Saturday, February 20, 2010
More Truth About Income
Here's one for you! I do self employed consulting work in Ashland, Oregon, and have done so for several years. I have an LLC client who is paying me with state tax credits. They are a direct deduction in state taxes due, as good as cash to me. The question is: do they need to send me a 1099? Do I need to pay self employment tax on the value of these as if they were cash? I'm guessing yes, but not sure this small LLC knows that!
Many thanks for any help, Jeff
Your guess is correct. Yes it is self-employed income to you.
Yes, if the value is $600 or more, the LLC should send you a 1099-MISC.
And, yes, it is income to you even if you do not receive a 1099. Read An Inconvenient Truth: It's income. below.