[cmddjd]

Can an employer still claim a 1099 contractor if he paid them less than 600 dollars in a given year and does the contractor have to report the 1099 as income on his taxes if he receives on and it is less than 600 dollars?

[ebaines]

First, please clarify what you mean by "can an employer still claim a 1099 contractor." I don't understand what you're asking.

Second, yes, if you are required to file taxes then you must report all 1099 income that you receive. If the $600 is your only source of income for the year then it is unlikely that you are required to file. If you need further info on whether you are required to file, post back.

[AtlantaTaxExpert]

I think he is asking is whether an employer can deduct an a deductible expense the money paid to a contractor if it is less than $600, the threshold amount for generating a Form 1099-MISC.

The answer is yes; it IS deductible.

[cmddjd]

I posted an answer because I needed more space to be clearer... thanks for all the enlightening! I really appreciate it!!

[cmddjd]

I posted an answer because I needed more space to be clearer... thanks for all the enlightening! I really appreciate it!!

[cmddjd]

I am working as a general contract employee on the side - moonlighting you might say. At my full time job I receive a W-2). It is a very short assignment and I will make approximately 540.00. Question #1: Am I required to report this income to the IRS on taxes if this employer sends me a 1099? Question #2: Am I required to report this income to the IRS on my taxes is this employer does NOT send me a 1099? And finally question #3: If the employer does NOT send me a 1099, does he still get to claim the 540.00 as a deduction on his taxes?

[AtlantaTaxExpert]

#1 & #2: Yes, you ARE required to report the income even if no Form 1099-MISC is generated. You would use Form 1040 or, if you are a non-resident alien, Form 1040NR, with Schedule C.

#3: Yes, he does. It is a legitimate personnel expense for him.

[cmddjd]

Im sorry Im such and idiot on this topic and thanks so much for your help. I thought you did not have to claim a 1099 if it was less than 600.00 if they did not 1099 you? Is this a myth or because I have other income to claim?

[cmddjd]

Also, does this mean I have to pay / file self employment tax on 550.00? That seems ludicrous to me...

[AtlantaTaxExpert]

Many people think that they do not have to report the income if it is not reported on Form 1099-MISC. That is NOT what the Internal Revenue Code says.

However, as a practical matter, the IRS will have NO WAY OF KNOWING you earned the molney if there is no Form 1099.

Further, once you factor in routine deductions claimed on the Schedule C for expenses incurred in the earning of the money, the Schedule C will likely show an amount LESS than $400, at which point you are NOT liable for self-employment tax.