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Posted by beckkl on March 4, 2008, 1:10 pm
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Last year I did not report 7K or 1099-Misc earnings, as the earnings
were in 2007, and the company that gave me the 1099 counted them in
2006. I adjusted, and am counting this 7k in earnings in 2007. Was
that a no-no? Should I have asked for a new 1099 instead? The IRS
sent a not saying I owe the ~2K in taxes now and $115 in interest.
I'm thinking I should just pay it and be done, since the cost is only
$115. Does agreeing with their judgment hurt me in any way?
-beckkl
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Posted by Paul Thomas, CPA on March 4, 2008, 2:02 pm
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> Last year I did not report 7K or 1099-Misc earnings, as the earnings
> were in 2007, and the company that gave me the 1099 counted them in
> 2006. I adjusted, and am counting this 7k in earnings in 2007. Was
> that a no-no? Should I have asked for a new 1099 instead? The IRS
> sent a not saying I owe the ~2K in taxes now and $115 in interest.
> I'm thinking I should just pay it and be done, since the cost is only
> $115. Does agreeing with their judgment hurt me in any way?
As a cash basis taxpayer (which you most likely are), your income is
correctly reported in the year received. If you received it in 2007, then
report it in 2007.
Your customer - probably a cash basis taxpayer, and wanting to show the
expense in 2006 - dated the check for 2006 and issued you a 1099
accordingly.
Tell the IRS the money was received IN 2007 (attach a copy of the deposit
slip, and/or get a copy of the deposit from the bank as supporting
documentation) and that you correctly reported the income in the year in
which you received it.
They should leave you alone after that.
Unfortunately this happens all too often.
--
Paul A. Thomas, CPA
Athens, Georgia
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<< ------------------------------------------------------- >>
<< 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 Phil Marti on March 4, 2008, 2:12 pm
Please log in for more thread options "beckkl" wrote:
> Last year I did not report 7K or 1099-Misc earnings, as the earnings
> were in 2007, and the company that gave me the 1099 counted them in
> 2006. I adjusted, and am counting this 7k in earnings in 2007. Was
> that a no-no?
No, assuming your contention that it was 2007 income is valid.
> Should I have asked for a new 1099 instead?
No, assuming the company's 2006 designation was valid. For example, the
company mails a payment December 31, 2006. It's a 2006 payment from the
company's perspective. You don't receive the payment until 1/2/2007. It's
2007 income from your perspective.
> The IRS
> sent a not saying I owe the ~2K in taxes now and $115 in interest.
> I'm thinking I should just pay it and be done, since the cost is only
> $115. Does agreeing with their judgment hurt me in any way?
You mean other than costing you $115 you don't owe and maybe giving the IRS
computers the idea that you're a little lax with your income reporting
rather than doing things right?
Can't think of anything.
Myself, I'd write back explaining why it's 2007 income.
--
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 Ron Rosenfeld on March 4, 2008, 4:26 pm
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>Last year I did not report 7K or 1099-Misc earnings, as the earnings
>were in 2007, and the company that gave me the 1099 counted them in
>2006. I adjusted, and am counting this 7k in earnings in 2007. Was
>that a no-no?
The last time I had that sort of problem, I called the IRS (at the phone
number shown on their notice) and, over the telephone, explained the facts
regarding when I had constructive receipt of the funds.
The person I spoke with took care of everything over the phone, and there
were no further repercussions.
--ron
--
<< ------------------------------------------------------- >>
<< 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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