1099 authors question

I think we have a few authors here. Hoping someone could answer me a tax question.

I'm amending my taxes because I'm pretty sure I screwed up my 1099-MISC.

My agent sent me the 1099-MISC with the amount paid before he took his 15 percent cut.

Obviously, that was not my income. Let's say my advance was $10,000. Well, I received $8,500. But my 1099-MISC says $10,000, which was not my income.

How and where do I indicate on my taxes that I was only paid $8,500, not $10,000? Surely others have done this. I've tried the Google and haven't had any luck.

P.S. I also received a 1099-MISC that was purely an expense reimbursement and not income for me in any way, shape, or form. Any idea what to do with that? Just write it off as a business expense? But then it seems I'm paying taxes on money I didn't earn.

Is the answer actually, "Hire an accountant."

 

Not an author, but have a been free-lancer for years so the same info applies. (BTW, after more than 10 years, I finally got an accountant and he's saved me bunches).
If you got a $10,000 advance, then that should be your gross income. However, the $1,500 paid to the agent is a business expense that you can write off against your gross income. That way, you are paying the self-employment tax on just $8,500.

 

Any idea what category that business expense falls under in TurboTax? Probably not, since you have an accountant.

 

OK, I figured that out. There's an "other" form. I just typed in, "agent fee" and the dollars fell. Not as much as I would have liked, though!

 

Your agent should send a 1099 reflecting the exact amount he paid you, not the amount he was paid on your behalf. He gets taxed on the commission as income, you are not responsible for it. The publisher didn't pay you, they paid the agent.

As an agent, every January I get a 1099 from every publisher I did business with. That's our gross income, which includes advances, royalties, subsidiary rights, etc. I then send 1099s to all my clients I paid during the year, reflecting the exact amount I paid them, which does NOT include our commission. My taxes show that I paid out X dollars per those 1099s, and the result is my net income.

I believe Turbo Tax has a provision for paying agency commissions, but I'm not sure it applies since you didn't actually receive the gross amount, your agent did, so you wouldn't be taxed on the gross. Different story if you paid the agent yourself, after you received direct payment from the publisher.

I probably made that worse, but that's the (overly complicated) answer.

As for amending your taxes, I would notify your agent that you want a 1099 reflecting what you were actually paid, and then just be sure you file for the correct amount, regardless of what the agent sent you. Keep good records, document everything. And if you have a cousin who is a tax accountant, it wouldn't hurt to make a call.