If your Gross Income was less than $58,000 you are qualified for Free Federal Tax Filing

File your Federal Taxes for Free with TurboTax Federal FREE Edition

Go Back   Tax Forum - Payroll, Accounting and Tax Help Forum > Individual Tax Forums > Business Income Tax Forum

Sponsored Links

Post New Thread  Reply
 
Thread Tools Display Modes

Sponsored Links

Old 02-08-2012, 04:28 PM   #1
LordX
Junior Member
 
Join Date: Feb 2012
Posts: 4
Rep Power: 0LordX is on a distinguished road
Read. Ask. Learn.
1099-MISC I received INCLUDED sales tax as my compensation!

Registered users do not see advertisement
I run a computer repair business in NY state.

When I do service calls for the general public - I collect sales tax.

When I do independent contracting (for companies like OnForce) I collect no sales tax of course because the end user isn't paying for the services - and then when I get my 1099-misc form from OnForce it includes my compensation.

This year I did work for a local business. I charged them sales tax on all services and parts.

They sent me a 1099-misc with my Non-employment compensation as the TOTAL amount they paid me including sales tax.

How can I file this and remove the sales tax? Obviously I dont want to pay income tax on money that is not mine.

This company has already sent their copy of the 1099 form to the IRS.
LordX is offline   Reply With Quote
Sponsored Links

Old 02-09-2012, 08:43 AM   #2
Juno
Senior Member
 
Join Date: Oct 2012
Posts: 2,620
Rep Power: 0Juno is on a distinguished road
Read. Ask. Learn.
“How can I file this and remove the sales tax? Obviously I dont want to pay income tax on money that is not mine.”----> If you can't get them to correct the 1099, then report it as income. You may report the whole amount on Box 7 1099 Form on your Sch C line 1b and also report(deduct) the sales tax on Sch C line 23. The best approach is not to include this on the 1099-Misc. This is because your client did not directly charge you for this amount. Thus, you would only include on the 1099-Misc amounts that your client charged you and the Sales taxes associated with particular client would be deducted as a separate line item deduction on your business tax return or on Schedule C if your an unincorporated business.You ALSO contact the IRS and advise that the 1099 is not correct, or send a detailed letter/statement to the IRS.
Juno is offline   Reply With Quote
Old 02-09-2012, 11:51 AM   #3
Trailman
Senior Member
 
Join Date: Mar 2011
Location: NY
Posts: 389
Rep Power: 4Trailman is on a distinguished road
Read. Ask. Learn.
Do not contact the IRS about this or include a statement about it with your return. The 1099-MISC is correct.

Report the gross amount received as income and deduct the sales tax paid as a separate line item. In this manner you will not be paying tax on the sales tax amount.
Trailman is offline   Reply With Quote
Old 02-09-2012, 02:35 PM   #4
skier_j
Moderator
 
Join Date: Sep 2008
Posts: 2,283
Rep Power: 8skier_j is on a distinguished road
Read. Ask. Learn.
I'd add that your information on your return should be backed up by your sales records, on the income side, and disbursement records on the deduction side. It is very unlikely that you (or any other business) will ever receive any of the various forms of form 1099 that add up to EXACTLY what your revenue sources were. It is your responsibility to make your return with ALL your revenue....not just that which is supported...correctly or not...by the receipt of a 1099.
skier_j is offline   Reply With Quote
Old 02-09-2012, 07:18 PM   #5
LordX
Junior Member
 
Join Date: Feb 2012
Posts: 4
Rep Power: 0LordX is on a distinguished road
Read. Ask. Learn.
Thank you all for the responses.

I guess my only question then is this:

Does anyone know where to put this sales tax deduction in Turbotax?

I have turbotax home and business 2011 - and I dont see anywhere on its pages where I would include the sales tax I paid on the 1099.
LordX is offline   Reply With Quote
Old 02-09-2012, 07:57 PM   #6
skier_j
Moderator
 
Join Date: Sep 2008
Posts: 2,283
Rep Power: 8skier_j is on a distinguished road
Read. Ask. Learn.
If you use your revenue records, which would imnclude the sales dollars (without tax) it goes no where because it doesn;'t belong on the tax return as a deduction at all.

You simply have a reconciling item IF it ever comes up. .
skier_j is offline   Reply With Quote
Old 02-09-2012, 08:17 PM   #7
LordX
Junior Member
 
Join Date: Feb 2012
Posts: 4
Rep Power: 0LordX is on a distinguished road
Read. Ask. Learn.
You will have to forgive me, I am very limited in my tax knowledge.

"If you use your revenue records, which would imnclude the sales dollars (without tax)"

I use those (my records) to report my income (without sales tax) - and the 1099's I receive for actual sub-contracting work (which dont have sales tax on them because sales tax never comes into play with them).

Since this ONE 1099 INCLUDES my sales tax - how can I avoid paying income tax on it? You said: "it goes no where because it doesn;'t belong on the tax return as a deduction at all."

So if I dont treat it as a deduction - how do I treat it in a program like Turbotax?
LordX is offline   Reply With Quote
Old 02-09-2012, 08:45 PM   #8
skier_j
Moderator
 
Join Date: Sep 2008
Posts: 2,283
Rep Power: 8skier_j is on a distinguished road
Read. Ask. Learn.
Quote:
Originally Posted by LordX View Post
You will have to forgive me, I am very limited in my tax knowledge.

"If you use your revenue records, which would imnclude the sales dollars (without tax)"

I use those (my records) to report my income (without sales tax) - and the 1099's I receive for actual sub-contracting work (which dont have sales tax on them because sales tax never comes into play with them).

Since this ONE 1099 INCLUDES my sales tax - how can I avoid paying income tax on it? You said: "it goes no where because it doesn;'t belong on the tax return as a deduction at all."

So if I dont treat it as a deduction - how do I treat it in a program like Turbotax?
One last time. Report your sales from your sales documents, cash register tapes, abacus, pencil and paper, excel worksheet what ever you use to keep track of all your sales.

Forget that 1099 it really does not mean anything at all if your sales records already include the sales transaction that is reported by the 1099.

And one more time...should the issue EVER get raised...you simply present to the examiner the documents that total up to the 1099 and point out that you recorded X as sales and paid the tax collected over to the state.

Done
skier_j is offline   Reply With Quote
Old 02-09-2012, 10:06 PM   #9
LordX
Junior Member
 
Join Date: Feb 2012
Posts: 4
Rep Power: 0LordX is on a distinguished road
Read. Ask. Learn.
Excellent. Thank you for the concise answer.

I apologize for the need to be hand-held.
LordX is offline   Reply With Quote
Disclaimer
While you may find opinions of forum members useful, they don't take the place of professional legal advice. TaxForum.us suggests that you find professional legal help for all your legal questions since every situation is different and depends on your state tax laws.

The information presented on this site comes without any warranty of correctness and, therefore, should not to be relied upon as professional advice. No attorney client relationship is created through use of this site.
Post New Thread  Reply


Special Offers
Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

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

Forum Jump


All times are GMT. The time now is 02:32 AM.


Join TaxForum.us
tax calculator

Free Tax Help® Version 3.8.4
Copyright ©2000 - 2014, Jelsoft Enterprises Ltd.




Approved TurboTax Affiliate Site
TurboTax and TurboTax Online, among others, are registered trademarks and/or service marks of Intuit Inc. in the United States and other countries. Other parties' trademarks or service marks are the property of the respective owners.
vRewrite 1.5 beta SEOed URLs completed by Tech Help Forum and Chalo Na.