Celebrating 10 years! 2007-2017

funds in escrow account used to pay outstanding client bill

If Iím holding client funds in my escrow account and the cli kenco06/07/17
I have no idea on the proper disbursements of escrow, but I doublefriedchicken06/07/17
The disbursement should be made to the client for the client supesnation06/07/17
credited. What are the escrow funds being held in escrow fo sjlawyer06/07/17
Thanks, everybody. kenco06/07/17
kenco (Jun 7, 2017 - 3:10 pm)

If Iím holding client funds in my escrow account and the client asked me if I can use $5,000 of his money to pay a bill he has outstanding, should I ask for a W9 from the vendor (an LLC) and then issue them a 1099. Or is that the responsibility of my client. They payment will technically be coming out of my account, but itís not my money.

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doublefriedchicken (Jun 7, 2017 - 3:20 pm)

I have no idea on the proper disbursements of escrow, but I don't think you would issue a 1099 to the firm, that would be your client's issue. You are not taking a $5,000 deduction on your taxes for this expense.

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supesnation (Jun 7, 2017 - 3:28 pm)

The disbursement should be made to the client for the client to handle. Otherwise, I would get a letter from the client directing you to disburse to the vendor. You do not need a W-9 or 1099 since it is not your money and you have no reporting obligation (beyond your own record keeping for disbursements, but this should show as a disbursement to your client).

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sjlawyer (Jun 7, 2017 - 4:09 pm)

credited. What are the escrow funds being held in escrow for? Unless it's the express purpose (like, in an escrow agreement where presumably you're the agent) I would definitely want paper tracking that. If it's outside of that scope, I'd probably tell the client I'd be glad to disburse cash on his order (in writing) rather than send it to a 3rd party. That's probably overkill and you can probably send to a third party on his written direction, so if he's a valuable client, it's probably worth the negligible risk, but that's more of a business decision.

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kenco (Jun 7, 2017 - 4:17 pm)

Thanks, everybody.

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