Question

I got a 1099 form from the IRS what does that mean?

The form says my previous employer reported I made extra 1600 and now I owed the IRS 400 dollars, I don't understand this form, I usually file my tax whenever I get it and this form says nonemployee compensation, what does this mean and why didn't my previous employer report the whole income that I made that year and why did they report this extra 1600 to the IRS now? What does nonemployee compensation mean?

4 years ago - 5 answers

Best Answer

Chosen by Asker

Look at the 1099-MISC that you have in your very carefully at the top left of the form box PAYER’S name, street address, city, state, ZIP code, and telephone no.
That will be where the 1099-MISC form came from if you do have a 1099-MISC form in your hand.
If you happen to have a notice or letter in your hand about some unreported income from the IRS then you have an error on your original filed 1040 income tax return for the tax year and you will have to file a 1040X Amended individual income tax return in order to correct the error that was made on the original filed income tax return and pay any income taxes that may be due when the return is completed correctly signed and mailed to the correct IRS address.
All forms and instruction can be found at the www.irs.gov website using the search box

4 years ago

Other Answers

We don't know. YOU'RE the one with the documents. The IRS does not generate 1099s - someone else submitted the 1099 TO the IRS. It would appear that you had some self-employment income that you failed to include on your tax return - that's what "nonemployee" compensation means.

by Caveat Emptor - 4 years ago

Techinically, this was not your "previous employer." Employers issue W-2s, not 1099-Misc forms.

"Non-employee" comensation means that the money was paid in a work context, but not to an employee. To the IRS's eyes, it triggers the 15.3% tax.

If your employer issued you both a W-2 *and* a 1099-Misc, they screwed up. They were supposed to put everything they paid you on a W-2 and ensure that the 15.3% fica/mc was paid. Since they didn't, the IRS is expecting you to pay the 15.3% for them. (That's $226 of the $400.) The extra income is also subject to income tax...and penalties and interest.

While you can call the old employer and ask what the money is for, you are kind of stuck. You can fight this out with the IRS using form 8919 and SS-8, but that will only save you $104.

by the tax lady - 4 years ago

Ah, the mysterious 1099 MISC form. I wish I had a nickel for every time someone asked me about that. I'm going to answer your questions in reverse order, I think it will make more sense that way.

First, non-employee compensation means that you did work for the company as an independent contractor. Maybe you did some freelance work for them before they actually hired you--that's one possibility. I had another case where a woman worked for a government agency and she received a W2 for her job. But--part of her work was funded by as special grant and they paid her for that as a 1099 employee. She now keeps really good records of which part of her job is what, but that was kind of strange. Normally, you don't get a W2 and a 1099 non-employee compensation from the same company-but it can happen.

Now if you get the 1099 MISC for non-employee compensation, that is automatically considered by the IRS to be self employment--in which case you are taxed for 15.3% for your self employment taxes PLUS tax at your regular rate.

What you can do: First, make sure the income really is yours. Since you did receive W2 income from the employer, go ahead and ask about the 1099. I've worked on a few returns where the company sending the 1099 made a mistake (it's rare, but it does happen.) Second, assuming that the income is yours and you were supposed to claim it, look to see if you have any job expenses against that income. We often have job expenses for our W2 jobs that we can never write off because there are so many other pieces to the puzzle--but, with Schedule C income (which is what you've got there) you can write off your expenses directly against the income. That would reduce the amount of extra tax you pay.

I've attached two links, one about contract labor and one about claiming business expenses.

Source(s)

by Jan - 4 years ago

apparently you did not report this $1600(and you didn't get a 1099 from IRS, you got a CP2000 probably reporting the missing 1099)
if you worked for the same employer and had a previous 1099 from him you probably need to contact him and find out why there is an additional $1600 that you were not aware of
nonemployee compensation means you were paid as an independent contractor, should have filed Sch C on that income etc.
you may have reported your income on Line 7, wages, and they were not

by tro - 4 years ago