How do I split 1099-K across two partners?

Forum|Forum|2 years ago
January 17, 2024
4 replies
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My collaborator and I have a facilitation business together. We're both sole proprietors. I received the 1099-K through Stripe for the total amount -- it's under my name. My collaborator files her taxes quarterly. I'm filing annually. How do I ensure that I only pay taxes on my half of the 1099K? Thank you !

VolvoGirl

Employee

First of all you probably should be filing a partnership return. But for your Schedule C you need to enter the full amount and then put her half under Contract Labor. And give her a 1099NEC for it.

Vanessa A

You can enter the 1099-K on your return, then you can issue your collaborator a 1099-NEC then report the amount you issue to her as a business expense under contractor labor. This will remove the income from your return. You can issue the 1099-NEC through this TurboTax link.

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charleyj21Author

Thanks for your help. I was also researching other questions on the TurboTax site and came across this example - https://ttlc.intuit.com/community/investments-and-rental-properties/discussion/full-1099-k-but-we-only-are-1-3-owners/01/2706090#M90713

Can you help me understand why it makes sense to pursue the NEC route, rather than the approach detailed here?

charleyj21Author

One follow up - I've been paying my collaborator along the way. Does that change your suggestion at all? (Apologies for all of the questions and thanks for your patience with me -- I'm new to this)

VolvoGirl

Employee

And by the way, she is paying estimated payments quarterly. She still files an annual return like the rest of us. You should also be sending in quarterly estimated payments.

Turbo Tax guide to Estimated taxes

A Guide to Paying Quarterly Taxes - TurboTax Tax Tips & Videos

You must make quarterly estimated tax payments for the current tax year if both of the following apply:

- 1. You expect to owe at least $1,000 in tax for the current tax year, after subtracting your withholding and credits.

- 2. You expect your withholding and credits to be less than the smaller of:

90% of the tax to be shown on your current year’s tax return, or

100% of the tax shown on your prior year’s tax return. (Your prior year tax return must cover all 12 months).

Turbo Tax can figure the estimates and print out the 1040ES forms to pay. Or you can pay them directly on the IRS website

AmeliesUncle

@charleyj21 wrote:
have a facilitation business together.

The definitely sounds like a Partnership, rather than two sole proprietorships. I recommend you consult a good tax professional (that is experienced with Partnerships) about this situation.