"mspotlight" <mspadaro[at]gmail.com> wrote:

- quote -

If they're making their checks out to you, I don't know if
you can really get away from it.

On possibility might be to have an agreement with your
clients whereby all money that comes in is theirs, that it
will go into a trust account where you will hold it for
them, and then you will deduct your fee from their money
before you forward it on to them.

But the tax preparers will have to tell you whether what
works on a legal basis will work for the IRS.

Stu

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Thanks for your reply, Rudy-

I would prefer to find an alternative to doing the
accounting this way if anybody has an idea. The commission
that I take is a small percentage, so I will be dealing with
a large amount (in the thousands, at first) of clients who
are billing their customers through me. I don't want to have
to be the one responsible for accounting for income that I
didn't earn and for sending out 1099's to all of my client's
customers, I want to be in a situation where my clients'
customers are responsible for sending their own 1099's.

The services which are being paid for are provided by my
client to their customer, with no interaction or guarantee
on my part except for the fact that I accept funds on behalf
of my clients. It seems that the Assignment of Income
Doctrine would say that the money that I pass along to my
clients can be excluded from my income because it was earned
entirely by my client. The commission that I take represent
my only true earnings, as the fee for referring customers to
my clients' business. Am I interpreting the Assignment of
Income Doctrine incorrectly?

Thanks,
Michael

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

Report all the income you receive, and then deduct the
income you pass on to your clients.

You would also need to file information returns, Form
1099-MISC, to report the income you passed on to each
client.

Rudy
www.LizcanoTaxServicesLLC.com

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

I am in the process of starting up a small business which
acts as an agent in accepting payments for small service
businesses. My clients invoice their customers using my
service, and then I accept payments on behalf of my clients,
taking a commission out of the payment before passing the
remainder along to the client.

My question is: what do I need to do to ensure that it is
clear to the IRS that the payments that I am accepting are
not the income of my business, but the income of my clients?
The only portion of the payments that I would count as my
business income is the portion that is deducted for my
commission. Does this require any additional paperwork at
tax-time, or do I simply list my commissions as gross income
and ignore the money that was passed through me?

Thank you- any insight would be much appreciated.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >