How to handdle a 1099-misc and a Schedule C


L

lurker

First year as a sole proprietor, Tax ID is my SS number.

One of my customers sent me a 1099-MISC for my services.

The income is already invoiced and paid in QuickBooks.

How do I handle the double income?

Thanks.

Carl
 
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P

Paul Thomas, CPA

lurker said:
First year as a sole proprietor, Tax ID is my SS number.

One of my customers sent me a 1099-MISC for my services.

The income is already invoiced and paid in QuickBooks.

How do I handle the double income?


It's not double income. You report on Schedule C all of the income you
receive, and deduct on Schedule C all of your business related expenses. As
long as the total of your gross revenues matches of exceeds the reported
1099's that get sent to the IRS, then you have no worries.
 
L

lurker

It's not double income. You report on Schedule C all of the income you
receive, and deduct on Schedule C all of your business related expenses. As
long as the total of your gross revenues matches of exceeds the reported
1099's that get sent to the IRS, then you have no worries.
Then why does it increase my income taxes, State and federal?

It is $688 in 1099-misc box 7.

I see the invoices that were paid as income for the business in Schedule
C. The profit from Schedule-C goes to my 1040 line Line 5.

The 1099-misc goes to 1040 line 1

1040 line 1 and line 5 are income.

This makes me wonder about the business that sent me the form. It seems
the invoices I sent them became deductible expenses when they made out a
check to pay them.

The total of those checks became deductible again when they file the
1099-Misc, box 7. Is that right?

Carl
 
L

lurker

lurker said:
Then why does it increase my income taxes, State and federal?

It is $688 in 1099-misc box 7.

I see the invoices that were paid as income for the business in Schedule
C. The profit from Schedule-C goes to my 1040 line Line 5.

The 1099-misc goes to 1040 line 1

1040 line 1 and line 5 are income.

This makes me wonder about the business that sent me the form. It seems
the invoices I sent them became deductible expenses when they made out a
check to pay them.

The total of those checks became deductible again when they file the
1099-Misc, box 7. Is that right?

Carl
Oops, correction (1040-line 1 should be line 12)
It came from Schedule C Profit or loss + The 1099. According to tax
software.

Carl
 
L

lurker

lurker said:
First year as a sole proprietor, Tax ID is my SS number.

One of my customers sent me a 1099-MISC for my services.

The income is already invoiced and paid in QuickBooks.

How do I handle the double income?

Thanks.

Carl

Okay, Now I have it.

I called the IRS and got my head straightened out.

The 1099-misc issued by the business is backed up by the checks they
wrote to me, and the only time they are deducted from their expenses.

The 1099-misc that I received, I do not enter into the tax program
because I already have the income information reflected on 1040 Line 12.

I did not realize that a 1099-misc is not an item submitted with your
tax forms. All the IRS computers looks for is sensible (in context with
other forms received) on 1040 line 12.

Carl
 
P

Paul Thomas

lurker said:
Then why does it increase my income taxes, State and federal?

Because you entered it twice.


It is $688 in 1099-misc box 7.
If you already included it in your revenue totals, forget about it.

I see the invoices that were paid as income for the business in Schedule
C. The profit from Schedule-C goes to my 1040 line Line 5.

The 1099-misc goes to 1040 line 1
No it doesn't.


This makes me wonder about the business that sent me the form. It seems
the invoices I sent them became deductible expenses when they made out a
check to pay them.

The total of those checks became deductible again when they file the
1099-Misc, box 7. Is that right?

No. You claim it once as income.

They deduct it once as an expense.

The 1099 is just a reporting tool.
 
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Phil Marti

lurker said:
First year as a sole proprietor, Tax ID is my SS number.

One of my customers sent me a 1099-MISC for my services.

The income is already invoiced and paid in QuickBooks.

How do I handle the double income?
No offense meant to you and Quick Books, and I hope none taken. You need an
accountant yesterday, because you clearly have no idea what you're doing.

Your time will be much more productive if you devote it to what you are good
at, making money in your business, and leave the taxes to someone who knows
what (s)he's doing.
 
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Nathan Liskov

If you include some of your 1099-MISC income in your schedule C
income, then it does not hurt to attach a supplemental schedule to
your schedule C to list the 1099-MISCs that were included in Schedule
C rather than reported in the 1040 form directly.

This will avoid questions by the IRS on where the missing 1099-MISC
income is reported.

Nate Liskov
 

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