Friend owes 7k need help!

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supamanjon

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So what happened was i used his social to do my adsense. Then we filed a 1099 last year and then i reproted the postive and negative on my end. The result being a negative as i reinvested everything back.

he just got an irs letter saying he owes 7k because the 1099 stuff is taxed. Did i file something wrong? did he need to report positve and negative on top of the 1099. I thought misc 1099 transfers the tax responsibility to me?

please help
 
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Unfortunately you used his social, which is his personal self and not a corporation EIN# so he is not eligible to write off losses. He will have to fork over $7k.
 
LOL, the responsibilities with him because you used his social...
 
expertSEO said:
Unfortunately you used his social, which is his personal self and not a corporation EIN# so he is not eligible to write off losses. He will have to fork over $7k.
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This is correct. He will either have to pay, or just not get a return for a couple of years til it is paid off.
 
So your saying if i used my own social. Which is not a corporate EIN i can't write off anything? So if i made 10k and i reivnested 10k into backlinks. I owe $3000 for making $0 profit?
 
supamanjon said:
So your saying if i used my own social. Which is not a corporate EIN i can't write off anything? So if i made 10k and i reivnested 10k into backlinks. I owe $3000 for making $0 profit?
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It was taxable earnings, plus the self-employment tax since it was not under an LLC. Basically, you screwed your buddy. Fork over the cash to him.
 
supamanjon said:
So your saying if i used my own social. Which is not a corporate EIN i can't write off anything? So if i made 10k and i reivnested 10k into backlinks. I owe $3000 for making $0 profit?
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That's precisely what I'm saying. What you are trying to do is operate a business. You can't declare losses unless you have a business. Meaning you set up a C corp an S corp, or even a simple DBA that costs $10 to file in most US cities.

Regular Persons cannot subtract business losses!
 
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I shoulda spent $200 to get an LLC. So you can't write off anything internet related if your using your own personal social TIN? Guess i'm fucked. Does the IRS accept payment plans?
 
OP: I think you should get a loan and pay your friend back. Then make a adsense account under your own SSN.

Sorry to hijack:

Is it beneficial for affiliate marketers to create a LLC or corporation? Can someone explain to me the pro's and cons? I have been doing everything as a individual..
 
When you give your friend a 1099 that's stating his income from you, he then needs to in turn file a 1040 schedule-C this form is a self employment form where he can then write off any business expense.
 
Dude.
Hire an accountant ... duh.

$20-50 per month (meet up once to give them your figures) and it will save you a big headache.
 
give your friend the money and make an llc problem solved.
 
A lot of the info on this thread is incorrect. You CAN write off plenty without having a business or LLC. I've been in sales and filed 1099's for the last 7 years. You can write off anything that has to do with your business. Or in this case HIS business.
Which means, laptop expense (600-1000) partial rent, food and coffee (say you work in a coffee shop and eat) Internet bill expenses, cell phone bill etc.. etc.. mileage. (to report mileage you will want to make a log)

(when you file 1099 you're considered an independent contractor and your name = your business.)

I do have a business now, but really nothing has changed since it's a sole proprietorship. Which means I can file as myself or as my business makes no difference. When you have employee's that's when it gets difficult.
 
THIS IS 100% INCORRECT!!!!!!!!
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expertSEO said:
That's precisely what I'm saying. What you are trying to do is operate a business. You can't declare losses unless you have a business. Meaning you set up a C corp an S corp, or even a simple DBA that costs $10 to file in most US cities.

Regular Persons cannot subtract business losses!
Click to expand...



​

You can file using a schedule C form and claim all your expenses. A dba is for your state and you usually need that to get a sales tax number and to get your company name on a bank account. The federal Govt and the IRS does not care about a dba at all.

You need to file the 1040 long form with a schedule C and you can claim all your business expenses..........

Filing a schedule C allows you to deduct all your business expenses. All the IRS requires is that you document all your expenses and that you run the business with the INTENT to make a profit. If audited you want to show that you are trying to make a profit as opposed to your activity being a hobby. Now having a separate bank account and a business name can help show intent if you get audited but they are not required.
 
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supamanjon said:
I shoulda spent $200 to get an LLC. So you can't write off anything internet related if your using your own personal social TIN? Guess i'm fucked. Does the IRS accept payment plans?
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The post above yours is incorrect. All you need to do is keep track of everything and fill out the schedule C when you file.
 
supamanjon said:
So what happened was i used his social to do my adsense. Then we filed a 1099 last year and then i reproted the postive and negative on my end. The result being a negative as i reinvested everything back.

he just got an irs letter saying he owes 7k because the 1099 stuff is taxed. Did i file something wrong? did he need to report positve and negative on top of the 1099. I thought misc 1099 transfers the tax responsibility to me?

please help
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You need to find a tax attorney at this stage of the game. There may well be something that can be done if you can show that the money was claimed by you but once the IRS starts sending large bills you need to get legal help. I would really suggest that you not try and deal with this yourselves at this point unless you plan on just writing the IRS a check.
 
I think your issue will be if your friend has another job and IM is not his fulltime job.

You cannot start 5 hobbies run them at losses and deduct from your other jobs income.

So yes I believe you can deduct some things - but it is going to require more facts and care -- honestly I'd go to an accountant and get this sorted then just get yourself a better structure to operate under and seperate everything.

cheers
 
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