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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 7252
Experience:  15years with H & R Block. Divisional leader, Instructor
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Hello. I just recently filed my 2012 taxes on Oct 14th before

Resolved Question:

Hello. I just recently filed my 2012 taxes on Oct 14th before the deadline (I applied for an extension). The only income I had in 2012 was work that I did for a corporation that was newly setup, and I was expecting to get a 1099 form from them. Instead I was told to claim this income (~$10,000) as schedule-c income, and I did that. I ended up being owed a $150 refund based on my deductions and what I paid the IRS back in March when I did my estimated taxes. Does this sound allowable?
Submitted: 9 months ago.
Category: Tax
Expert:  Robin D. replied 9 months ago.

Robin D. :

Hello and thanks for trusting me to help you today. I am a tax adviser with over 15 years of experience.
If you were an independent contractor (not an employee) and the company paid you $10,000 for your services then yes, you should have listed it on teh Schedule C even if they did not follow procedure and issue you the 1099MISC.

Robin D. :

Please make sure that you track your income if you continue in this manner because the company could later come back and issue a late 1099MISC reporting m,ore then what you showed on your return.

Robin D. :

Make sure that you retain copies of invoices or checks that would substantiate the correct amount you receive from any company.

Customer:

Ok

Customer:

But this could potentially be an issue for the company?

Robin D. :

They are required to issue the 1099MISC for any amount over $600 that the pay in the course of their business

Robin D. :

They could be fined for not following that procedure

Customer:

And are there requirements about who they can claim was a contractor? Meaning are there rules about who is a contractor vs who is acting as an employee?

Robin D. :

Yes there are

Customer:

how do they define those roughly?

Robin D. :

There are 3 main areas


Common Law Rules


Facts that provide evidence of the degree of control and independence fall into three categories:




  1. Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?



  2. Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)



  3. Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?


Robin D. :

Some factors may indicate that the worker is an employee, while other factors indicate that the worker is an independent contractor. There is no “magic” or set number of factors that “makes” the worker an employee or an independent contractor, and no one factor stands alone in making this determination.

Customer:

ok

Customer:

that makes sense

Customer:

last question I have is this: does it sound right that I would actually get $150 back from the IRS? Because when i originally did my 'estimated taxes' to make an estimated payment in march (to avoid fines etc) I assumed this was 1099 income, but now that I have filed it as schedule C it seems my deductions were larger?

Robin D. :

1099MISC issued to you would have still been on a Schedule C when you filed. You must have estimated less deductions then your were actually able to finally show on the return.

Robin D. :

That would account for the refund.

Customer:

Oh ok

Robin D. :

Much better than owing more and having a penalty\

Customer:

Because on this I was able to claim part of my house as an office etc

Customer:

Correct yes I'm glad I did that

Robin D. :

I hope our CHAT has been helpfl

Customer:

Yes most certainly thanks for your help

Customer:

take care

Customer:

oh

Customer:

One thing, maybe this is a question for another person or i should re-ask

Robin D. :

We will see.......

Customer:

This is related to corporate tax law and transfer of shares

Robin D. :

That is a different topic

Customer:

Ok I will re-ask that of someone

Customer:

Thanks

Robin D. :

You are most welcome.
Your positive rating is always thanks enough.

Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 7252
Experience: 15years with H & R Block. Divisional leader, Instructor
Robin D. and 7 other Tax Specialists are ready to help you

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