Me and my brother are doing work for a friend. The friend paid me the full amount, and I am supposed to give 50% to my brother. How do I handle this to ensure that I do it correctly and don't get double-taxed? I do not have a corp setup. My friend paid me into my personal checking account. I am in the USA.

  • does your friend have a business, and will he be claiming the expense? – mhoran_psprep May 30 '18 at 23:38

It doesn't matter. As far as the IRS goes...assuming this is a one-time thing, simply report the amount you kept (ie: the amount you didn't give to your brother). The IRS isn't even going to look at the check/debit/whatever, much less be like "wait a sec, Nate said he only received half as much!" -- and even if for some bizarre reason they ever did, the first two sentences of your question would satisfy them as an explanation.

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    Getting the brother to write a receipt wouldn't hurt. – Rupert Morrish May 30 '18 at 23:58
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    If you want a paper trail just in case, a receipt would help. You could also write him a check. That'd give you evidence of payment without requiring he do anything but cash/deposit it. – cHao May 31 '18 at 14:53

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