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TAX TIME! Got a W-2 & 1099-MISC, Filing issues...

axmaster45 1,624 375 February 3, 2011 at 10:03 AM
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My wife rec'd a regular W-2 from her employer. She rec'd a bonus for the holidays that was not taxed. They issued her a 1099-misc for that bonus. When I try to enter it into TurboTax, it has all kinds of problems. Basically the issue is they want to know why she is getting a 1099-misc from her regular employer. they want all of these extra forms filled out , form 8919 with a reason code, and an explanation of what she does there...etc. a very big hassle. the secretary at the company tells me her accountant always just added the amount to the WAGES box on her 1040 form and never had an issue. Wont this create a problem when the IRS sees a 1099-misc was sent but never filed on the return? Im really confused here.

Thanks for any help.

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Her employer is opening themselves up to a world of problems. Here is the low down: http://www.irs.gov/newsroom/artic...66,00.html

She is going to have to pay her share: http://www.irs.gov/pub/irs-pdf/f8919.pdf You also get to fill out this little number as well: http://www.irs.gov/pub/irs-pdf/fss8.pdf

The IRS is likely going to go after the employer for lack of payment on SS and Medicare.


The companies accountant is not someone I would trust. The proper filing of 1099-MISC income should either go on the 1040 under other miscellaneous income subject to S/E taxes or on the Schedule C if there is business activity surrounding the income.
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Last edited by PiratesSayARRR February 3, 2011 at 10:57 AM
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Quote from PiratesSayARRR View Post :
Her employer is opening themselves up to a world of problems. Here is the low down: http://www.irs.gov/newsroom/artic...66,00.html

She is going to have to pay her share: http://www.irs.gov/pub/irs-pdf/f8919.pdf You also get to fill out this little number as well: http://www.irs.gov/pub/irs-pdf/fss8.pdf

The IRS is likely going to go after the employer for lack of payment on SS and Medicare.


The companies accountant is not someone I would trust. The proper filing of 1099-MISC income should either go on the 1040 under other miscellaneous income subject to S/E taxes or on the Schedule C if there is business activity surrounding the income.
i mentioned exactly this to the perosn in charge. they said thier accountant always just adds it to the W-2 amount , that way taxes will be deducted from it. as an example if she made 100 dollars and paid 10 dollars in taxes, but then i change the amount to 105 dollars but still put that she paid only $10 in taxes, the rest will come out of her refund, no?
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Quote from axmaster45 View Post :
i mentioned exactly this to the perosn in charge. they said thier accountant always just adds it to the W-2 amount , that way taxes will be deducted from it. as an example if she made 100 dollars and paid 10 dollars in taxes, but then i change the amount to 105 dollars but still put that she paid only $10 in taxes, the rest will come out of her refund, no?
The issue is that your wife is not getting credit for the amount of SS and Medicare from the employer and she should be. The employer is trying to circumvent paying employer taxes on taxable wages.

So your wife will have to pay 1) Extra income tax (taken out of refund) 2) Extra Social Security Tax (6.2% of the bonus and assuming she hasn't already made over $106,800) 3) She will have to pay 1.45% in Medicare Taxes on the bonus amount 4) Any applicable state taxes.

The proper way to do it is the filling out the other 2 forms.
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Quote from PiratesSayARRR View Post :
The issue is that your wife is not getting credit for the amount of SS and Medicare from the employer and she should be. The employer is trying to circumvent paying employer taxes on taxable wages.

So your wife will have to pay 1) Extra income tax (taken out of refund) 2) Extra Social Security Tax (6.2% of the bonus and assuming she hasn't already made over $106,800) 3) She will have to pay 1.45% in Medicare Taxes on the bonus amount 4) Any applicable state taxes.

The proper way to do it is the filling out the other 2 forms.
Thank you so much for taking the time to explain this. i will forward your comments to them.

repped!
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Quote from axmaster45 View Post :
Thank you so much for taking the time to explain this. i will forward your comments to them.

repped!
Welcome...but likely you won't get far with them. I would simply file the forms I listed and even file a wage discrepancy with the labor board. The company will be audited for incorrectly classifying employees. They will get hit with taxes owed and penalties.
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Quote from PiratesSayARRR View Post :
Welcome...but likely you won't get far with them. I would simply file the forms I listed and even file a wage discrepancy with the labor board. The company will be audited for incorrectly classifying employees. They will get hit with taxes owed and penalties.
not something i am trying to do to the company, which is why im in touch with them to correct this . they have been very accommodating to our family and i wish to give them the chance to fix it.
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not something i am trying to do to the company, which is why im in touch with them to correct this . they have been very accommodating to our family and i wish to give them the chance to fix it.
Totally understand. Unfortunately you always have to look out for yourself particularly when it comes to the IRS. Is this a big or small company? <50 employees?
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[QUOTE=PiratesSayARRR;36962555]Totally understand. Unfortunately you always have to look out for yourself particularly when it comes to the IRS. Is this a big or small company? <50 employees?[/QUOTE

I would say 50-100 employees. they mentioned they do this every year with dozens of employees and have no issues. now whether thats just good luck? i dont know
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I would say 50-100 employees. they mentioned they do this every year with dozens of employees and have no issues. now whether thats just good luck? i dont know
That is quite surprising. I assume that the bonuses are over $600 since that is the reporting limit to the IRS.
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That is quite surprising. I assume that the bonuses are over $600 since that is the reporting limit to the IRS.
must be. i wouldnt know b/c last year her bonus was only $300, and was written from a personal account, not the business
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When we get our bonuses here @ work (profit sharing), everything about it is just like a normal pay period except for no 401k withholding (you can elect to do it but if you have it for automatic deductions, it won't deduct from profit sharing by default). Odd that a company would choose to do so otherwise. Heck, even when we get safety checks ($100 every 100 days or so), it's just like a normal paycheck.
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