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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29535
Experience:  Taxes, Immigration, Labor Relations
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2015 is my first year in the app business, I started around

Customer Question

Hello,
2015 is my first year in the app business, I started around July. I have an individual developer account for myself and another one under my friends name (he filled it out using his social security number and other personal information, but is letting me use it).
Apple doesn't send developers a 1099; or at least at my level of income. I have a portal that tracks all revenues and expenses. Reporting the correct figures is easy.
Problem is, how can I claim the income under my friends' developer account so he is not liable for tax? It's all under his name, but I've been using it 100%. I don't want him to be audited and screwed over.
Is there a form he and I can sign that transfers the tax liability? Not sure what my options are.
Thanks a lot for the help!
Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.

When someone receive the money that doesn't belong to that person - that calls "nominee income" -- nominee is a middleman who receives income that actually belong to another person.
If your friend allow you to use his/her account - your friend should understand that income credited to that account might be reported as income of the account owner - and that is not a good practice.
If you do not want your friend to be audited or questioned about his/her financial activity - you better to use your own account.

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If your friend will ever receive any reporting form - that is also sent to the IRS - that should not be ignored.

See instructions - page 2

https://www.irs.gov/pub/irs-pdf/i1099gi.pdf

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 spouse is not required to file a nominee return to show amounts owned by the other spouse. The nominee, not the original payer, is responsible for filing the subsequent Forms 1099 to show the amount allocable to each owner.

So your assessment is correct - you will report YOUR income, but your friend will have some filing overhead.

Does that answer your question?

Customer: replied 1 year ago.
I understand it is cleaner to just use my account, but both accounts are doing well and I'd like to use both moving forward. So I'm trying to figure out the cleanest way to do this.Please let me know if I understood your answer correctly.+ My friend is considered a middleman (nominee). He must file a form 1099 and a Form 1096. Form 1099 establishes he is the payer and I am the owner and recipient.1. A form 1096 must accompany a form 1099? "Use this form to transmit paper Forms 1097, 1098, 1099, 3921, 3922, 5498, and W-2G to the Internal Revenue Service.". What if it is electronic?
2. Which form 1099 needs to be filed, there seem to be quite a few? "You must file a Form 1099 with the IRS (the same type of Form 1099 you received) " --> My friend won't be receiving a Form 1099, so the same type doesn't apply.The rest makes sense.
Expert:  Lev replied 1 year ago.

If your friend will NOT receive any reporting forms - that woudl be between you and your friend - and while your friend still will be a middleman (nominee) - nothing need to be reported.
ONLY if your friend will receive any 1099 reporting form - we need to understand that same forms are sent to the IRS - and will be recorded in your friend's tax account.

Only in this case - your friend will need to issue same forms to you.
Most likely - your friend will receive 1099misc OR 1099k - so SAME form will be issued to you and to the IRS.

Forms are informational returns - they may be filed on paper or electronically - your choice.

Expert:  Lev replied 1 year ago.

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How to file - that is a technical issue - but for instance form 1099misc may not be filed by itself.

It is filed as an attachment to form 1096 - which is a transmitter form.

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But if your friend will NOT receive any reporting form and there will be no information sent to the IRS - there is NOTHING need to be reported.

You just report YOUR income regardless if it was reported to the IRS or not.

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