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Old 02-05-2015, 06:32 PM
 
Location: Denver
1,149 posts, read 988,812 times
Reputation: 1445

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My 2012 return got IRS's attention somehow.
I had two 1099's in that year along with W2 from regular job.

IRS letter mentioned that I missed to submit $8K 1099 from employer#2 and to pay taxes on the $8k from that employer which is around $4600. I don't know how that came up that high but anyways...

I checked the amount they have as what I reported and noticed it has all $20k for employer#1 instead of $12k for that and the other $8k for the missing employer#2.

So I replied explaining that the total of $20k includes both employer's income along with 1099 copies and that should be the end of it.

Today, I got another letter from IRS and this is where it gets weird.
This letter now correctly divides $12k and $8k between those two employers and shows difference between what I reported and what IRS received from employer is 0 but then they added 'Self Employment Tax' of $2k plus interest for me to pay.
If they agree on the amount mentioned in the initial letter of missing payment, how in the hell they added other tax?

They reported missing income, I replied, they agreed and that should be as if it never was an issue but now I'm supposed to pay $2,100.

What the hell am I supposed to do?
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Old 02-05-2015, 06:45 PM
 
Location: I am right here.
4,914 posts, read 4,073,264 times
Reputation: 15540
Quote:
Originally Posted by Mystery123 View Post

What the hell am I supposed to do?
See your accountant. That's what they are paid for.
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Old 02-05-2015, 07:51 PM
 
Location: Denver
1,149 posts, read 988,812 times
Reputation: 1445
Quote:
Originally Posted by PeachSalsa View Post
See your accountant. That's what they are paid for.
I always filed myself.
Maybe need to do a review with a professional then.
Hmm...
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Old 02-05-2015, 08:11 PM
 
Location: I am right here.
4,914 posts, read 4,073,264 times
Reputation: 15540
Quote:
Originally Posted by Mystery123 View Post
I always filed myself.
Maybe need to do a review with a professional then.
Hmm...
See, I've ALWAYS used an accountant - 25+ years with the same guy. He's been well worth the investment and peace of mind.
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Old 02-05-2015, 08:30 PM
 
Location: The Berk in Denver, CO USA
14,047 posts, read 20,382,028 times
Reputation: 22834
Quote:
Originally Posted by PeachSalsa View Post
25+ years with the same guy. He's been well worth the investment and peace of mind.
Duh!
34 years with the same family firm for me: Barker Financial Services.
Started with father, now on to the son. Good news: there are grandchildren.
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Old 02-05-2015, 09:03 PM
 
Location: Denver CO
21,189 posts, read 11,814,728 times
Reputation: 32206
Did you pay self employment tax on that income in 2012? If not, then you owe it and it was just a fluke that your return got flagged for one thing but then they ended up spotting another issue. If you paid SE tax, then send proof of your payments or reference where what you owed was included on the return. You can pay an accountant if you want, but SE tax is a very standard thing and if you didn't pay it, you owe it. And if you have 1099 income from employment in other years that you have paid SE tax on, you should file amended returns before they catch those too. You can work out a payment plan to pay over time if you need to.
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Old 02-05-2015, 09:14 PM
 
Location: Washington Park, Denver
6,964 posts, read 6,573,338 times
Reputation: 7492
Quote:
Originally Posted by Mystery123 View Post
I always filed myself.
Maybe need to do a review with a professional then.
Hmm...
If you're being audited and you are not getting the result you desire, it's time to bring in someone who does this for a living.
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Old 02-05-2015, 09:15 PM
 
Location: mancos
7,180 posts, read 6,474,997 times
Reputation: 4949
Iget several1099's a year and never seen the irs break them up into 1 2 etc. I just add them up see if they match my invoices and file.You don't need to hire anyone to do simple math unless you went to college. double check and write them back if you were honest you will be fine. BOO!
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Old 02-05-2015, 10:27 PM
 
Location: Denver
1,149 posts, read 988,812 times
Reputation: 1445
Thanks for comments.
Here is the thing.
I don't own a business.
I work as a software programmer.
Those two 1099 were like this:
1. $12k was from a small coding project that I did in the weekends for few months for a company who needed some additional help finishing their project in time so they paid me in 1099.
2. $8k was a 1099 payment from a consulting company as a kind of bonus.

So I never filed self employment tax as these projects were in between and not my full time job.
What I did is added those two 1099's with all the W2's, bank interest etc... in tax return as suggested by the Turbotax or Taxcut (one of them) and that DID increase the overall income and tax accordingly so it's not like I didn't pay tax on the 1099 incomes.
I remember the tax before those 1099's were something like $4k that I had to pay to IRS and after I added that $20k, I paid $12k.
So $8k additional tax for $20k 1099 because that $20k took overall income to higher bracket.
I even paid $50 or something as late tax payment that Turbotax calculated for 1099 as I was supposed to pay tax quarterly or something.
But the thing is it's not my business and it doesn't go all year so there is no way I can pay pretax so have to lump sum all income in the end.
I have done that before that as well and after but never had self employment tax issue until yet.

I do those projects very rarely.
Sometimes one or two in a year and then no projects for years.
Last year (2014), I had two small projects.
One was one day training that I was paid $500 and another was I think around $700.
So how do I pay self employment tax on that $1200 now?
This year in 2015 and here on in the future, there will be no projects at all as I'm not doing those anymore and focusing on the full time job.
Looks like it's my turn to have a bad luck with IRS.
You have to deal with them at least once in your lifetime I guess.

Quote:
Originally Posted by emm74 View Post
Did you pay self employment tax on that income in 2012? If not, then you owe it and it was just a fluke that your return got flagged for one thing but then they ended up spotting another issue. If you paid SE tax, then send proof of your payments or reference where what you owed was included on the return. You can pay an accountant if you want, but SE tax is a very standard thing and if you didn't pay it, you owe it. And if you have 1099 income from employment in other years that you have paid SE tax on, you should file amended returns before they catch those too. You can work out a payment plan to pay over time if you need to.
That may be true.
I'll have to read on self employment tax.
Still seems off as I paid correct income tax on the 1099's with my overall income and now they are asking over $2k.
May be that's for SS and Medicare as income tax is paid but those were not paid in 1099?
:S

Last edited by Mystery123; 02-05-2015 at 10:43 PM..
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Old 02-05-2015, 11:35 PM
 
Location: Denver
1,149 posts, read 988,812 times
Reputation: 1445
Quote:
Originally Posted by parfleche View Post
Iget several1099's a year and never seen the irs break them up into 1 2 etc. I just add them up see if they match my invoices and file.You don't need to hire anyone to do simple math unless you went to college. double check and write them back if you were honest you will be fine. BOO!
I have always reported everything correctly.
Don't know how the amount got to one employer as I remember that I entered them separately with each employer's federal tax id.
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