Adding up 1099nec and 1099misc box 6 income for clients

Software. Marketing. Training. Running your business.
#1
Posts:
2611
Joined:
24-Jan-2019 2:16pm
Location:
North Shore, Oahu
What do you do in this case?

A client provides a list of categorized expenses, but provides no total gross proceeds number.

Instead, they give you several 1099s only.

I personally will not accept this because I have no way to know if:

1) There is any cash income
2) There is any income that has not been reported on a 1099 (either less than $600 or no 1099 provided as is sometimes the case with s and c corps)
3) If there is additional co-pay income
4) If there is additional income form the sale of products such as supplements for a chiropractor, just for example
5) I am not engaged for bookkeeping with the client and I do not verify or reconcile their proceeds via bank statements
6) I have no way to know if the 1099s are correct, complete, or have been corrected

I email the client with a quick and polite canned response explaining why I can't simply add them up and include my own result, and I ask them to provide "one" total gross proceeds number for the activity.

Do you think I am being a PITA? Too careful?
 

#2
Posts:
6043
Joined:
22-Apr-2014 3:06pm
Location:
WA State
I ask simply: Do the 1099s report all the income you received during the year? Are there any other income payments we need to account for?
If the reply is a credible 'yes', then I move on.

I have several realtors and landlords who fall into this category. I don't spend a lot of time verifying gross income when I have 1099s.
~Captcook
 

#3
Posts:
8155
Joined:
4-Mar-2018 9:03pm
Location:
The Office
I also don't have a problem with this. Some of my clients do it. I confirm in writing that they have not received any other income during the year other than what is reflected on the provided 1099s, and save their response as support in the file.

You'll waste more time (and likely frustrate them) trying to get them to jump through your hoops than by just pulling out a 10 key and adding up a few 1099s.
 

#4
CathysTaxes  
Moderator
Posts:
3557
Joined:
21-Apr-2014 9:41am
Location:
Suburb of Chicago
I always enter the 1099s in my tax software let it total them. I ask for any other income they received. Some fools deposit checks that were below 1099 threshold and think it's free money. I remind them that they must report it. If they start spinning tales I tell them I can't complete the return unless I see their bank statements.
Cathy
CathysTaxes
 

#5
NYCCPA  
Posts:
196
Joined:
23-Apr-2021 5:11pm
Location:
NY
Is it our job as the tax preparer to audit what the client provides? Add up the darn 1099s. Draft an email to the client "Dear Mr/Ms. Client that wants me to work harder than I would like, the total of the 1099s you provided is $xx,xxx, is this representative of the total income you received for year 20XX? Was there any income you received that was not reported to you on 1099s for 20XX? Simple yet effective.
 

#6
Frankly  
Moderator
Posts:
2455
Joined:
21-Apr-2014 9:08am
Location:
California
"Dear Client,
If we add 10% will that be enough to cover cash income, product sales, and other income for which you don't have a 1099?"
 

#7
sjrcpa  
Posts:
6475
Joined:
23-Apr-2014 5:27pm
Location:
Maryland
Then you're using an estimate. I would prefer the client to answer the question.

NYCCPA wrote:Was there any income you received that was not reported to you on 1099s for 20XX? Simple yet effective.
 

#8
Beagle  
Posts:
189
Joined:
16-Jan-2020 3:15pm
Location:
Freelander
NYCCPA wrote:Is it our job as the tax preparer to audit what the client provides? Add up the darn 1099s. Draft an email to the client "Dear Mr/Ms. Client that wants me to work harder than I would like, the total of the 1099s you provided is $xx,xxx, is this representative of the total income you received for year 20XX? Was there any income you received that was not reported to you on 1099s for 20XX? Simple yet effective.



Our job is only to inform them of possible penalties and interest that the IRS may assess on under reported income. It is not our job to verify their income and expenses or audit their bank accounts for potential under reported income.
 


Return to Business Operations and Development



Who is online

Users browsing this forum: Frankly and 25 guests