Share 1099 payment with another sole proprietor
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Jane and Sally are independent contractors who provide education consulting to public school systems. They are separate business entities (both sole proprietors) but they frequently partner together. They obtained a contract with a school system in which they would each be paid $8,000 for providing services to the school.
Erroneously, the school system wrote the contract to pay all $16,000 to Jane, with the understanding that Sally is Jane's subcontractor and would be paid by Jane. Jane did not catch the error and approved the contract. She later realized the error, but the school system was unable/unwilling to revise the contract since it was already approved.
Thus Jane will receive $16,000 and will pay $8,000 to Sally. The school system will send a 1099 at the end of the year reflecting the $16,000 payment to Jane.
How does Jane properly report this adjustment on her tax return? Should she report her income from the school as $8,000 (which won't match the 1099 sent to the IRS), or should she report $16,000 as her income and record an $8,000 expense to Sally?
united-states taxes form-1099 sole-proprietorship
asked Dec 1 at 17:51
Brian from QuantRocket
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up vote
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Jane and Sally are independent contractors who provide education consulting to public school systems. They are separate business entities (both sole proprietors) but they frequently partner together. They obtained a contract with a school system in which they would each be paid $8,000 for providing services to the school.
Erroneously, the school system wrote the contract to pay all $16,000 to Jane, with the understanding that Sally is Jane's subcontractor and would be paid by Jane. Jane did not catch the error and approved the contract. She later realized the error, but the school system was unable/unwilling to revise the contract since it was already approved.
Thus Jane will receive $16,000 and will pay $8,000 to Sally. The school system will send a 1099 at the end of the year reflecting the $16,000 payment to Jane.
How does Jane properly report this adjustment on her tax return? Should she report her income from the school as $8,000 (which won't match the 1099 sent to the IRS), or should she report $16,000 as her income and record an $8,000 expense to Sally?
united-states taxes form-1099 sole-proprietorship
asked Dec 1 at 17:51
Brian from QuantRocket
1333
add a comment |
up vote
6
down vote
favorite
up vote
6
down vote
favorite
Jane and Sally are independent contractors who provide education consulting to public school systems. They are separate business entities (both sole proprietors) but they frequently partner together. They obtained a contract with a school system in which they would each be paid $8,000 for providing services to the school.
Erroneously, the school system wrote the contract to pay all $16,000 to Jane, with the understanding that Sally is Jane's subcontractor and would be paid by Jane. Jane did not catch the error and approved the contract. She later realized the error, but the school system was unable/unwilling to revise the contract since it was already approved.
Thus Jane will receive $16,000 and will pay $8,000 to Sally. The school system will send a 1099 at the end of the year reflecting the $16,000 payment to Jane.
How does Jane properly report this adjustment on her tax return? Should she report her income from the school as $8,000 (which won't match the 1099 sent to the IRS), or should she report $16,000 as her income and record an $8,000 expense to Sally?
united-states taxes form-1099 sole-proprietorship
asked Dec 1 at 17:51
Brian from QuantRocket
1333
Jane and Sally are independent contractors who provide education consulting to public school systems. They are separate business entities (both sole proprietors) but they frequently partner together. They obtained a contract with a school system in which they would each be paid $8,000 for providing services to the school.
Erroneously, the school system wrote the contract to pay all $16,000 to Jane, with the understanding that Sally is Jane's subcontractor and would be paid by Jane. Jane did not catch the error and approved the contract. She later realized the error, but the school system was unable/unwilling to revise the contract since it was already approved.
Thus Jane will receive $16,000 and will pay $8,000 to Sally. The school system will send a 1099 at the end of the year reflecting the $16,000 payment to Jane.
How does Jane properly report this adjustment on her tax return? Should she report her income from the school as $8,000 (which won't match the 1099 sent to the IRS), or should she report $16,000 as her income and record an $8,000 expense to Sally?
united-states taxes form-1099 sole-proprietorship
united-states taxes form-1099 sole-proprietorship
asked Dec 1 at 17:51
Brian from QuantRocket
1333
asked Dec 1 at 17:51
Brian from QuantRocket
1333
asked Dec 1 at 17:51
Brian from QuantRocket
1333
asked Dec 1 at 17:51
Brian from QuantRocket
1333
asked Dec 1 at 17:51
Brian from QuantRocket
1333
1333
add a comment |
add a comment |
1 Answer
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Jane should report $16,000 as income and an $8,000 expense to Sally, which will match the 1099 she will issue for Sally.
answered Dec 1 at 17:57
Hart CO
25k15975
Your answer includes an answer to a related question I didn't ask but should have: Must Jane issue a 1099 for Sally? Yes.
– Brian from QuantRocket
Dec 2 at 13:57
add a comment |
1 Answer
1
active
oldest
votes
1 Answer
1
active
oldest
votes
active
oldest
votes
active
oldest
votes
up vote
9
down vote
accepted
Jane should report $16,000 as income and an $8,000 expense to Sally, which will match the 1099 she will issue for Sally.
answered Dec 1 at 17:57
Hart CO
25k15975
Your answer includes an answer to a related question I didn't ask but should have: Must Jane issue a 1099 for Sally? Yes.
– Brian from QuantRocket
Dec 2 at 13:57
add a comment |
up vote
9
down vote
accepted
Jane should report $16,000 as income and an $8,000 expense to Sally, which will match the 1099 she will issue for Sally.
answered Dec 1 at 17:57
Hart CO
25k15975
Your answer includes an answer to a related question I didn't ask but should have: Must Jane issue a 1099 for Sally? Yes.
– Brian from QuantRocket
Dec 2 at 13:57
add a comment |
up vote
9
down vote
accepted
up vote
9
down vote
accepted
Jane should report $16,000 as income and an $8,000 expense to Sally, which will match the 1099 she will issue for Sally.
answered Dec 1 at 17:57
Hart CO
25k15975
Jane should report $16,000 as income and an $8,000 expense to Sally, which will match the 1099 she will issue for Sally.
answered Dec 1 at 17:57
Hart CO
25k15975
answered Dec 1 at 17:57
Hart CO
25k15975
answered Dec 1 at 17:57
Hart CO
25k15975
answered Dec 1 at 17:57
Hart CO
25k15975
25k15975
Your answer includes an answer to a related question I didn't ask but should have: Must Jane issue a 1099 for Sally? Yes.
– Brian from QuantRocket
Dec 2 at 13:57
add a comment |
Your answer includes an answer to a related question I didn't ask but should have: Must Jane issue a 1099 for Sally? Yes.
– Brian from QuantRocket
Dec 2 at 13:57
Your answer includes an answer to a related question I didn't ask but should have: Must Jane issue a 1099 for Sally? Yes.
– Brian from QuantRocket
Dec 2 at 13:57
Your answer includes an answer to a related question I didn't ask but should have: Must Jane issue a 1099 for Sally? Yes.
– Brian from QuantRocket
Dec 2 at 13:57
add a comment |
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