To correct, go back to the issuer and remind them the amount was for reimbursements for which you provided the proper receipts and documentation and is therefore not subject to 1099 reporting.
If the 1099 reflects the amount that was reimbursed to you for service expenses (i.e. events, visit gifts, etc.) in the previous calendar year, then it should not have been issued. The IRS, in section 6041 part (h)1 of the Revenue Code, does not require reporting for reimbursement of “Accountable Employee Business Expenses.” Such expenses would be for the benefit of the business and supported with receipts.
This is covered in the service expense section of the Apartment Life service contract that each community signs that specifically states that they are not subject to taxes or 1099 reporting requirements. To correct, go back to the issuer and remind them the amount was for reimbursements for which you provided the proper receipts and documentation and is therefore not subject to 1099 reporting. Be sure to request and receive a revised 1099 marked “corrected” with a zero balance and keep it with your tax records.
Q: What if the issuer will not correct the 1099-MISC?
You will need to report the 1099 amount on your 1040 tax return as “Other Income.” If you have receipts, you can offset the “Other Income” by the amount of the receipts. On your form 1040, as Other Income, report the net amount or zero and type in “See attached schedule.”
On the attached schedule, type in as follows:
- Other Income erroneously reported on the 1099 from XYZ Properties for business accountable employee expense reimbursements of $6,000
- Business expenses with receipts subject to reimbursement and excluded from taxable income of $6,000 (If you can only support a portion with receipts, you will have some net income to report) •Net Other Income = $0 (This can not be a negative number)
Q: What if we did not submit receipts?
Then they would be correct in giving you a 1099. If you have the receipts and can account for the expenses, then you should include the reimbursement net of the receipts in the same way as the not corrected 1099 above.
Q: What if the 1099 is for the value of the apartment?
The Apartment Life service contract that each community signs specifically states that the value of the apartment is considered a working condition fringe benefit and not subject to taxes of 1099 reporting requirements. Be sure to request and receive a revised 1099 marked “corrected” and reflecting zero income. If they still insist on issuing a 1099, then it must be in the name of Apartment Life because that is who the agreement and lease is with.
Q: What if they have questions I cannot answer?
You and your program director should be able to resolve most of the issues with this information. If you are still having problems, please have the community call Apartment Life’s CFO, Peter Wayman. He can be reached at 817-685-2963 x135 or petewayman@apartmentlife.org.