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Thread: IRS / Turbotax Question

  1. #1
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    IRS / Turbotax Question

    So we just got a letter from the IRS claiming we owe them another $400 on our 2010 taxes. The reason, they say, is due to this little $3000 consulting job my wife did (reported on a 1099-MISC). We reported it on our taxes and we were taxed on it. But the IRS is now claiming it constitutes self-employment, meaning we also owe the employer portion of tax on it in addition to the income tax we already paid.

    I have two problems with this:

    First, the IRS seems to be saying that anyone who is not a regular employee getting paid on a regular 1099 counts as both employee AND employer and will be taxed as both. That sounds wicked bogus.

    Second, we completed the return using Turbo Tax which guarantees its returns will be accurate (providing you feed in accurate information, which we did). So even if the IRS's claim is correct, shouldn't Turbo Tax bear some responsibility?

    Has anyone had a similar experience or can offer insight?

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    You would have had to pay for the audit protection...

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    do you mean you are being charged self employment tax?

    I think anything over $400 means you pay SET. I can't imagine TT doesn't know that.
    Last edited by FF2; 05-21-2012 at 10:03 PM.

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    [IMG]http://i2.kym-cdn.com/photos/images/original/000/282/901/fc2.jpg[/IMG]

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    [QUOTE=BushyTheBeaver;4474223]So we just got a letter from the IRS claiming we owe them another $400 on our 2010 taxes. The reason, they say, is due to this little $3000 consulting job my wife did (reported on a 1099-MISC). We reported it on our taxes and we were taxed on it. But the IRS is now claiming it constitutes self-employment, meaning we also owe the employer portion of tax on it in addition to the income tax we already paid.

    I have two problems with this:

    First, the IRS seems to be saying that anyone who is not a regular employee getting paid on a regular 1099 counts as both employee AND employer and will be taxed as both. That sounds wicked bogus.

    Second, we completed the return using Turbo Tax which guarantees its returns will be accurate (providing you feed in accurate information, which we did). So even if the IRS's claim is correct, shouldn't Turbo Tax bear some responsibility?

    Has anyone had a similar experience or can offer insight?[/QUOTE]

    Sorry man, your wife is considered an Independent Contractor and is classified as such if the company paying her does not have her on their payroll. There are many companies that try to get slick and classify as many people as non-employees as possible (IC's) so THEY don't get stuck paying the Double Tax and if they lose their audit, back taxes and penalties can be astronomical. No one wants to pay Double Tax (mostly companies) but I think your wife has to. Just be glad it's not in the 1,000's.....lesson learned.

    Next year have her put that consulting income on a Sched. C or better yet if the income outside of her employment is substantial set up an LLC for her.

  6. #6
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    [QUOTE=BushyTheBeaver;4474223]So we just got a letter from the IRS claiming we owe them another $400 on our 2010 taxes. The reason, they say, is due to this little $3000 consulting job my wife did (reported on a 1099-MISC). We reported it on our taxes and we were taxed on it. But the IRS is now claiming it constitutes self-employment, meaning we also owe the employer portion of tax on it in addition to the income tax we already paid.

    I have two problems with this:

    First, the IRS seems to be saying that anyone who is not a regular employee getting paid on a regular 1099 counts as both employee AND employer and will be taxed as both. That sounds wicked bogus.

    Second, we completed the return using Turbo Tax which guarantees its returns will be accurate (providing you feed in accurate information, which we did). So even if the IRS's claim is correct, shouldn't Turbo Tax bear some responsibility?

    Has anyone had a similar experience or can offer insight?[/QUOTE]


    Arent there any chowds with 'puters up there that can answer this for you?
    Seems odd that a Jets website is the first place you check.


    [QUOTE=FF2;4474230]do you mean you are being charged self employment tax?

    I think anything over $400 means you pay SET. I can't imagine TT doesn't know that.[/QUOTE]

    [QUOTE=AFCEastFan;4474232][IMG]http://i2.kym-cdn.com/photos/images/original/000/282/901/fc2.jpg[/IMG][/QUOTE]


    Er, nevermind.


    :rolleyes:





















    :alien:


    -

  7. #7
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    [QUOTE=32green;4474288]Arent there any chowds with 'puters up there that can answer this for you?
    Seems odd that a Jets website is the first place you check.
    -[/QUOTE]

    You think chowds know **** about paying taxes? :huh:

    On the other hand, the subject o' not paying taxes, I figure there's at least a few folks in White Plains who have ideas on the matter. :yes:

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    [QUOTE=BushyTheBeaver;4474296]
    On the other hand, the subject o' not paying taxes, I figure there's at least a few folks in White Plains who have ideas on the matter. :yes:[/QUOTE]

    You're on the wrong forum for the WP folks. That's the GInsider forum. This is the other side of the tracks, the polk salad group.

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    [QUOTE=BushyTheBeaver;4474223]So we just got a letter from the IRS claiming we owe them another $400 on our 2010 taxes. The reason, they say, is due to this little $3000 consulting job my wife did (reported on a 1099-MISC). We reported it on our taxes and we were taxed on it. But the IRS is now claiming it constitutes self-employment, meaning we also owe the employer portion of tax on it in addition to the income tax we already paid.

    I have two problems with this:

    First, the IRS seems to be saying that anyone who is not a regular employee getting paid on a regular 1099 counts as both employee AND employer and will be taxed as both. That sounds wicked bogus.

    Second, we completed the return using Turbo Tax which guarantees its returns will be accurate (providing you feed in accurate information, which we did). So even if the IRS's claim is correct, shouldn't Turbo Tax bear some responsibility?

    Has anyone had a similar experience or can offer insight?[/QUOTE]

    You may have also violated Obamacare. Did your wife the employer provide insurance to your wife the employee? If not, did your wife the employee provide proof of insurance to your wife the employer?

  10. #10
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    [QUOTE=BushyTheBeaver;4474223]So we just got a letter from the IRS claiming we owe them another $400 on our 2010 taxes. The reason, they say, is due to this little $3000 consulting job my wife did (reported on a 1099-MISC). We reported it on our taxes and we were taxed on it. But the IRS is now claiming it constitutes self-employment, meaning we also owe the employer portion of tax on it in addition to the income tax we already paid.

    I have two problems with this:

    First, the IRS seems to be saying that anyone who is not a regular employee getting paid on a regular 1099 counts as both employee AND employer and will be taxed as both. That sounds wicked bogus.

    Second, we completed the return using Turbo Tax which guarantees its returns will be accurate (providing you feed in accurate information, which we did). So even if the IRS's claim is correct, shouldn't Turbo Tax bear some responsibility?

    Has anyone had a similar experience or can offer insight?[/QUOTE]


    Here's the deal as a person whose wife did this stuff. If she was an "outside supplier" if fact she will be taxed as an employer and employee. However, some of that is deductable on the first page of your tax return.
    Also, expenses can be applied against her earnings. Gas, insurance etc, etc.he list is endless. Depreciation.
    Recommend you contact southparkcpa on JI here. He's an expert. Do not despair!!

  11. #11
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    [QUOTE=BushyTheBeaver;4474223]So we just got a letter from the IRS claiming we owe them another $400 on our 2010 taxes. The reason, they say, is due to this little $3000 consulting job my wife did (reported on a 1099-MISC). We reported it on our taxes and we were taxed on it. But the IRS is now claiming it constitutes self-employment, meaning we also owe the employer portion of tax on it in addition to the income tax we already paid.

    I have two problems with this:

    First, the IRS seems to be saying that anyone who is not a regular employee getting paid on a regular 1099 counts as both employee AND employer and will be taxed as both. That sounds wicked bogus.

    Second, we completed the return using Turbo Tax which guarantees its returns will be accurate (providing you feed in accurate information, which we did). So even if the IRS's claim is correct, shouldn't Turbo Tax bear some responsibility?

    Has anyone had a similar experience or can offer insight?[/QUOTE]

    Welcome to the cruel world of income taxes.

    The income notice, probably a CP2000? Is unfortunately correct. You SHOULD HAVE put the $3,000 on a schedule C-EZ or schedule C, then taken legitimate and allowable expenses directly against it such as some cell phone, auto, etc...

    THAT would have netted the income down to say $2,000 which would have been taxable for both income and SE tax BUT total tax would be lower tah what you ultimately paid.

    My advice...pay the $400 and suck it up, filing an amended return would not be cost effective.

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