[vendtalk] Reporting of Vending Machine Income on Form 1099

mazher mazher at comcast.net
Thu Sep 27 11:13:41 UTC 2012

Does anyone have any ideas about how vending machine income should properly
be treated and reported on the 1099.  All vending machine income is of
course subject to income tax but is it also subject to the self employment
and FICA?  The IRS makes a distinction between earned income and income
derived from rents, royalties and commissions.

On the 1099, if box 7, captioned as non employee compensation is checked,
the IRS assumes this to be earned income and treats it as income on which
self employment and fica are due in addition to the income tax.  Generally,
this is the box that would be checked for payments to contractors who are
responsible for their own taxes. 

However, if the income is instead reported in box 3, which is inter alia
reserved for reporting of rents, royalties and commissions, it is treated as
passive income on which only income taxes are due, not the self employment
and fica.

How is the vending commission income reported on the 1099 in your state?  

A definitive opinion on this, anyone?


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