Right - so if they’ve issued payments for work done by the trainer - they could issue a 1099 to the trainer for expenses, couldn’t they? Especially jumpers that have earned prize money.
Of course! And it doesn’t matter if the horses have won money or not. Money won is
income. It gets reported too. And it is not ‘could they issue’ it is, ‘they must issue’.
I would assume, however, that the trainer is also a business. Businesses do not send 1099s to each other.
I was assuming the training fees were paid to the trainer by check or electronic transfer, not cash. On having the clients pay for the trainer’s horse at a horse show, the expenses are paid by the clients in place of the trainer. If the trainer deducts the horse show expenses paid by others from her own income, that is tax fraud, but I don’t see the role of a 1099.
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A professional trainer can deduct their own horse showing expenses from the their income, and pay taxes just on their income in excess of business expenses. If they were audited, I doubt that deducting their horse show expenses would be questioned by the IRS. For an amateur client, horse show expenses would not be deductible, whether the expenses were for the amateurs horse or the trainer’s horse.
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Y’all, there is a LOT of tax misinformation here. Any amount of payment for services, whether cash, check, barter, etc. is income. The $600 amount applies to the requirement for a 1099 to be issued. The recipient has income regardless if a 1099 is issued. Businesses most certainly do send 1099’s to other businesses. Re-read what @Midge posted above.
Without revisiting all the responses, those are a couple of things that stuck out as completely erroneous. Lesson: don’t depend on COTH for tax advice. 
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Are you saying that as an amateur client, I should send my trainer a 1099 for what I pay in training fees and/or what I pay for her horse show expenses?
If I were a business and planned on deducting my payments to her as my own business expenses, I could see the point of a 1099, maybe.
But as an amateur whose horse expenses are not a business expense and therefore not deductible, why would I issue a 1099?
If you can tell me how to legally deduct my horse expenses from my salary for tax purposes, I will be eternally grateful.
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Re: trainers and 1099s - I know of more than one trainer who has moved to the “program” business model, where instead of separate board and training fees, all boarders pay a set monthly fee just to be in the barn. In these situations, the trainer owned or leased the property and had the entire operation set up as an LLC. Boarders are expected to make a single payment each month “for board” to the business entity. There is no reduction in fees for a retired horse or a horse not able to “work.”
And even though the trainer “trains” or teaches 3-4 lessons per horse/client per week, she does not claim any income from those activities. All income is reported as part of the boarding business, so the trainers get around the sticky issue of 1099s that way. And by keeping their personal income “low” they are able to qualify for government benefits aimed at low-income taxpayers.
One such trainer even commented one time about “working for free” and how they - she and spouse - had significantly reduced their tax liability that way. Yes, it’s shady but their CPA and attorney blessed it and they have been operating that way for quite a few years now.
Edited to add: In at least one of these operations, the trainer enacted the “program” business model specifically because a client had her horses set up as an LLC and wanted EIN info from the trainer so she (the client) could make sure she stayed straight with IRS. Trainer was pretty indignant about the thought of any income being reported to IRS by a client, so she eliminated “training” fees from the board contract and switched to the “program” model.
No, ma’am. Your trainer, as a business, must report all income of all amounts. (Not just amounts over $600, which was stated above). As an AA, you do not issue 1099’s, nor do you deduct personal expenses (everything horse related).
What I said was, businesses do issue 1099’s to other businesses. Someone upthread stated that they do not.
Now, if you want to deduct you horse expenses, you must be a business. And that opens up a whole 'nother can of worms regarding hobby vs. profit driven.
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I would disagree that this is shady,as you describe it. If all income and expenses are part of the business, where is that shady? If the business operates at a loss, that may reduce other sources of income, thus reduce the tax liability, but, presumably, they are using that other income to subsidize the boarding operation.
If the business operates consistently at a loss, the IRS may question the profit motive (and the IRS is particularly sticky about horses), but if you can show your intention to operate as a legitimate, profitable, business, you can take losses for years.
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I guess I think it is on the shady side because the trainer is actually working (riding client horses/teaching, etc.). These were very high-end barns, where the “board” fee would take most people’s breath away. The fee was way over the top as far as actual costs for “board/feed” etc. for each horse (even when you consider costs of employees, insurance, maintenance, etc.) , and it was understood by the clients that part of what they were paying went for training/instruction (even if that was not on paper anywhere). Also, profit from the “program” was used to pay for things such as high-end vehicles, trips to Europe (essentially vacations but the trainer wrote off the trip as a business expense because she “looked at” a few horses there - i,.e., went to a horse show as a spectator). Those types of shenanigans left a bad taste in the mouths of more than a few clients.
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The whole premise of the 1099 on this thread was a he-he insider tax joke about the client paying for the trainer’s horse expenses. It wasn’t meant as a serious proposition/solution (without some intense scrutiny as you now see here) so carry on with your lives.
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actually unless the trainer or the farm you are paying is a corporation you should issue the proper 1099 once paying more than $600 in a tax year, even some LLCs if it is taxed as a partnership or is a single-member LLC, the contractor needs to receive a 1099 form
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Well God forbid that a trainer charges enough to actually make a real profit, so they too can have nice things.
My business is an LLC and an SCorp. Everything I earn is paid to the company, and I pay myself a salary, while at the same time making monthly payroll tax payments. I am fortunate enough to actually make a bit of money; not as much as 90% of my clients, but I am comfortable, and may be able to retire before I’m 90. There is nothing underhanded or shady about any of this. As a matter of fact, it was set up by my tax accountants
The training in question from the original post, however, is gouging her clients. We’ve shown lot’s of our own horses, and they were included in all splits
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I have no problem at all with trainers charging whatever they want for lessons, training, horse shows etc. The market will dictate if it’s too high.
I also don’t have a problem with trainers including personal horses in the client show splits as long as that is disclosed to clients beforehand. If that’s part of the dues to belong to that particular club, so be it. But transparency about that should be included.
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When I say our horses were included in the splits, I mean that our horses paid for their portion of the tack stalls, etc, thus lowering it for everybody. Not sure what your point is…
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Yes I understood that’s what you meant. I was agreeing with you.
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Well I seriously hope that you and the other horse owners who were cheated ( that is what it is) are going to have a talk with your trainer and set this matter straight.
I am truly shocked at how commonplace it is among the answers here and that horse owners don’t seem to do anything about it? Maybe $ 150- $200 a show is nothing for some people to absorb but it would be for me.
Does she not get paid for being at the show to coach or be of assistance to you already??
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Please talk to the other clients and your trainer about this. I would push back. Casually dumping a trainer’s personal horse expenses on the clients is not right, and I say this as someone in the horse business.
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By your own admission, you are paying yourself a salary - therefore have reportable personal income.
I have no problem with trainers making a profit, or making a living. I do find it disconcerting though that some trainers are not taking a salary specifically so they won’t have to report personal income, especially when it is obvious to their clients (and everyone else but IRS) that they ARE working (and reaping the personal benefits of a hefty profit coming in through the “program” they are managing).
Re “nice things” - one trainer buys a new high-end horse-hauling truck every three years, and a new luxury personal vehicle every two years (last one was a Jaguar). Her spouse (who doesn’t work) also gets a fancy new car every few years (currently driving a Maserati). Re: vacations - trips to Abu Dhabi, trips to the Mediterranean, trips to the Maldives, Viking river boat cruises, etc. Heck, I can’t afford those things, and I am making a pretty nice salary (and reporting it to IRS).
And I wasn’t the only one these practices didn’t sit well with - at one such barn, eight of the twelve boarders left because they didn’t agree with it.
Adding that I also don’t get a warm and fuzzy feeling when hairdressers, dog groomers, massage therapists, lawn dudes, etc., ask to be paid in cash (so they can “hide” income from IRS).
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