I am renting a house to a church for their temporary pastor. I received a 1099 misc for the rent they had paid me. But they have the rent listed under nonemployee compensation. Shouldn't this be under rents? If they leave it under nonemployee comp., wont I have to pay self-employement taxes on it? Thanks for any help
"danaThatsCauseWhy" wrote
Yup, it should.
Get them to fix their problem.
In reality, no. You need to account for it on the proper form for the type and amount of income that it is. The issue will come up, you'll get a notice, and you can explain it to the IRS if/when need be. But I'd get the church to fix it.
-- Paul A. Thomas, CPA Athens, Georgia taxman at negia.net
You've hit the nail on the head.
First, 1099's are required to be issued by profit making organizations, so the church did right. The amount should have been in block one, not block 7 as you suspect. ChEAr$, Harlan Lunsford, EA n LA Wed 9 Mar 2005
Yes.
No. It is nice, but not necessary, for the church to correct the 1099. If they don't and IRS inquires, you explain. Oddly enough, this isn't the first incorrect 1099 they've ever dealt with.
-- Phil Marti Clarksburg, MD
Report as rent on your Sch E. If IRS sends you a letter in
2007 (which is about how long it will be before the matching is complete) just send back a response that you included the amount on your Sch E and send a copy of Sch E. Same thing happens every year for one of my clients because the issuer will not issue the 1099 misc correctly. IRS has always accepted and sends back a letter which says so.
You only pay SE tax on self-employment income. Treat the payment as rent and complete Schedule E. Cross out the amount in Box 7 and put it in Box 1 of the 1099 and attach it to the return as a way of explanation.
-- Alan
Get the issuer to correct the form 1099misc. This happens often. File the return with the rent reported on Schedule E like it should be and not on Sch. C. If the issuer does not correct the form 1099 before the 4/15 deadline, file your return with a letter and copy of the
1099 explaining the difference. Missy Doyle
I'd put the amount on line 21, and then another line there backing it out with a description that says this is correctly reported on Schedule E. No SE tax due when you provided no substantial services. The church treasurer probably didn't know any better.
-- Tom Healy, CPA Boulder, CO Web:
It Sounds as if the person filling out the 1099 made a mistake and filled it out as if intended for the interrum pastor (who is often treated as a 'nonemployee').
Thanks for the information. I had been under the impression that everything in box 7 meant self-employment income, meaning extra tax on it. I didn't want to do anything that would require me to be audited. But if all they will do is send a letter and require me to send the 1099-misc and a copy of sch E, I can live with that. Thanks very much for all of your wisdom.
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