LLC Pass Through Income Taxation


1

I'm working for a client who is doing business as a LLC in CA. He represents merchants by advertising them on certain websites. His commission is taken out from the sales received from the websites, and the rest goes back to the merchants. However, when he received a 1099-MISC, the website where he advertised is reporting both his share and his merchant's, since he used his TAX ID to register with the sites, and not the merchants themselves.

My question is: what can he do to make sure his merchants' share gets passed on directly to them, and not to him? Because, he should only be taxed on the $100 of the $1000 he commissioned for, and the other $900 should go to the merchants themselves.

Is there anything he can do to get the 1099-MISC changed or something?

Thank you!

LLC Tax Independent Contractor

asked Feb 13 '13 at 03:50
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Cong Xiao
6 points
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  • @littleadv okay - removed my comment. good answer. – Jim Galley 8 years ago

1 Answer


1

My question is what can he do to make sure his merchants share gets
pass on directly to them, and not to him? Because, he should only be
taxed on the $100 of the $1000 he commissioned for, and the other $900
should go to the merchants themselves.


Is there anything he can do to get the 1099-MISC changed or something?

No, because he indeed received all that money. 1099-MISC reports money received, not money taxable.

What he needs to do is to issue his own 1099-MISC to the merchants on the amounts he's passing on to them.

Disclaimer: I'm not a tax professional and this is not a tax advice. Get a professional advice from a EA or CPA licensed to practice in your jurisdiction.

answered Feb 13 '13 at 04:27
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Littleadv
5,090 points

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LLC Tax Independent Contractor