Question

1099-MISC

Forum|Forum|6 years ago
February 24, 2020
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The owner of our company sold a portion if his business to another agency. He decided to give employees over a period of time a portion of proceeds. He gave the employees a 1099-Misc issued under his company name not agencies. Last year I reported this under the 1099-Misc. This year I received another 1099-Misc form and when I try to enter this now it does not fill out under this section but automatically goes under the business section. I do not have a business or self-employed. How do I report this?

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Anonymous

The owner of our company sold a portion if his business to another agency. He decided to give employees over a period of time a portion of proceeds. He gave the employees a 1099-Misc issued under his company name not agencies.

if the IRS were to audit the company, I believe they would treat it as employee compensation and not a payment to an independent contractor or some other form of income. this poses tax problems for both the business and for you. the company could be hit with significant penalties, interest and the taxes for failure to withhold and pay in payroll taxes. for you, the issue is how to report this since it should be on your W-2 and not a 1099. the safest course for you is to report it as self-employment income even though you don't have a business. it is virtually impossible for an employer to pay amounts to employees that isn't considered compensation. the one exception is the employer has an accountable plan but this only covers employee reimbursements when they submit documentation for business expenses they incur.