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Tax.appeal.168
Tax.appeal.168, Tax Accountant
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Experience:  Nearly 30 years of varied tax industry exp. Tax Biz owner
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A Form 1099 was received for nonemployee compensation by a

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A Form 1099 was received for nonemployee compensation by a lawyer. However, the 1099 should have been issued to the law firm, not to one of the lawyers of the law firm. The lawyer contacted the law firm (no longer an employee there) and was told to send in a Form 1099 showing that same amount of money going from her to the law firm and to amend her tax return showing the original 1099 received as a nominee and then the offsetting expense of the 1099 she issued to her law firm. Is this an acceptable way to treat the 1099? I thought that the original 1099 should be amended, but I am assuming that the law firm does not want/or is unable to get the SSA to amend the 1099.
Submitted: 2 years ago.
Category: Tax
Expert:  Tax.appeal.168 replied 2 years ago.
Welcome, THANK YOU for using Just Answer. My goal is to help make your life...a little...LESS taxing.

As the 1099 should have been issued to the law firm and not the former employee, the former employee issuing the law firm a 1099 is acceptable. She would issue the law firm a 1099 for the amount of income that was reported to her, and she will also submit a copy of the 1099 to the IRS.

Please let me know if I can be of further assistance to you regarding this matter.

Thank you again for using JUST ANSWER.

Expert:  Tax.appeal.168 replied 2 years ago.
Nominee/middleman returns. Generally, if you receive a Form 1099 for amounts that actually belong to another person, you are considered a nominee recipient. You must file a Form 1099 with the IRS (the same type of Form 1099 you received) for each of the other owners showing the amounts allocable to each. You must also furnish a Form 1099 to each of the other owners. File the new Form 1099 with Form 1096 with the Internal Revenue Service Center for your area. On each new Form 1099, list yourself as the “payer” and the other owner as the “recipient.” On Form 1096, list yourself as the “Filer.” A husband or wife is not required to file a nominee return to show amounts owned by the other. The nominee, not the original payer, is responsible for filing the subsequent Forms 1099 to show the amount allocable to each owner.

REFERENCE SOURCE:

http://www.irs.gov/instructions/i1099gi/ar02.html#d0e220

Under "Who Must File"
Customer: replied 2 years ago.
Do you recommend filing an amended 1040 to reflect the 1099 originally received? This amount was left off of the original filing of the 1040.
Expert:  Tax.appeal.168 replied 2 years ago.
Hello again,

Yes, an amended return should be filed because the IRS will show this as income to her, and if she doesn't report it, it will appear that she understated her income, and then she will get tagged with penalties and interest for not reporting that income.
Tax.appeal.168, Tax Accountant
Category: Tax
Satisfied Customers: 2533
Experience: Nearly 30 years of varied tax industry exp. Tax Biz owner
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