My son's 1099-MISC mess

He's 21, and received a 1099-MISC for $3500, for a one-time paint job he did for a builder. (Of course, he just dropped this in my lap today at the last minute.) He says the payment was about half labor, and the other half was reimbursement for materials.

Turbotax offers several options for explaining the work. One is "Side job" - a one time thing which has nothing to do with his profession (full time student). That's actually the case. However, he *does* have receipts for the materials he bought for the job. Since it was a one-time job, can he deduct these expenses? Or, does he have to choose another option other than "side job", such as "independent contractor", "self employed", etc?

His tax hit went from $8.00 to $500-ish because of this, so I'm trying help the kid out. Some kid....

Reply to
JoeSpareBedroom
Loading thread data ...

Report the income and expenses on Schedule C of the 1040.

Independent contractor.

Phil Marti VITA/TCE Volunteer Clarksburg, MD

Reply to
Phil Marti

On Mon, 11 Apr 2011 23:12:40 EDT, "JoeSpareBedroom" wrote Re My son's 1099-MISC mess:

You can probably use Schedule-Cez to report the income and deduct the expenses. If Turbotax doesn't have Cez, then just use C.

Reply to
Vic Dura

That 's probably because of self-employment tax. It is roughly 15.3% on your self-employment income (that is income minus deductions).

Reply to
removeps-groups

Have you ever tried to PUSH a rope up a hill?

If he's an independent contractor you report his income and ALL of his expenses on Schedule C and he pays SE tax in addition to any income tax that may be due. Beware if you're claiming him, OR COULD CLAIM him, as a dependent on your return. It adds some complexity to the calculations, but it isn't insurmountable.

On the other hand if was really an employee then he's only taxed on the part that was his labor, the amount for materials should be a reimbursement under an accountable plan (he couldn't get the money for the materials if he hadn't submitted proof of payment). In that case his income is really only half of what's on the 1099 AND the employer is responsible for the FICA taxes. You have essentially two options to deal with this in this manner - try to force the payor to issue a corrected 1099 and issue a late W-2 for the wage portion (good luck with this without professional help) OR force half the 1099 onto Line 7 of Form 1040 and pay the unpaid part of FICA on Form 8918 (again, good luck with this without professional help).

I wish there was a better answer for you.

Gene E. Utterback, EA, RFC, ABA

Reply to
Gene E. Utterback, EA, RFC, AB

BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.