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Topic: 1099 issue
| Author | Message |
| pamelabeth | Posted – 10/15/2007 8:10:05 PM | show profile i'm a freelancer. my accountant, in going over some of my records, noticed that there seemed to be a problem regarding a client's 1099 form to me from several years ago--namely, they seem to have claimed that they paid me more than they actually did pay. i called them, very apologetic (obviously i should have noticed and settled this long ago), and asked if i could see copies of the checks they issued me from that year. they said no can do--checks are in storage, who knows where. but they did send a list of each check they have a record of having paid me, when, and for how much. my accountant was right. 2 of the checks they said they issued, i have no personal or bank record of having deposited, anywhere near the dates they said those checks were issued. i went over this with my bank; no record of deposits of those amounts. i got back to the client, explained the situation, and asked for a corrected 1099. no reply. i need to have this settled. other than a corrected tax form, they also have the option of *paying* me the money they said they paid (though i don't recall that that money actually was owed to me). otherwise, i've paid taxes on money i did not get--unacceptable. i think i've done everything i can on my end. this magazine is in another state, not close; so going to the office and speaking about this face to face isn't an option. now what? p.s. freelancers, don't let this happen to you. review every tax form against your own records, every year. paying taxes is one thing; paying taxes on money that was not received is another. |
| dribbledrive1 | Posted – 10/15/2007 9:44:39 PM | show profile Incorrect 1099s are not uncommon. You should, as you now know, check this each tax year. The first thing you need to do is be absolutely sure you weren't paid. I don't know what you do in a case like this where the 1099 is years old, but your accountant can surely guide you in the proper steps. |
| pamelabeth | Posted – 10/15/2007 10:00:07 PM | show profile making sure the client sent me the list of every check they claim to have issued me that year, for how much, and when they issued it. some of those amounts matched exactly to deposits i made around those dates that were on my bank statements, so that was easy to verify. for the rest, i found (after a month of looking) someone at my bank who was able to call up my specific-check deposit records (as opposed to lump-sum deposits) from that year. i gave him every amount and every date that they'd given me. of the nine checks they say they issued, seven matched bank records of my specific-check deposits. two were nowhere to be found. if there's anything else i can do from my end, i don't know what it is...? my acountant said, "go to their office." she doesn't know how to force them to find my cancelled checks in storage, or even to communicate with me; and unfortunately, neither do i. |
| Marie | Posted – 10/16/2007 12:39:44 AM | show profile You can always claim corrections on future tax returns. I would just pay the taxes on what your records say you should owe, according to what your records show the company paid you, regardless of what the oompany has reported on your 1099. This will only become relevant in the event of an audit. Your bank seems to back you up. So I would just make an adjustment on a future return, and in the event of an audit, your bank records should support you. This is probably not very helpful, but that's what I would do. Your bank records show your income from that company, regardless of what the company has reported. |
| dribbledrive1 | Posted – 10/16/2007 12:51:47 AM | show profile How much money/taxes we talking about here? |
| mkelly | Posted – 10/16/2007 9:02:29 AM | show profile You've learned this the hard way, but the lesson all freelancers should follow is this: a spreadsheet for each fiscal year of your business, with a separate worksheet for each client, listing every assignment, due date, contracted rate, and confirmation of check received. Update this spreadsheet every time you have a check, so you can track all discrepancies as they occur. |
| chucho | Posted – 10/16/2007 9:18:50 AM | show profile Is it possible that they reimbursed you for expenses by giving you one check that represented your pay and your reimbursement? (They shouldn't do that and freelancers should insist that the reimbursement check and the check for the actual contract are separate disbursements.) In any case there is a procedure for disputing inaccuracies. I would gather what information you have, go to IRS online, and follow the instructions. PS: A little advice when dealing with the IRS: do everything by mail so you have a paper record. Resolving matters over the phone -- as the IRS often advises you to do -- means you have not practical way of logging all interactions and communications with the IRS in case you need to prove something. IT slows the process down, but that's not actually a bad thing. I have dealt with the IRS in disputing a former employer who categorized me as a "freelancer" even though I was getting a salaried paycheck (and other evidences of being a f/t employee). BY dealing with the IRS by mail I found the IRS was incompetent and simply kept sending me a form reply asking me to call. Each time I would write back expalining that I had already submitted my dispute, all the paperwork, etc, and that they need toinvestigate and make a decisision, and that I wanted all communication with paper. Then another form response would arrive. I repeated this process until the statute of limitations ran out. The irony of this is in fact the IRS owed me for FICA I shouldn't have had to pay. But in any case I decided the FICA payment would apply to my social security later in life so I just let it go. But, yeah, generally you should pay first and dispute later. The IRS has a nasty way of assuming your guilty until you can prove your innocence, and will rack up late fees and interest on money "owed" and consider you in default EVEN IF you are in the right. I know this is impractical for those who may not have the money. But oh well, it's the supply-side favoritism that the everyone voted for so deal with it. (For example, the IRS disproportionally audits lower income people more than the super rich and corporations because the super rich and corporations are considered employers that are good for the economy (and they can buy legislation, such as making corporations "entites") so they get a privileged position in the eyes of the IRS. Any freelancer who disputes this claim of mine has probably never tried to get money from a company that has filed for bankruptcy and watched the "secured lenders" (banks, hedge fund investors, personal friends/investors of the owner) cut in line in front of you to get their money first. But I digress :) |
| dribbledrive1 | Posted – 10/16/2007 12:28:46 PM | show profile I just use Quicken,, and I log expense and income by payer. At the end of the year, I just have Quicken total how much I got from each payer and check that against their 1099s. It's a little easier than having a bunch of separate worksheets, and makes income tax preparation pretty easy. --You've learned this the hard way, but the lesson all freelancers should follow is this: a spreadsheet for each fiscal year of your business, with a separate worksheet for each client, listing every assignment, due date, contracted rate, and confirmation of check received. Update this spreadsheet every time you have a check, so you can track all discrepancies as they occur.-- |
| bjoconnorfla | Posted – 10/16/2007 1:30:06 PM | show profile If it's been more than three years, I don't think you can amend your tax return. If that's the case, it might not be worth your time to pursue it. Just keep on the client to give you a correctd 1099 if you do pursue it. You may need to reach out to an editor or someone who can help you find a way around the bookkeeping folks, who obivously are not interested in your problem. |
| pamelabeth | Posted – 10/16/2007 3:41:01 PM | show profile i'm just under the time limit for correcting this; but if they continue to delay, i'll be over it. i think i'm gonna send them a record of the deposits i *did* make during the one-month period when they say they issued me the two "phantom" checks--explaining (again) that none of those deposits reflect those checks. the amount they say they paid--and so, the amount i paid taxes on without receiving--is not outrageously huge, but it's not tiny. and the principle of the thing means a lot to me. i've worked hard for this client over a number of years and have always done good work--even when they paid me late; even when they were disorganized. they owe me the effort necessary to resolve this issue. i could involve an editor at the mag, but--their editorial office is in one city, their finance office in another. |
| dribbledrive1 | Posted – 10/16/2007 4:05:00 PM | show profile Personally, I'd probably try to get someone from accounting on the phone and eat a piece of humble pie: "I know I made a mistake in not catching this earlier, but you guys made a mistake on your 1099 as well. I know it's not your fault personally, and it's a big bother to find the checks and redo this, but can you please help me? It's bad enough to pay taxes, but imagine paying six hundred dollars in taxes you don't owe. Can you please help me?" I think you need to really find someone and appeal to their humanity, because the people in their accounting department don't care about the good work you've done for their editorial side. |
| pamelabeth | Posted – 10/16/2007 5:46:00 PM | show profile good suggestion. i already apologized for the inconvenience of it all and for being behind on spotting a problem; but i will apologize more and try to get them to put themselves in my shoes. thing is, they don't stand to gain anything $-wise by helping me. they'll only remain as they were or lose; and meanwhile i'm asking for effort on their part. it seems the finance office is thinking, "what's in it for us to do this?" if they don't consider this an integral part of their job, then i don't have a good answer to that question. |
