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I am working as an independent contractor for a university…

I am working as...

I am working as an independent contractor for a university and have an LLC with C taxation election. The University refused to accept the W9 listing the LLC and informed me that I must complete the W9 using my personal SSN and it must not include the LLC name on the form. How can I get this income associated with the 1099 assigned to the LLC where my expenses are accumulated?

Accountant's Assistant: The Expert will know how to help. Is there anything else important you think the Expert should know?

Not that I can think of, this is the basic form of the situation.

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Answered in 3 minutes by:
10/15/2017
emc011075
emc011075, Tax adviser
Category: Tax
Satisfied Customers: 3,864
Experience: IRS licensed Enrolled Agent and tax instructor
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Hi. My name is ***** ***** I will be happy to help you.

Did the university hired you as an individual or your LLC?

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Customer reply replied 9 months ago
They forced me to complete the W9 as an individual, however I have already accumulated expenses in the LLC for the project as they never mentioned that I must file as a sole proprietor until I had already began working on the project.
So, yes. They will send the 1099 to me individually. Can I deduct the individual 1099 income by establishing a subcontract for my LLC to conduct the work?

Well, this did not exactly answer my question. You have kind of contract or some type of job offer. Is it issued to you or to your corporation?

Some universities do not higher scorps or corporation because they want to have some kind of control who will be doing the job. Because you are not an employee they cannot force you to sign W9 but they can cancel the contract or you can walk away.

You can subcontract your LLC to do the job and issue yourself W2 through your LLC but you will still need to file Schedule C, report the income and deduct it as contract labor for LLC. And you will report the wages on your tax return and expenses on your LLC return which will not be deductible on your tax return. So at the end you will end up paying higher taxes because the deductions will not offset your w2 but generate corporate loss that will not be deductible by you.

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Customer reply replied 9 months ago
Sorry for the ambiguity. I do not have the contract yet, as I know the group hiring me well and they needed the work immediately. The contract is forthcoming as university bureaucracy is slow moving. By the way they made me fill out the W9, I am certain the contract done in posthaste will be with me individually.I have already done most of the work and I have charged all expenses to my corporation and I need to deduct these expenses from the pros income. Additionally, I do want to receive a W2 from my corporation for my wages.If I understand you correctly - It is possible to establish a subcontract between myself (individual and recipient of the 1099) and my corporation so that the corporation completes the job on my behalf. In this case, the Schedule C income from this 1099 would be completely offset by the expense of the invoice by my corporation (exactly same price as University pays me) for doing the job on my behalf. In this case I can receive my wages and W2 from the corporation and deduct the expenses for doing the job.Am I understanding you correctly? Will the IRS have a problem with this?Thanks,

Yes. Report the 1099Misc on Schedule C and deduct the entire amount as contract labor or outsourced services or nominee distribution reported by xyz corporation EIN##### (other expenses section).

It is not ideal but this is best you can do in your situation. Next time you accept a job make sure that the company hiring you is aware that they are hiring your company, not you.

emc011075
emc011075, Tax adviser
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Customer reply replied 9 months ago
Thank you kindly.I really appreciate your advice.
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