or not.
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Perhaps so, but the form doesn't make that distinction. All is says is include the amount NOT reported on box 1 of form W-2. Reimbursement on a
1099 is NOT on the form W-2. Maybe that's not supposed to happen, but following the instructions still puts it on the 2106.Which would work if it were reported via a W-2. It wasn't. The employer, by omittng it from box 1 of the W-2, isn't saying that it's a non-accountable plan.
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