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Marvin,EA
Marvin,EA, Enrolled Agent
Category: Tax
Satisfied Customers: 1672
Experience:  Enrolled to Represent Taxpayers Before The IRS
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I just received a 1099-Misc from my employer for money I received

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I just received a 1099-Misc from my employer for money I received to purchase my own health insurance. Should I have received a 1099-Misc for this type of compensation? Am I still liable for paying all taxes on the income listed on the 1099-Misc? I am a fulltime employee and received a W-2 from the same employer. I have worked for this employer for 1 year.

Marvin,EA :

Hello and thanks you for using Just Answer. You must report the amount reported on Form 1099-MISC on your federal income tax return as other income. If you Itemized you can deduct the amount reported on Form 1099-MISC as a medical deduction. Your total medical expenses in excess of 7.5%-of-Adjusted Gross Income are deductible.

Customer:

I know I have to report the income on 1099-Misc but my question was should I receive a W-2 and a 1099-Misc from the same employer. If I am an employee, shouldn't all the income I receive (whether wages or compensation) be recorded on a W-2? I do not have enough to itemize so I am liable for all taxes on a 1099-Misc.

Marvin,EA :

If the amount you received to pay your health insurance was reported on a W-2 the amount would still be taxable income to you and social security, medicare taxes would have been withheld from the payment. The amount reported on Form 1099 is not wages to you and no social security or medicare taxes is due.

Customer:

But the amount recorded on the 1099-Misc is listed as "other income" which (I thought) means I am responsible for paying ALL social security and medicare taxes since the employer didn't pay any.

Customer:

Also, if the amount listed on the 1099-Misc is listed as "other income" shouldn't the employer have reported it on my W-2 like the rest of my income?

Marvin,EA :

You are not responsible for payment of any social security or medicare tax on income reported on Form 1099 if your identify the type of payment on your tax return. Most employers paid health insurance for their employees so the amount paid are not reported on the employees' W-2s as income. If the employer paid the employee to buy their own insurance the amount must be reported as income to the employee on Form 1099-MISC or W-2 because there is no restrictions on the funds the employee received

Customer:

So the amount on the 1099-Misc will be added to the W-2 income somewhere on my 1040.So it is OK for an employer to issue a W-2 and a form 1099-Misc (Box 3 "other income") to the same employee?

Marvin,EA :

Yes. When your report the amount from Form 1099-MISC on your tax return you must identify the payment as reimbursement for medical insurance.

Customer:

Ok, thanks for your help.

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