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Subject Author Date
1099 - Misc for auto expense reimbursement SMF 02-20-2008
Posted by SMF on February 20, 2008, 5:48 pm
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 We got a 1099-Misc with $5000 in Box 3 Other Income. This was a
reimbursement for auto expenses of an employee. I understand how to
deduct the employee expenses on Sch A but not sure if the $5000 goes
on Other Income Line 21 on the front of my 1040. Someone said it had
to go on Sch C. Advice? They reimburse at the fed 48.5 We loose out
with the limitation on Sch A where it goes. IF it somehow went on Sch
C it would be a wash.

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Posted by Phil Marti on February 20, 2008, 6:28 pm
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 "SMF" wrote:

> We got a 1099-Misc with $5000 in Box 3 Other Income. This was a
> reimbursement for auto expenses of an employee.

It was incorrect. The $5,000 should have been included in Box 1 wages of
the W-2. I'll be charitable and say that the employer is confused, but
there's also the chance that the employer is trying to avoid the employer's
share of FICA and Medicare (and perhaps FUTA).

If the employer won't correct the W-2, do the following:

1. Include the $5,000 with wages on line 7 of the 1040.

2. File Form 8919 with your 1040 to calculate and pay the employee's share
of FICA/Medicare.

--
Phil Marti
Clarksburg, MD

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
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Posted by D. Stussy on February 20, 2008, 11:29 pm
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> > We got a 1099-Misc with $5000 in Box 3 Other Income. This was a
> > reimbursement for auto expenses of an employee.
>
> It was incorrect. The $5,000 should have been included in Box 1 wages of
> the W-2. I'll be charitable and say that the employer is confused, but
> there's also the chance that the employer is trying to avoid the
employer's
> share of FICA and Medicare (and perhaps FUTA).
>
> If the employer won't correct the W-2, do the following:
>
> 1. Include the $5,000 with wages on line 7 of the 1040.
>
> 2. File Form 8919 with your 1040 to calculate and pay the employee's
share
> of FICA/Medicare.

If this year's from 2106 (Line 7 - I haven't done one of those in a while)
has a line for employer reimbursement, that's really where it should go.
Form 8919 would be applicable to the extent there was EXCESS reimbursement.
That does produce a different (lower) answer of tax due.

You should file the form 2106 even if you DON'T have a Schedule A - because
it has to show the reimbursement.

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by Phil Marti on February 21, 2008, 1:45 am
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"D. Stussy" wrote:

> If this year's from 2106 (Line 7 - I haven't done one of those in a while)
> has a line for employer reimbursement, that's really where it should go.
> Form 8919 would be applicable to the extent there was EXCESS
> reimbursement.
> That does produce a different (lower) answer of tax due.

I disagree. What you are talking about would be the treatment of excess
payments under an accountable plan.

>From facts in the OP we are apparently talking about a nonaccountable
reimbursement plan. All payments to the employee are fully taxable as wages
and reported on the W-2 ( Pub 15). The employee is stuck will the Schedule
A employee business expense deduction.
--
Phil Marti
Clarksburg, MD

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by D. Stussy on February 21, 2008, 9:33 pm
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> "D. Stussy" wrote:
> > If this year's from 2106 (Line 7 - I haven't done one of those in a
while)
> > has a line for employer reimbursement, that's really where it should go.
> > Form 8919 would be applicable to the extent there was EXCESS
> > reimbursement.
> > That does produce a different (lower) answer of tax due.
>
> I disagree. What you are talking about would be the treatment of excess
> payments under an accountable plan.

Perhaps so, but the form doesn't make that distinction. All is says is
include the amount NOT reported on box 1 of form W-2. Reimbursement on a
1099 is NOT on the form W-2. Maybe that's not supposed to happen, but
following the instructions still puts it on the 2106.

> >From facts in the OP we are apparently talking about a nonaccountable
> reimbursement plan. All payments to the employee are fully taxable as
wages
> and reported on the W-2 ( Pub 15). The employee is stuck will the
Schedule
> A employee business expense deduction.

Which would work if it were reported via a W-2. It wasn't. The employer,
by omittng it from box 1 of the W-2, isn't saying that it's a
non-accountable plan.

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

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