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  1. #1
    Join Date
    Mar 2013
    Location
    Maryland
    Posts
    5

    Default I Got a 1099-Misc for a Gift

    My question involves employment and labor law for the state of: MARYLAND

    In 2011 my uncle offered to pay off my tuition debt in collections. I gave him the collections account number and their phone number and he took care of it. Yesterday I got a notice from the IRS saying that I didn't file a 1099. The information listed was from my uncle's company. It looks like he wrote off the payment as a business expense.

    I have never worked for my uncle or his company and I never filled out a W-9. During tax time in 2012 I was living in North Hollywood, CA. I was never mailed this 1099. Apparently, it was handed to my mother in an unmarked envelope which she opened and forgot to give me. I founded it today mixed up with a bunch of her old paperwork.

    My uncle never informed me of his intent and never came to me directly regarding any information about this. I didn't even know this existed until yesterday.

    Isn't this fraud? Payment of my debt had nothing to do with his company. And I never gave him any personal information for him to issue a 1099 in the first place.

    Am I responsible for paying taxes on the money he paid to my collection account?

  2. #2
    Join Date
    Sep 2011
    Location
    OH10
    Posts
    17,019

    Default Re: I Got a 1099-Misc for a Gift

    Your 1099 should have the amount as non employee compensation. You are free to argue with the IRS that you feel the 1099 was issued in error.

  3. #3
    Join Date
    Dec 2008
    Location
    Calif
    Posts
    289

    Default Re: I Got a 1099-Misc for a Gift

    From the IRS, Publication 4681: "Gifts, Bequests, Devises, and Inheritances In most cases, you do not have income from canceled debt if the cancellation or forgiveness of the debt is a gift, bequest, devise, or inheritance." As far as him using it as a business deduction, I'm curious about what else is going on. Find out if he's listing you as an employee for tax purposes. There might be more going on, then you realize. I don't see how he can use it as a business deduction. Ask him, who's doing his taxes. If he's doing his own, I would be concerned.

  4. #4
    Join Date
    Mar 2013
    Location
    Maryland
    Posts
    5

    Default Re: I Got a 1099-Misc for a Gift

    I am sure there a lot more going on but with him being family I don't want to cause a huge issue. I'm just going to dispute it with the IRS he has no way of proving I worked (no w-9 or paychecks) for him so I'm not worried. I'm not saying a thing to him. He's not the most approachable man.

  5. #5
    Join Date
    Dec 2008
    Location
    Calif
    Posts
    289

    Default Re: I Got a 1099-Misc for a Gift

    Good, cover yourself. You don't want the IRS coming back on you for this. Don't let the fact that he's family cloud the issue. The IRS isn't going to care.

    - - - Updated - - -

    You also might want to talk to a tax lawyer about this. The IRS can give mixed signals, if you go to them.

  6. #6
    Join Date
    Mar 2013
    Location
    Maryland
    Posts
    5

    Default Re: I Got a 1099-Misc for a Gift

    I already got one John : D but being that I received the notice on a Friday night, I've been fumming all weekend. I won't be able to talk with my lawyer until Monday. I just needed some reassurance that my uncle can't do this.

    I just hope this doesn't ruin him and his business. Do you have any idea how deep the IRS can dig if he can't prove that I worked for him? How could this 1099 implicate him?

  7. #7
    Join Date
    Jul 2007
    Location
    Florida
    Posts
    2,344

    Default Re: I Got a 1099-Misc for a Gift

    Unfortunately, the IRS' default position is that the tax reporting documents filed with them by businesses are accurate. You will have to be aggressive in taking the position that this was fraudulently done. If your uncle is particularly devious he might forge a contract, labor records, or what ever to try to pin this income on you. It's entirely up to you, but I would not let anyone do that to me, family or not, and I wouldn't be particularly concerned about any consequences they might incur. He is not your friend if he did this to you.

  8. #8
    Join Date
    Sep 2011
    Location
    OH10
    Posts
    17,019

    Default Re: I Got a 1099-Misc for a Gift

    I do not think it unreasonable that the uncle wanted a business deduction for meeting OP's responsibility by paying the bill.

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