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    spkendrick's Avatar
    spkendrick Posts: 5, Reputation: 1
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    #1

    Aug 22, 2013, 03:23 AM
    1099-misc box 7 entered as wages and tips
    I had a company file my taxes and they entered my 1099-misc (box 7) as wages and tips (line 7) on my 1040. I was told that 1099 box 7 had to be entered on a schedule C or something like that.


    Is this the correct way to list it ? I was told that it wasn't.
    joypulv's Avatar
    joypulv Posts: 21,591, Reputation: 2941
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    #2

    Aug 22, 2013, 03:53 AM
    You are correct. Go back to the tax preparer and make them file an amended return for free.
    spkendrick's Avatar
    spkendrick Posts: 5, Reputation: 1
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    #3

    Aug 22, 2013, 04:00 AM
    LOL, thank you.

    Is it going to make a difference in the tax I owe or my refund if its switched from wages and tips to schedule C? And not that you would know but why would they do it like this?
    joypulv's Avatar
    joypulv Posts: 21,591, Reputation: 2941
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    #4

    Aug 22, 2013, 04:18 AM
    Someone was rushing and made a mistake or they hired someone unqualified to know what to do.
    Yes, you will owe more tax. Leaving you with a dilemma - let it go and hope you don't hear from the IRS? It can take the IRS 2 years sometimes to find a mistake. Then you go back to the preparer and make them correct it, but you still have to pay the tax. You can hold them liable for any penalties and interest.
    I think I'd go back now, demand that they not only correct it but also give you your fee back for the incovenience.

    What was the dollar amount in the 1099?
    spkendrick's Avatar
    spkendrick Posts: 5, Reputation: 1
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    #5

    Aug 22, 2013, 04:26 AM
    25471
    ebaines's Avatar
    ebaines Posts: 12,131, Reputation: 1307
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    #6

    Aug 22, 2013, 06:02 AM
    I agree that you should file an amended return to fix the mistake. The good news is that moving the income from line 7 to schedule C of your 1040 should not result in any additional income taxes being owed. In fact, since you are an independent contractor you may be able to deduct business-related expenses - things like equipment, supplies, and other expenses necessary for your business - so you may actually end up with a smaller income tax bill than was calculated originally. However, the bad news is that if the tax preparer neglected to include self-employment taxes on your original return you will have to pay them now, and given the late filing there will be some interest owed as well.
    spkendrick's Avatar
    spkendrick Posts: 5, Reputation: 1
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    #7

    Aug 22, 2013, 06:06 AM
    WOW... this is a mess. I was going to leave it how it was, but I am buying a house and I think the mortgage company would have a problem with it.

    They asked for my W2's and I told them I had 1099s so then they asked for my schedule C... and I don't have one and this is how I found out that I had a problem.
    joypulv's Avatar
    joypulv Posts: 21,591, Reputation: 2941
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    #8

    Aug 22, 2013, 06:44 AM
    Who in the world did your tax return? I thought this might be 1,000, not 25,000.
    I suspect that you will owe, especially with SE (self-employment tax) and if you can't cook up some deductions on Sch C.
    Download both forms from IRS.gov.
    Try to come up with about 5K in deductions, and come back for help with that after you read the line items.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
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    #9

    Aug 22, 2013, 07:45 AM
    You need to find a competent tax professional to amend you return and properly prepare the Schedules C and SE. Do NOT do it yourself.

    If you want my professional help, email,me at the email address in my profile.
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