» Are smooches 1099-able?

Are smooches 1099-able?

February 11, 2009 by Carol Katarsky
Posted in: 1099s, Communication, In this week's e-newsletter, IRS regs, Latest news & views, Tax compliance

The nature of the worker/company relationship is one key in determining if a payment is 1099-reportable. But this artist took things a bit too far. Just in time for Valentine’s Day, a recent U.S. Tax Court rules on when love is more like work.

In the case, a woman moved into her boyfriend’s home. She cooked and did light housekeeping for him, but did not contribute to his art business. There was no contract indicating that she would perform any task for pay.

The boyfriend gave her checks totaling $10,500, many marked “wages” in the info line. At the end of the year, he reported them as payments for business services and issued her a 1099-MISC.

When she didn’t include the $10,500 as income, IRS took her to court. But the judge ruled that the payments were actually gifts, since there was no contract, and that whatever tasks she performed were unrelated to his business.

She’s now off the hook for the back taxes.

No word on whether the couple is still together. But we’re betting not.

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2 Responses to “Are smooches 1099-able?”

  1. Internet Business Says:

    Wow, what will they think of next…I wish I could write off all the money I spend on my wife each year!

  2. Michael Says:

    If the IRS couldn’t collect from her as undeclared income, I bet they’ll audit him to make sure he doesn’t take those $ as a deduction for business expenses. Is this a great country or what? :)


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