Accountant Forums


Reply
Thread Tools

1099-MISC Box 7 - Declare as Other Income?

 
 
ihleventhal
Guest
Posts: n/a
Thanked:
 
      04-12-2011, 06:43 PM
My daughter, who is currently a high school student, worked as an
intern for a law firm last summer and made about $2000. The firm sent
her a 1099-MISC with the income listed in Box 7, non-employee
compensation. We were doing her tax return with TurboTax and it asked
her a series of questions about the income, including whether she had
done this type of work in 2009 (Answer: No) and whether she planned to
do this type of work in 2001 or 2012 (Answer: No plans at this time).
Based on her answers, TurboTax classified this as a "one time side-
job" and listed it as "Other Income". This leads to more favorable tax
treatment as she doesn't have to pay the self-employment tax, but I'm
wondering if this is really correct. I've done lots of Googling on
this topic, and it seems like for similar cases of a summer job with a
1099-MISC, almost every post I've seen says that it has to be treated
as self-employment income. Please let me know if it's OK to consider
this as "Other Income", as TurboTax is indicating. Thanks!

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>
 
Reply With Quote
 
 
 
 
paultry
Guest
Posts: n/a
Thanked:
 
      04-12-2011, 08:31 PM
On 4/12/2011 1:43 PM, ihleventhal wrote:
> My daughter, who is currently a high school student, worked as an
> intern for a law firm last summer and made about $2000. The firm sent
> her a 1099-MISC with the income listed in Box 7, non-employee
> compensation. We were doing her tax return with TurboTax and it asked
> her a series of questions about the income, including whether she had
> done this type of work in 2009 (Answer: No) and whether she planned to
> do this type of work in 2001 or 2012 (Answer: No plans at this time).
> Based on her answers, TurboTax classified this as a "one time side-
> job" and listed it as "Other Income". This leads to more favorable tax
> treatment as she doesn't have to pay the self-employment tax, but I'm
> wondering if this is really correct. I've done lots of Googling on
> this topic, and it seems like for similar cases of a summer job with a
> 1099-MISC, almost every post I've seen says that it has to be treated
> as self-employment income. Please let me know if it's OK to consider
> this as "Other Income", as TurboTax is indicating. Thanks!
>

Shame on the law firm! Since an internship is usually an
entry level job requiring close supervision, she most likely
should have been classified as a W-2 employee and not as a
1099 self-employed person. If the lawyers won't fix their
error, follow the guidance here:

http://www.irs.gov/faqs/faq/0,,id=199741,00.html

Employment tax auditors enjoy explaining the law to lawyers
who should know better.

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>
 
Reply With Quote
 
 
 
 
Stuart A. Bronstein
Guest
Posts: n/a
Thanked:
 
      04-12-2011, 09:43 PM
paultry <(E-Mail Removed)> wrote:
> ihleventhal wrote:


>> My daughter, who is currently a high school student, worked as
>> an intern for a law firm last summer and made about $2000. The
>> firm sent her a 1099-MISC with the income listed in Box 7,
>> non-employee compensation.
>>

> Shame on the law firm! Since an internship is usually an
> entry level job requiring close supervision, she most likely
> should have been classified as a W-2 employee and not as a
> 1099 self-employed person. If the lawyers won't fix their
> error, follow the guidance here:
>
> http://www.irs.gov/faqs/faq/0,,id=199741,00.html
>
> Employment tax auditors enjoy explaining the law to lawyers
> who should know better.


While it's mentioned on the webpage Paul linked to, here again for
emphasis is the form to file with the IRS to have them determine
employee status:

http://www.irs.gov/pub/irs-pdf/fss8.pdf

--
Stu
http://DownToEarthLawyer.com

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>
 
Reply With Quote
 
D. Stussy
Guest
Posts: n/a
Thanked:
 
      04-13-2011, 12:04 AM
"paultry" <(E-Mail Removed)> wrote in message
news:io2cq2$51c$(E-Mail Removed)...
> On 4/12/2011 1:43 PM, ihleventhal wrote:
> > My daughter, who is currently a high school student, worked as an
> > intern for a law firm last summer and made about $2000. The firm sent
> > her a 1099-MISC with the income listed in Box 7, non-employee
> > compensation. We were doing her tax return with TurboTax and it asked
> > her a series of questions about the income, including whether she had
> > done this type of work in 2009 (Answer: No) and whether she planned to
> > do this type of work in 2001 or 2012 (Answer: No plans at this time).
> > Based on her answers, TurboTax classified this as a "one time side-
> > job" and listed it as "Other Income". This leads to more favorable tax
> > treatment as she doesn't have to pay the self-employment tax, but I'm
> > wondering if this is really correct. I've done lots of Googling on
> > this topic, and it seems like for similar cases of a summer job with a
> > 1099-MISC, almost every post I've seen says that it has to be treated
> > as self-employment income. Please let me know if it's OK to consider
> > this as "Other Income", as TurboTax is indicating. Thanks!
> >

> Shame on the law firm! Since an internship is usually an
> entry level job requiring close supervision, she most likely
> should have been classified as a W-2 employee and not as a
> 1099 self-employed person. If the lawyers won't fix their
> error, follow the guidance here:
>
> http://www.irs.gov/faqs/faq/0,,id=199741,00.html
>
> Employment tax auditors enjoy explaining the law to lawyers
> who should know better.


Agreed. She was an employee - no doubt here.

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>
 
Reply With Quote
 
ihleventhal
Guest
Posts: n/a
Thanked:
 
      04-13-2011, 01:15 AM
On Apr 12, 5:04*pm, "D. Stussy" <(E-Mail Removed)>
wrote:
> "paultry" <(E-Mail Removed)> wrote in message
>
> news:io2cq2$51c$(E-Mail Removed)...
>
>
>
> > On 4/12/2011 1:43 PM, ihleventhal wrote:
> > > My daughter, who is currently a high school student, worked as an
> > > intern for a law firm last summer and made about $2000. The firm sent
> > > her a 1099-MISC with the income listed in Box 7, non-employee
> > > compensation. We were doing her tax return with TurboTax and it asked
> > > her a series of questions about the income, including whether she had
> > > done this type of work in 2009 (Answer: No) and whether she planned to
> > > do this type of work in 2001 or 2012 (Answer: No plans at this time).
> > > Based on her answers, TurboTax classified this as a "one time side-
> > > job" and listed it as "Other Income". This leads to more favorable tax
> > > treatment as she doesn't have to pay the self-employment tax, but I'm
> > > wondering if this is really correct. I've done lots of Googling on
> > > this topic, and it seems like for similar cases of a summer job with a
> > > 1099-MISC, almost every post I've seen says that it has to be treated
> > > as self-employment income. Please let me know if it's OK to consider
> > > this as "Other Income", as TurboTax is indicating. Thanks!

>
> > Shame on the law firm! *Since an internship is usually an
> > entry level job requiring close supervision, she most likely
> > should have been classified as a W-2 employee and not as a
> > 1099 self-employed person. *If the lawyers won't fix their
> > error, follow the guidance here:

>
> >http://www.irs.gov/faqs/faq/0,,id=199741,00.html

>
> > Employment tax auditors enjoy explaining the law to lawyers
> > who should know better.

>
> Agreed. *She was an employee - no doubt here.


Hi All,

Yes, I agree that my daughter should have been classified as an
employee and given a W-2. However, I don't want to make an issue of
this with them, as she will want to use them as an important
reference.

Therefore, what I want to understand is whether or not TurboTax's
classification of the income as "Other Income" due to it being a "one-
time side-job" is allowable. Thanks!

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>
 
Reply With Quote
 
paultry
Guest
Posts: n/a
Thanked:
 
      04-13-2011, 03:27 AM
On 4/12/2011 8:15 PM, ihleventhal wrote:
> On Apr 12, 5:04 pm, "D. Stussy"<(E-Mail Removed)>
> wrote:
>> "paultry"<(E-Mail Removed)> wrote in message
>>
>> news:io2cq2$51c$(E-Mail Removed)...
>>
>>
>>
>>> On 4/12/2011 1:43 PM, ihleventhal wrote:
>>>> My daughter, who is currently a high school student, worked as an
>>>> intern for a law firm last summer and made about $2000. The firm sent
>>>> her a 1099-MISC with the income listed in Box 7, non-employee
>>>> compensation. We were doing her tax return with TurboTax and it asked
>>>> her a series of questions about the income, including whether she had
>>>> done this type of work in 2009 (Answer: No) and whether she planned to
>>>> do this type of work in 2001 or 2012 (Answer: No plans at this time).
>>>> Based on her answers, TurboTax classified this as a "one time side-
>>>> job" and listed it as "Other Income". This leads to more favorable tax
>>>> treatment as she doesn't have to pay the self-employment tax, but I'm
>>>> wondering if this is really correct. I've done lots of Googling on
>>>> this topic, and it seems like for similar cases of a summer job with a
>>>> 1099-MISC, almost every post I've seen says that it has to be treated
>>>> as self-employment income. Please let me know if it's OK to consider
>>>> this as "Other Income", as TurboTax is indicating. Thanks!

>>
>>> Shame on the law firm! Since an internship is usually an
>>> entry level job requiring close supervision, she most likely
>>> should have been classified as a W-2 employee and not as a
>>> 1099 self-employed person. If the lawyers won't fix their
>>> error, follow the guidance here:

>>
>>> http://www.irs.gov/faqs/faq/0,,id=199741,00.html

>>
>>> Employment tax auditors enjoy explaining the law to lawyers
>>> who should know better.

>>
>> Agreed. She was an employee - no doubt here.

>
> Hi All,
>
> Yes, I agree that my daughter should have been classified as an
> employee and given a W-2. However, I don't want to make an issue of
> this with them, as she will want to use them as an important
> reference.
>
> Therefore, what I want to understand is whether or not TurboTax's
> classification of the income as "Other Income" due to it being a "one-
> time side-job" is allowable. Thanks!
>

Not according to the IRS guidance given in he link I
provided which says, in part:

"Unless you think you were an employee, you report your
non-employee compensation on Form 1040, Schedule C (PDF),
Profit or Loss from Business (Sole Proprietorship), or Form
1040, Schedule C-EZ (PDF), Net Profit from Business:

* You also need to complete Form 1040, Schedule SE
(PDF), Self-Employment Tax, and pay self-employment tax on
your net earnings from self-employment, if you had net
earnings from self-employment of $400 or more."

An expensive way for a young person to learn a tax lesson or
to gain a job reference. It's a sad situation seen
repeatedly in the construction trades. Laborers treated as
independent contractors with no withholding, no matching
FICA, no workers' comp, no unemployment comp, and large
uncollectible tax liens. To complain means loss of job and
income.

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>
 
Reply With Quote
 
D. Stussy
Guest
Posts: n/a
Thanked:
 
      04-13-2011, 03:33 PM
"ihleventhal" <(E-Mail Removed)> wrote in message
news:(E-Mail Removed)...
> On Apr 12, 5:04 pm, "D. Stussy" <(E-Mail Removed)>
> wrote:
> > "paultry" <(E-Mail Removed)> wrote in message
> > news:io2cq2$51c$(E-Mail Removed)...
> > > On 4/12/2011 1:43 PM, ihleventhal wrote:
> > > > My daughter, who is currently a high school student, worked as an
> > > > intern for a law firm last summer and made about $2000. The firm

sent
> > > > her a 1099-MISC with the income listed in Box 7, non-employee
> > > > compensation. We were doing her tax return with TurboTax and it

asked
> > > > her a series of questions about the income, including whether she

had
> > > > done this type of work in 2009 (Answer: No) and whether she planned

to
> > > > do this type of work in 2001 or 2012 (Answer: No plans at this

time).
> > > > Based on her answers, TurboTax classified this as a "one time side-
> > > > job" and listed it as "Other Income". This leads to more favorable

tax
> > > > treatment as she doesn't have to pay the self-employment tax, but

I'm
> > > > wondering if this is really correct. I've done lots of Googling on
> > > > this topic, and it seems like for similar cases of a summer job

with a
> > > > 1099-MISC, almost every post I've seen says that it has to be

treated
> > > > as self-employment income. Please let me know if it's OK to

consider
> > > > this as "Other Income", as TurboTax is indicating. Thanks!

> >
> > > Shame on the law firm! Since an internship is usually an
> > > entry level job requiring close supervision, she most likely
> > > should have been classified as a W-2 employee and not as a
> > > 1099 self-employed person. If the lawyers won't fix their
> > > error, follow the guidance here:

> >
> > >http://www.irs.gov/faqs/faq/0,,id=199741,00.html

> >
> > > Employment tax auditors enjoy explaining the law to lawyers
> > > who should know better.

> >
> > Agreed. She was an employee - no doubt here.

>
> Hi All,
>
> Yes, I agree that my daughter should have been classified as an
> employee and given a W-2. However, I don't want to make an issue of
> this with them, as she will want to use them as an important
> reference.


You WANT [her] to use as a reference a LAW FIRM that can't follow the law?
I think you have larger problems than how to deal with this tax error.

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>
 
Reply With Quote
 
Stuart A. Bronstein
Guest
Posts: n/a
Thanked:
 
      04-13-2011, 03:47 PM
"D. Stussy" <(E-Mail Removed)> wrote:

>> Yes, I agree that my daughter should have been classified as an
>> employee and given a W-2. However, I don't want to make an
>> issue of this with them, as she will want to use them as an
>> important reference.

>
> You WANT [her] to use as a reference a LAW FIRM that can't
> follow the law? I think you have larger problems than how to
> deal with this tax error.


I have to agree with that. If a law firm either doesn't know or
doesn't care enough to comply with federal law, that's not the kind
of recommendation she should want.

--
Stu
http://DownToEarthLawyer.com

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>
 
Reply With Quote
 
Alan
Guest
Posts: n/a
Thanked:
 
      04-13-2011, 09:49 PM
On 4/12/2011 7:15 PM, ihleventhal wrote:
> On Apr 12, 5:04 pm, "D. Stussy"<(E-Mail Removed)>
> wrote:
>> "paultry"<(E-Mail Removed)> wrote in message
>>
>> news:io2cq2$51c$(E-Mail Removed)...
>>
>>
>>
>>> On 4/12/2011 1:43 PM, ihleventhal wrote:
>>>> My daughter, who is currently a high school student, worked as an
>>>> intern for a law firm last summer and made about $2000. The firm sent
>>>> her a 1099-MISC with the income listed in Box 7, non-employee
>>>> compensation. We were doing her tax return with TurboTax and it asked
>>>> her a series of questions about the income, including whether she had
>>>> done this type of work in 2009 (Answer: No) and whether she planned to
>>>> do this type of work in 2001 or 2012 (Answer: No plans at this time).
>>>> Based on her answers, TurboTax classified this as a "one time side-
>>>> job" and listed it as "Other Income". This leads to more favorable tax
>>>> treatment as she doesn't have to pay the self-employment tax, but I'm
>>>> wondering if this is really correct. I've done lots of Googling on
>>>> this topic, and it seems like for similar cases of a summer job with a
>>>> 1099-MISC, almost every post I've seen says that it has to be treated
>>>> as self-employment income. Please let me know if it's OK to consider
>>>> this as "Other Income", as TurboTax is indicating. Thanks!

>>
>>> Shame on the law firm! Since an internship is usually an
>>> entry level job requiring close supervision, she most likely
>>> should have been classified as a W-2 employee and not as a
>>> 1099 self-employed person. If the lawyers won't fix their
>>> error, follow the guidance here:

>>
>>> http://www.irs.gov/faqs/faq/0,,id=199741,00.html

>>
>>> Employment tax auditors enjoy explaining the law to lawyers
>>> who should know better.

>>
>> Agreed. She was an employee - no doubt here.

>
> Hi All,
>
> Yes, I agree that my daughter should have been classified as an
> employee and given a W-2. However, I don't want to make an issue of
> this with them, as she will want to use them as an important
> reference.
>
> Therefore, what I want to understand is whether or not TurboTax's
> classification of the income as "Other Income" due to it being a "one-
> time side-job" is allowable. Thanks!
>

The direct answer to your very specific question is that payment for her
services is taxable compensation, not "Other Income". It goes on either
a Schedule C or C-EZ.

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>
 
Reply With Quote
 
removeps-groups@yahoo.com
Guest
Posts: n/a
Thanked:
 
      04-14-2011, 03:43 AM
On Apr 13, 8:47*am, "Stuart A. Bronstein" <(E-Mail Removed)>
wrote:
> "D. Stussy" <(E-Mail Removed)> wrote:


> >> Yes, I agree that my daughter should have been classified as an
> >> employee and given a W-2. However, I don't want to make an
> >> issue of this with them, as she will want to use them as an
> >> important reference.

>
> > You WANT [her] to use as a reference a LAW FIRM that can't
> > follow the law? I think you have larger problems than how to
> > deal with this tax error.

>
> I have to agree with that. *If a law firm either doesn't know or
> doesn't care enough to comply with federal law, that's not the kind
> of recommendation she should want.


Their decision to not issue a W-2 should not reflect on the rest of
what they do, such as corporate, antitrust, immigration, civil laws,
etc.

Besides, if they issue a W-2 they would just pay less to make up their
portion of social security, FUTA, SDI, etc.

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>
 
Reply With Quote
 
 
 
Reply

Thread Tools

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are On
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
1099-Misc Box 3 or Box 7 Which to use for reporting payment made to instructor w Teri - Massage Practitioner Tax 2 01-20-2013 08:20 PM
Confusion over Form 3922, cost basis, ESPP transfer of stock, box 8(FMV) vs box 5 (price) Aaron FIsher Tax 5 04-03-2012 08:29 PM
Comment Box or description box Gary Microsoft Point Of Sale 1 08-13-2009 02:34 PM
W2 box 1 vs box 3 Y Tax 1 02-23-2009 07:37 PM
Re: how to declare income earned as a contractor? randy Tax 1 04-08-2004 07:05 PM


All times are GMT. The time now is 09:27 AM.
Posts in this forum do not constitute the advice of AccountantForums.com or its members. Financial advice should always be taken from qualified advisors before committing to a financial decision.