How can i do this?Referall fee?

[felipe212]

What is the name of your state? Nevada

Ok, i am a mortgage consultant here in Las vegas,NV every once in a while i will give out a referall fee to realtors of other mortgage consultants, my company however pays me the check and then out of that i will give the referall fee, now i dont want to get stuck with paying the taxes on amounts that i give out as referall fees wich sometimes go as high as 2000 dollars, i am a Independent contractor on a 1099, i know that at the end of the year i will get my 1099, however the amount on the 1099 is going to include all of my earnings and the referall fees that i give out.

How can i document and avoid paying taxes on referall fees?

Thanks for any help

[LdiJ]

Originally Posted by felipe212

What is the name of your state? Nevada

Ok, i am a mortgage consultant here in Las vegas,NV every once in a while i will give out a referall fee to realtors of other mortgage consultants, my company however pays me the check and then out of that i will give the referall fee, now i dont want to get stuck with paying the taxes on amounts that i give out as referall fees wich sometimes go as high as 2000 dollars, i am a Independent contractor on a 1099, i know that at the end of the year i will get my 1099, however the amount on the 1099 is going to include all of my earnings and the referall fees that i give out.

How can i document and avoid paying taxes on referall fees?

Thanks for any help

You do that by issuing 1099s yourself to the realtors to whom you give referral fees, and then deducting that expense on your schedule C or business return.

[felipe212]

What 1099 do i issue there are different ones?

[LdiJ]

Originally Posted by felipe212

What 1099 do i issue there are different ones?

1099 MISC and then classify it as "non-employee compensation".

Use a professional to handle this for you. It doesn't have to be horribly expensive or complicated. Just find a tax preparer who is also able/willing to prepare 1099s.

[efflandt]

You should make sure that anyone you pay referal fees to gives you a properly filled out W-9 before you pay them, so you know if you need to withhold (and process with IRS), what you will report on their 1099. See [url]http://www.irs.gov/pub/irs-pdf/i1099.pdf[/url] and [url]http://www.irs.gov/pub/irs-pdf/iw9.pdf[/url]

I know that many customers our company does service work request a W-9.

[LdiJ]

Originally Posted by efflandt

You should make sure that anyone you pay referal fees to gives you a properly filled out W-9 before you pay them, so you know if you need to withhold (and process with IRS), what you will report on their 1099. See [url]http://www.irs.gov/pub/irs-pdf/i1099.pdf[/url] and [url]http://www.irs.gov/pub/irs-pdf/iw9.pdf[/url]

I know that many customers our company does service work request a W-9.

While I agree that its proper to get a W9 before making payments, its not absolutely required.