Help: Self Employ. Tax on Race Purses - Page 2

GTX JOHN · 05-21-2012, 06:43 PM

My son Jon does not file a Schedule A as he is does not itemize and just take a Std. Deduction. It looks like he will file C EZ and have to show the income BUT
NOT show any expenses at all period (NO Schedule. A). He will have to SE taxes on all earnings from the racing since they are all 1099. The racetrackshow " Compensated Non Employee".

Andys dad · 05-21-2012, 07:21 PM

Be careful what you say on here

The IRS is watching

Ron

Julie Jordan · 05-21-2012, 07:25 PM

John ~ As we discussed on the phone, just because the 1099 was issued in error does not mean it changes the composition of the income to your son. Race winnings should be reported in box 3 of the 1099 (prizes & awards), rather than box 7 (non-employee compensation, which would be for services rendered). An entry in box 3 means the income is not subject to SE tax. An entry in box 7 leads the IRS to believe the income is SE income.

When a racer gets their 1099's at year-end they should review them. If they are issued incorrectly, they should contact the payor and request a corrected one (I know, good luck in getting that done, right? But stranger things have happened!)

When doing your returns, report the income on Form 1040, line 21. Report it as "hobby winnings", "prizes and awards", etc., anything that will indicate to IRS that the 1099 is not for services rendered.

05-21-2012, 06:43 PM	#11
GTX JOHN VIP Member Join Date: Jun 2009 Location: Boulder City, Nevada 89005 Posts: 2,733 Likes: 2,799 Liked 2,483 Times in 697 Posts	Re: Help: Self Employ. Tax on Race Purses My son Jon does not file a Schedule A as he is does not itemize and just take a Std. Deduction. It looks like he will file C EZ and have to show the income BUT NOT show any expenses at all period (NO Schedule. A). He will have to SE taxes on all earnings from the racing since they are all 1099. The racetrackshow " Compensated Non Employee".

05-21-2012, 07:21 PM	#12
Andys dad VIP Member Join Date: Aug 2006 Location: Arcadia, Ca Posts: 1,571 Likes: 48 Liked 175 Times in 78 Posts	Re: Help: Self Employ. Tax on Race Purses Be careful what you say on here The IRS is watching Ron __________________ time is our most precious resource, you can always make more money but you can never make more time spend your time wisely with the ones you love - Ron Durham

05-21-2012, 07:25 PM	#13
Julie Jordan Senior Member Join Date: Dec 2001 Location: Modesto, CA Posts: 639 Likes: 90 Liked 547 Times in 94 Posts	Re: Help: Self Employ. Tax on Race Purses John ~ As we discussed on the phone, just because the 1099 was issued in error does not mean it changes the composition of the income to your son. Race winnings should be reported in box 3 of the 1099 (prizes & awards), rather than box 7 (non-employee compensation, which would be for services rendered). An entry in box 3 means the income is not subject to SE tax. An entry in box 7 leads the IRS to believe the income is SE income. When a racer gets their 1099's at year-end they should review them. If they are issued incorrectly, they should contact the payor and request a corrected one (I know, good luck in getting that done, right? But stranger things have happened!) When doing your returns, report the income on Form 1040, line 21. Report it as "hobby winnings", "prizes and awards", etc., anything that will indicate to IRS that the 1099 is not for services rendered. __________________ Julie Jordan 7549 STK