Updated March 18, 2011 at 8:59 AM; Posted March 18, 2011 at 8:32 AM
Question from Bonnie
March 17, 2011 at 1:33pm
Loaned an agent money. Booked as an agent accounts receivable with payments actuality deducted from paycheck.
Employee abdicate or was concluded and the debt has apperceive become uncollectible ( not forgiven).
If we address it off as a bad debt, do we charge to accelerate a 1099.
Answer: Bonnie – In attractive at your catechism I advised the instructions for Forms 1099 C and Misc.
The instructions for Anatomy 1099 C explain the following:
File Anatomy 1099-C if you are:
A banking academy declared in area 581 or 591(a) (such as a calm bank, assurance company, architecture and accommodation or accumulation and accommodation association).
A acclaim union.
Any of the following, its successor, or subunit of one of the following:
Federal Deposit Allowance Corporation,
Resolution Assurance Corporation,
National Acclaim Abutment Administration,
Any added federal controlling agency, including government corporations,
Any aggressive department,
U.S. Postal Service, or
Postal Rate Commission.
A association that is a accessory of a banking academy or acclaim union, but alone if, because of your affiliation, you are accountable to administration and assay by a federal or accompaniment authoritative agency.
A federal government bureau including:
A cloister or cloister authoritative office, or
An action in the administrative or aldermanic annex of the government.
Any alignment whose cogent barter or business is the lending of money, such as a accounts aggregation or acclaim agenda aggregation (whether or not affiliated with a banking institution). The lending of money is a cogent barter or business if money is lent on a approved and continuing basis.
Based on what you accept declared you would not affair a Anatomy 1099 C.
The instructions for Anatomy 1099 Misc state:
File Anatomy 1099-MISC, Miscellaneous Income, for anniversary being to whom you accept paid during the year:
At atomic $10 in royalties (see Box 2 on folio 4) or agent payments in lieu of assets or tax-exempt absorption (see Box 8 on folio 7);
At atomic $600 in rents, casework (including genitalia and materials), prizes and awards, added assets payments, medical and bloom affliction payments, crop allowance proceeds, banknote payments for angle (or added amphibian life) you acquirement from anyone affianced in the barter or business of communicable fish, or, generally, the banknote paid from a abstract arch arrangement to an individual, partnership, or estate;
Any fishing baiter proceeds; or
Gross gain of $600 or added paid to an attorney
In addition, use Anatomy 1099-MISC to address that you fabricated absolute sales of at atomic $5,000 of customer articles to a client for resale anywhere added than a abiding retail establishment. You charge additionally book Anatomy 1099-MISC for anniversary being from whom you accept withheld any federal assets tax beneath the advancement denial rules behindhand of the bulk of the payment.
Given that the accommodation was from an employer to an employee, it does not arise that arising a Anatomy 1099 Misc is appropriate.
Usually back there is an accustomed employer/employee relationship, around annihilation of amount the agent receives from the employer is compensation.
Based on the advice provided, the accommodation takes the anatomy of an beforehand and is agent compensation. A Anatomy W-2 would be the adapted anatomy to issue.
Need tax help? Accelerate in your tax questions to Richard Panick, IRS media relations specialist.
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