How do charge backs figure into your federal taxes? When I was with NAA I recieved advanced commisions and almost all of my policies charged back at one time or another. When I filled my 2005 taxes, I reported the earnings from the advances. Old Mutual ,whom I just noticed never sent me a 1099, has listed on my 12/06 statement that shows that they paid me year to date $14,000.00, Yet I have recieved not a dime this year from them.
Charge Backs and Taxes
- Thread starter Golddoor
- Start date
- 14,809
I was in the same spot with UGA/Mega Life. When I worked for them in '03 they 1099'd me on all the advances. Of course, after I quit most of what I wrote cancelled. It was actually a nightmare since I did earn income for the time the policy was on the books - but it was nowhere close to the 1099.
I called the IRS directly who actually was of little help. The bottom line is I had to remit taxes based on the 1099 they filed. Obviously the IRS has no way of knowing that I've quit and 80% of what I wrote lapsed.
I wrote it off my schedule C under returns and allowances. I had proof of the cancellations since they had sent me a bill for the debit balance. I figured in an audit I could proove that I did not earn what was reported.
I called the IRS directly who actually was of little help. The bottom line is I had to remit taxes based on the 1099 they filed. Obviously the IRS has no way of knowing that I've quit and 80% of what I wrote lapsed.
I wrote it off my schedule C under returns and allowances. I had proof of the cancellations since they had sent me a bill for the debit balance. I figured in an audit I could proove that I did not earn what was reported.
- 1,160
This is why it's very important to keep records. The 1099 should reflect any chargebacks, but as we see in these examples, that's not always the case. And good luck trying to get a 1099 corrected. With some companies (whether insurance or not) you're doing good to receive one at all.
- Thread starter
- #4
- 14,809
No. It's too simple. I don't have employees or major expenses. I have my 1099's and simple expenses. I crank out taxes in about 30 minutes.
- 477
So what are you guys saying then, chargebacks can be written off?
- 14,809
Keep it simple. Say you sell a few plans for $5,000 in advances then quit the company. Everything cancels and you owe all $5,000 back. Since the comany no longer can take it out of your check they bill you. You pay the $5,000. What have you earned? Nothing. What's your tax liability? Zero.
- 1,328
If your business loses money it can be deducted.. And think about it.. If you earned $30,000 but $15,000 charges back, you only earned $15,000 of taxable income...
- 477
Okay, so here are 2 stupid questions of the hour. Sorry for my ignorance but I really do not know.
Thanks for replying. I understand. I'm wondering though, does this apply per state tax code or is this a uniform federal aspect of righting off taxes no matter what state in one resides?
I get the concept and sure, it makes sense that way. (sure am happy to hear about that, I'll say.)
But the kicker to my question above is:
I'm sure there are so many years one is entitled to show losses before one can no longer show any more losses? Is that right?
Thanks for replying. I understand. I'm wondering though, does this apply per state tax code or is this a uniform federal aspect of righting off taxes no matter what state in one resides?
I get the concept and sure, it makes sense that way. (sure am happy to hear about that, I'll say.)
But the kicker to my question above is:
I'm sure there are so many years one is entitled to show losses before one can no longer show any more losses? Is that right?
- 14,809
Years of losses? How would you pay your bills?
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