On Fri, 13 Mar 2009 17:39:27 EDT, Harlan Lunsford
<lunstax[at]bellsouth.net> wrote:

- quote -

I agree with Alan on this one. If the money is on a
1099-MISC then the employer is admitting it is not an
accountable plan so the $5,000 goes into income. It is not a
reimbursement, if it was a reimbursement then it would not
be on the 1099-MISC. The full deduction goes on Form 2106.
Is it unfair? I will let the reader decide. Is it the law,
yes.

Drew Edmundson, CPA
Cary, NC

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"Harlan Lunsford" <lunstax[at]bellsouth.net> wrote in message
news:TDeul.14990$qa.13771[at]bignews4.bellsouth.net...
- quote -

HINT: Isn't there a line on form 2106 for reimbursements not reported as
income?
(That's a rhetorical question)

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Alan wrote:
- quote -

To put that reimbursement from a form 1099-misc on line 21 increases
AGI, which leads to .... (etc)

ChEAr$,
Harlan Lunsford, EA n LA

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"Bob Sandler" wrote:

- quote -

The last time I looked the procedure for the 4852 still said to call the IRS
and the IRS would prepare the 4852 and send it to you. It's always seemed
to me like the 4852 was the solution to wihheld tax that wasn't included on
a W-2.

- quote -

That's one of the uses, but not the only one. In this case I'm suggesting
using it because it's a way of:

1. Correcting the SSA earnings record; and
2. Collecting the employee's portion of FICA/Medicare.

Because the employer has already issued a W-2 there's no SS-8 determination
needed.

--
Phil Marti
Clarksburg, MD

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"Alan" wrote:

- quote -

And I believe it will. Do you have anything other than a hunch to base it
on? I don't.

But let's assume for the sake of discussion that they won't pursue the
employer. If the employee pays the employee's share how is the employee
worse off than the employee would have been had the employer done everything
right?

I don't see it as the preparer's role to prepare a return based on fixing
perceived inequities rather than the law.

--
Phil Marti
Clarksburg, MD

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- quote -

If the W-2 is incorrect, why not use Form 4852 (Substitute
W-2) instead of Form 8919, and add the $5,000 to the wages,
where it belongs? The IRS says to use Form 4852 if a W-2 is
incorrect and the employer won't correct it.

The instructions for Form 8919 say to use it "if you were an
employee but were treated as an independent contractor by
your employer." But that's not the situation here. Using
Form 8919 would effectively require the employee to file an
SS-8, which isn't appropriate and would stir up trouble with
the employer.

Bob Sandler

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Phil Marti wrote:
- quote -

you it is not an accountable plan. You are correct that this
should have been reported as wages and 15.3% of employment taxes
paid. This is probably not an employer mistake but just a way to
avoid paying the employer's share of the employment taxes
(7.65%). As I don't believe that filing the 8919 will ever cause
the IRS to go after the other 7.65%, I don't see why the employee
should be forced to fork over 7.5% when the employer gets a free
ride. I agree with Harlan (who forgot to mention that you can't
deduct anything on the 2106 unless you put the income on Line 21)
that the employee should not pay 7.5%.

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"Harlan Lunsford" wrote:

- quote -

It boils down to whether it's an accountable or nonaccountable plan. (Pubs
15 and 463) I assumed it was nonaccountable because that's what it sounded
like to me. If it's nonaccountable it's taxable wages for income and
employment taxes. (Pub 15)

If it's an accountable plan then I agree, put all the expenses and the
reimbursement on the 2106.

In either case it leaves us with the question of what to do about the
1099-MISC, which never should have been issued. My preference is to leave
it off the return entirely, telling the IRS where it's accounted for when
they inquire. I know most prefer putting it on line 21 and backing it out.

--
Phil Marti
Clarksburg, MD

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Phil Marti wrote:
- quote -

correct his employer's mistake. This form of reimbursement is common
enough throughout the USofA. why should employee be saddle with
another 7.65% of the 5,000?

I very simply put everything on form 2106.

ChEAr$,
Harlan Lunsford, EA n LA

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"SMF" wrote:

- quote -

Since the $5,000 belongs in Boxes 1, 3 and 5 of the W-2, I recommend using
Form 8919. That will put the $5,000 on line 7 where it belongs and the
employee's portion of FICA/Medicare on line 58. The expenses go on the
2106, feeding Schedule A, where they belong.

--
Phil Marti
Clarksburg, MD

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Employee has auto allowance that he receives 1099-misc "other Income"
form for. $5000. Employer will not put in W-2. Employee has about
$10000. worth of auto business expenses. Given the employer won't put
it in
W-2 I see two choices:

1 - Put 5000 on line 21 as other income and deduct $10,000 on 2106

2 - Put 5000 on Sch C and put enough mileage on that to reduce to 0
and the rest on 2106.

Any advice? Thanks

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