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Old 11-06-2015, 04:54 PM
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Paid in advance for 2016 earnings... don't know what to do!

Hello!

I have an awkward situation. I am a 1099 assistant to someone who has paid me well into 2016 (through July). If I keep the money, my taxes will be outrageous, and also this affects my healthcare credit, causing me to overpay there as well. I don't know how to rectify the situation. It's quite alarming!

Thank you for your help!




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Old 11-06-2015, 08:10 PM
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Quote:
Originally Posted by ozzy12 View Post
Hello!

I have an awkward situation. I am a 1099 assistant to someone who has paid me well into 2016 (through July). If I keep the money, my taxes will be outrageous, and also this affects my healthcare credit, causing me to overpay there as well. I don't know how to rectify the situation. It's quite alarming!

Thank you for your help!

You need to report your income on your 2015 return; Advance income received is reported in the tax year in which you receive it .
I do not think you are a deferral/accrual method taxpayer; In certain circumstances, tax law allows accrual-method taxpayers to defer inclusion of payments received in one tax year if attributable to services to be performed by the end of the next. However, taxpayers and the IRS frequently disagree about whether advance payments are for services, nonservices or a mixture of both. Payments for nonservices and certain mixtures of services and nonservices do not qualify for deferral . Generally, a taxpayer that wants to change its treatment of advance payments to either the full-inclusion or deferral method may obtain automatic consent from the IRS.



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Old 11-08-2015, 11:05 AM
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Can I return the income?

Hello and thank you!

Is there a way for me to return the income this year to my boss so I don't have to claim it as it was not really earned?

Thank you!



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Old 11-08-2015, 02:25 PM
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Quote:
Originally Posted by ozzy12 View Post
Hello and thank you!

Is there a way for me to return the income this year to my boss so I don't have to claim it as it was not really earned?

Thank you!
I cann niot tell you anything about your question; I guess it is up to yur ER so, you need to discuss about it with your ER.



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