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Form 1099-Misc tax law changes re new restrictions on issuing to individuals vs. those with FEIN.

My client is a sales rep and has been receiving a Form-1099 from his employer for the past ten years.  This year his employer stopped reporting his earnings under his social security number (mid year) and insisted that my client secure an EIN (which he did) and the employer reported the remaining earnings during 2019 under the new EIN.  Bottom line: my client has two Forms 1099 from his employer. One reporting income under his social security number and the other under the newly EIN.  Do I input both 1099's received (from the same payor) as self-employment income to existing Sch. C ?  Not sure how to handle this and have seen numerous examples of Payors insisting on this change due to new restrictions on "who can receive a Form 1099-Misc. for self-employment income". HELP!

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3 Comments 3
Level 15
Level 15

Its still all self employment income, reportable on Sch C whether under the SSN or EIN. 

There is a place on the Sch C to enter the EIN associated with that self employed business.

Not sure why they insisted on them getting an EIN, wouldn't be required of a sole prop unless they had employees, but its probably more secure to use the EIN than to be handing out your SSN to people that pay you for your services.

Being a "sales rep" may actually be considered an employee position (depending on what/how/where youre doing the selling, maybe the payor thinks that will save him from this sales rep being re-classified as an employee if they have an EIN)

Level 15

Looks like the "employer" might feel safer from an employment-tax audit if IRS doesn't notice how many self-employed people he pays with a 1099.  For all we know, maybe IRS is screening 1099 filers that way.  More likely, they'll be tipped off by a former "employee" who is turned down for unemployment or workers compensation.  

Level 15

I'm not aware of any Tax Law change on this.

But tell your client how much better it is now that they can use the EIN on the W9, and they stop giving out their SSN to everyone!

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