AboutMike Wellman Expertise I was a former Manager with Price Waterhouse, now PricewaterhouseCoopers, the largest accounting firm in the world. I have had clients in almost every industry and of every size.
I will only answer questions dealing with IRS problems such as delinquent tax returns, Offers in Compromise (Tax Settlement), IRS collection matters including installment agreements, liens, levies, seizures, audits, appeals, innocent spouse claims and injured spouse claims. All other will be referred to the question pool.
Experience Over 25 years experience in taxation specializing in IRS collections, examinations and appeals.
Publications New York Times, Wall Street Journal, Your Money.
Education/Credentials BBA, Baylor University.
Awards and Honors IRSOS.com won the Knowledgeweb award for educational excellence for content.
Expert: Mike Wellman Date: 12/19/2007 Subject: Letter from IRS ref 1099 MISC
Question QUESTION: I rec'd a letter stating that I did not report $27158.00 1099 MISC income from a employer. I did receive a W2 from him for some wages. The company went out of buisness when I was let go, so I had no recourse contact them to verify amounts regarding my W2 and if a 1099 was pending? how does this play out with the IRS . They say I owe now $13,000.00 to include $2300,00 of penalties and interest?I guess the employewr sent them the W2 and 1099.
What can I do?
ANSWER: If you had expenses associated with the $27,158 in income then you should complete a Schedule C and attach it to your response so you only get taxed on your net income. If you had no expenses then what they calculate will be correct. They will assess additional tax and bill you for it. If you are unable to pay, you can set up an installment agreement to pay it off over time.
Whether you should have been sent a 1099 is another question. You may have grounds to argue that it was really wages and pay a lot less tax. You would owe the tax but not the self-employment tax. However, when companies go out of business, there is often a lot of confusion and innocent people left holding the bag.
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QUESTION: What are typical expenses I can include on Schedule C?
Auto Expense (car payment)since I did travel with the job
Cellphone
Desk/ Computer, Printer supplies
Gas/Mileage??
Answer Those are all valid depending on what your job was. There could be others. Mileage to and from work is not deductible but if you drove to job sites or client offices - that mileage is deductible. Your car payment is covered by the standard mileage rate.
Some expenses would be all deductible - others based on the business use only.
