I rent office equipment to my employer & every year. I receive a 1099-MISC from from them for the non-taxed rental amount. However, this year they reported this non-taxed amount on my W-2 in the 12a box (with the letter "L" next to it). Is this correct? Should they be issuing me a 1099 instead? The amount I was paid for the rental is around $1,400 & I am an Individual/Sole proprietor.

ANSWER

The BIDaWIZ Team's Answer:

Can you provide more context as to the details of the type of office equipment your employer is renting from you? Based on the facts you provided, we're surprised that your employer reported these amounts on your form W-2. Generally, you would report amounts on box 12a of the form W-2 with Code L for employee business expenses that are reimbursed (non-taxable). This is consistent with an accountable plan. Are they actually reimbursing you for expenses or are they paying you? This is referenced in IRS Publication 529 and IRC Section 274(c).