Recording a 1099-Misc income twice

David43 · ‎April 14, 2020

When I started working for a client, I was not incorporated. I incorporated before I finished the work and received payment for it. They sent me a 1099-Misc statement. The income that I received was recorded in QBDT as income and was part of the income reported with my 1120S form.

How do I report the 1099-Misc or do I need to?

I'm worried that if I don't report it to IRS, they will think that I am trying to hide the income, yet it is recorded as part of the corporate income.

Thank you,

David

john-pero · ‎April 15, 2020

There is nothing you need do at your end - other than ensure that any payments reported on 1099s are in fact recorded in your books. Do you want to report the issuers for issuing unnecessary forms? (they could be penalized and would then stop doing business with you) If you were an LLC instead and the 1099s came in to your personal tax ID you could issue a replacement or pass through on your own but since your corporation is exempt there is no need for this.

You could ask the client to submit a corrected 1099 which would be in effect to cancel the one issued but I do not know the procedure for that but someone else does https://smallbusiness.chron.com/voiding-1099misc-80923.html

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MaryLandT · ‎April 14, 2020

Thank you for contacting us, David43.

Your client should submit your 1099-Misc to the IRS. And, the statement you've received is your copy.

That being said, there isn't a need to report it again to your 1099 in QuickBooks Desktop. This is to avoid duplicate returns to the IRS.

Check out the Prepare and file 1099s article for your guidance on the next filing return. It provides detailed steps and screenshots.

Stay in touch if there's anything else you need. I'm always around to help you out.

David43 · ‎April 15, 2020

Hi MaryLandT,

I had been operating as a sole proprietor providing electronic engineering and computer consulting for a couple of years before I incorporated.

The project I was working on for a client took about a month to complete. During that time is when I incorporated (S-Corp) and opened up new corporate bank accounts and added my s-corp to QuickBooks.

Since I was a sole proprietor when I started the project, my client issued a 1099 to me (with my social security number) for the work. I deposited the payment for the work into my corporate bank account and recorded the income as consulting income into QuickBooks.

I am concerned that IRS received the 1099 from my client (with my social security number as opposed to my FEIN) and that I did not report the 1099 with my personal income tax return because the income was already included in my schedule K1.

Something like this happened to me when I was operating as a sole proprietor. I received a notice from IRS after I filed my taxes stating that I did not pay the taxes on the 1099 income, yet the business income reported on my schedule C included that income. They did accept my explanation and dropped the issue, but it required a telephone call and quite a bit of my time to resolve.

I think that I am not understanding how I need to process 1099's that I might receive from clients (some will issue them even if I am a corporation).

Thank you,

David

john-pero · ‎April 15, 2020

There is nothing you need do at your end - other than ensure that any payments reported on 1099s are in fact recorded in your books. Do you want to report the issuers for issuing unnecessary forms? (they could be penalized and would then stop doing business with you) If you were an LLC instead and the 1099s came in to your personal tax ID you could issue a replacement or pass through on your own but since your corporation is exempt there is no need for this.

You could ask the client to submit a corrected 1099 which would be in effect to cancel the one issued but I do not know the procedure for that but someone else does https://smallbusiness.chron.com/voiding-1099misc-80923.html

David43 · ‎April 15, 2020

Thank you John-Pero,

The 1099 was issued in good faith since they did not know at the time I was incorporated.

Thanks again and regards,

David

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Recording a 1099-Misc income twice