Hello, I live in California. I did some work for my father last fall, on his house in Nevada. I was compensated for that work for $2000, plus the airfare. I need to reflect that income as 1099 income from him. If he issues me a 1099 for that income what must he do on his end, if anything, to reflect that he hired me, and compensated me, and is issuing it? And, is there any financial implications to him of issuing that 1099 to me for the payment he made to me for those services rendered? Does he have to pay anything to anyone on behalf of that payment made to me as 1099 work?

I very much appreciate your feedback on this.

Thank you.

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Originally Posted by cj07

Hello, I live in California. I did some work for my father last fall, on his house in Nevada. I was compensated for that work for $2000, plus the airfare. I need to reflect that income as 1099 income from him. If he issues me a 1099 for that income what must he do on his end, if anything, to reflect that he hired me, and compensated me, and is issuing it? And, is there any financial implications to him of issuing that 1099 to me for the payment he made to me for those services rendered? Does he have to pay anything to anyone on behalf of that payment made to me as 1099 work?

I very much appreciate your feedback on this.

Thank you.

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There is a form for persons to show that they compensated another party during the tax year. It is a short form that is used for those persons that did not issue a W-2. It's red and white (forgive me I don't recall the number) I've only had to use it once three years ago. Go to Internal Revenue Service and enter small business or business expenses for the search and you can print it from the website. Your father will file a copy and you will file a copy of his form as your W-2. Hope this helps.

I applaud you and your father for being honest and reporting the income. By law, the IRS says that you must issue a 1099-Misc to any contractor that you paid unless it is a corporation that does the work. The advantage to your father if he has a company, is that he has the documentation required to expense the $2000 as contract labor. You on the other hand will have to pay self-employment tax on it. Basically this is all of the Social Security and Medicare that an employer would normally hold from your paycheck PLUS the half that an employer would normally pay if you had a paycheck. As self-employed, you pay both halves. Plus Federal Income Tax.

Mobea hit the nail on the head once again! :-)