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1099 question

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  • Avatar AtYourCervix 
    Participant
    Status: Physician
    Posts: 6
    Joined: 10/29/2018

    So when I started my new job in Aug, I got $10k sign on bonus and $7600 in moving my expenses reimbursed by the hospital I’m affiliated with (not employed by them). I got my 1099-MISC and all it has is the $10k listed in box 3. I was expecting all of it to be listed. Is this normal? Should I expect another 1099 for the moving expenses?

    #188818 Reply
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 7797
    Joined: 01/09/2016

    I’m surprised. That doesn’t relieve you of the obligation to pay taxes on it, however.

    Might want to double-check and ask if you are going to get a W2 for it even though you’re not technically an employee – wouldn’t expect a 2nd 1099. Sounds like someone in accounting is not familiar with the rules for moving expenses.

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~
    http://www.fox-cpas.com/for-doctors-only ~ [email protected]

    #188856 Reply
    Avatar EMPAC623 
    Participant
    Status: Advanced Practice Provider
    Posts: 28
    Joined: 11/15/2018

    If you received a check for $10,000 as your sign on bonus that’s a taxable event to you. But If you set up and had movers move you then sent the hospital the bill for $7,600 and they paid it you aren’t responsible for those taxes as it was never money given to you. Rather they picked up your tab. Now, if you went to them and said hey moving is $7,600 and they said ok and GAVE YOU the money then it’s a taxable event.

    #188952 Reply
    Avatar AtYourCervix 
    Participant
    Status: Physician
    Posts: 6
    Joined: 10/29/2018
    Splash Refinancing Bonus

    I set up and paid for all the moving stuff, then submitted all my receipts to them. They then sent me a check for the total amount. So then it’s not a taxable event for me and I should be good?

    #188969 Reply
    Avatar EMPAC623 
    Participant
    Status: Advanced Practice Provider
    Posts: 28
    Joined: 11/15/2018

    Then that means they paid you $7,600 dollars. Therefore it’s taxable to you. So they need to correct their 1099. If you set up the movers then said hey the hospital is footing the bill and they directly paid then you’d be set

    #188971 Reply
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 7797
    Joined: 01/09/2016

    Then that means they paid you $7,600 dollars. Therefore it’s taxable to you. So they need to correct their 1099. If you set up the movers then said hey the hospital is footing the bill and they directly paid then you’d be set

    Click to expand…

    Actually, no. Even if the payment went directly to the movers, AtYourCervix would still be expected to report as income. Paying an expense on behalf of a contracted worker does not mean the contracted worker receives no benefit.

    I don’t see the need to ask for an amended 1099. Just report it and be done with it. The IRS cross-checks to make sure you don’t under-report. They don’t care if you over-report.

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~
    http://www.fox-cpas.com/for-doctors-only ~ [email protected]

    #188976 Reply
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 7797
    Joined: 01/09/2016

    I set up and paid for all the moving stuff, then submitted all my receipts to them. They then sent me a check for the total amount. So then it’s not a taxable event for me and I should be good?

    Click to expand…

    Yes, it is a taxable event because moving expenses are not deductible (except for military) bg. 2018.

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~
    http://www.fox-cpas.com/for-doctors-only ~ [email protected]

    #188977 Reply
    Liked by Peds
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 7797
    Joined: 01/09/2016
    But If you set up and had movers move you then sent the hospital the bill for $7,600 and they paid it you aren’t responsible for those taxes as it was never money given to you.

    Click to expand…

    This is 100% wrong. So if your employer pays $7,600 on your student loan on your behalf in lieu of a sign on bonus, you don’t owe tax on the benefit? Of course you do, happens all the time. You do not have to receive money in hand to owe taxes on it.

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~
    http://www.fox-cpas.com/for-doctors-only ~ [email protected]

    #188980 Reply
    Avatar EMPAC623 
    Participant
    Status: Advanced Practice Provider
    Posts: 28
    Joined: 11/15/2018

    My hospital CFO and I just had this conversation. He told me if they paid themselves my monthly loan payments since it’s their money I am not taxed on it, but If they give me
    Money to then pay it I am taxed on it

    #188981 Reply
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 7797
    Joined: 01/09/2016

    My hospital CFO and I just had this conversation. He told me if they paid themselves my monthly loan payments since it’s their money I am not taxed on it, but If they give me
    Money to then pay it I am taxed on it

    Click to expand…

    Then you need to share this thread with your hospital CFO. He may know accounting (hopefully) but he sure doesn’t know tax theory.

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~
    http://www.fox-cpas.com/for-doctors-only ~ [email protected]

    #188983 Reply
    Liked by childay
    Avatar AtYourCervix 
    Participant
    Status: Physician
    Posts: 6
    Joined: 10/29/2018

    Thanks for the clarification!

    #188985 Reply
    Avatar EMPAC623 
    Participant
    Status: Advanced Practice Provider
    Posts: 28
    Joined: 11/15/2018

    thank you for this clarification. I just had this conversation last week as Accounts Receivable didnt include my student loans on my 1099, so I had to have them correct it as I was given that money monthly, but the CFO then told me the above that I posted, so I will have to chat with him about the people who “they pay for their loans therefore its not taxable” people.

    #188994 Reply
    Liked by jfoxcpacfp
    Avatar DAK 
    Participant
    Status: Other Professional
    Posts: 20
    Joined: 11/30/2016

    I may have this wrong, but I think an important difference here is that the original poster is not an employee but is a 1099 contractor.  As such, the removal of “unreimbursed employee business expenses” (which would include moving expenses) or treating them as taxable W-2 fringe benefits would not apply.

    However, if the hospital pays you money as an independent contractor (1099), and then you as an independent contractor have legitimate business expenses, those expenses would be deductible.   However, if your client (hospital) pays you for those expenses in addition to other compensation, it should be reported on a 1099.

    On the other hand.  If the hospital pays those expenses (moving costs) directly for someone who is a contractor (not an employee) they would have to send the provider of those services (moving company) a 1099 unless that provider was exempt from that requirement (e.g., a C-corp, or was paid via credit card, etc.)

    So I think it makes a difference whether the poster is a contractor or an employee.  (Note: that the IRS may not care which tax form you receive, but has its own criteria for determining who is an employee and who is a contractor)

    #189067 Reply
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 7797
    Joined: 01/09/2016

    I may have this wrong, but I think an important difference here is that the original poster is not an employee but is a 1099 contractor.  As such, the removal of “unreimbursed employee business expenses” (which would include moving expenses) or treating them as taxable W-2 fringe benefits would not apply.

    However, if the hospital pays you money as an independent contractor (1099), and then you as an independent contractor have legitimate business expenses, those expenses would be deductible.   However, if your client (hospital) pays you for those expenses in addition to other compensation, it should be reported on a 1099.

    On the other hand.  If the hospital pays those expenses (moving costs) directly for someone who is a contractor (not an employee) they would have to send the provider of those services (moving company) a 1099 unless that provider was exempt from that requirement (e.g., a C-corp, or was paid via credit card, etc.)

    So I think it makes a difference whether the poster is a contractor or an employee.  (Note: that the IRS may not care which tax form you receive, but has its own criteria for determining who is an employee and who is a contractor)

    Click to expand…

    I think you make a good point and can see that argument being brought up (and slapped down) in court. However, the payment of moving expenses for a party who is not employed by the hospital is a red flag to me. I suspect that the OP is actually an employee who is simply being paid via 1099 for the convenience of the hospital. I am having a difficult time justifying having an expense paid on his behalf by the hospital justified as a non-taxable benefit. Contracting entities cannot siphon “perks” out to contractees simply to thwart the taxation of said benefits. The fact that the moving company will pay taxes for providing the service is irrelevant.

    Of course, we would probably all be willing to bet a tidy sum that, should the OP simply not report the moving expenses, nothing will ever come of it.

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~
    http://www.fox-cpas.com/for-doctors-only ~ [email protected]

    #189069 Reply
    Avatar AtYourCervix 
    Participant
    Status: Physician
    Posts: 6
    Joined: 10/29/2018

    I am most definitely not an employee of the hospital. I’m employed by a large private practice (an LLC). We take care of our own patients at this hospital and participate in ER call for patients without a community physician. I don’t know how relevant the backstory is but: This hospital reached out to my practice and asked them to take over a failing clinic. In return, they offered to assist in recruiting providers to cover that clinic (e.g. the sign on bonus and moving expense reimbursement paid by them and not my employer). This clinic is no longer their clinic. The only way the hospital is involved is that we’re renting the clinic space from them in their office building. Does that have any relevance in why they may not have included the moving expenses? Or is it still likely just an accounting error?

    #189112 Reply

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