Tips About IRS Tax Form 1099-MISC
Posted on March 18, 2011 | No Comments
Chintamani Abhyankar asked:
Form 1099-MISC is one of the most commonly used tax forms for the self-employed and is primarily used by sole-proprietors to report profits from services performed for other businesses. If you are a sole-proprietor who performed services for another business and you were paid $600 or more for those services, that business is required to send you an IRS form 1099-MISC.
When you receive the 1099-MISC, review box number 7, “non-employment compensation.” This is where your income from that business should be recorded. You must be certain to report this income on your Schedule C because the IRS has also received a copy of this form. In this respect, the form 1099-MISC serves the same function as a form W-2, in that it reports your income from this source to the IRS.
Even if you do not receive a form 1099-MISC, you are required to report the income when you file your tax return.
If you earned less than $600 in a tax year from an income source, you must still report the income. Less than a $600 income simply means that the business you did the work for does not, necessarily, have to provide you with the 1099-MISC, but you must still report the earnings. Because you earned less than $600 from that source in no way exempts you from paying taxes on the income.
If the amount of income reported on the form 1099-MISC is incorrect, you must contact the issuing business and they must send a corrected form 1099-MISC to you and the IRS. Under these circumstances, you should wait until you receive the corrected form 1099-MISC before filing your income tax return. In the event that your Schedule C total and the tally of all of your 1099s do not match, the IRS will contact you and require an explanation.
If you receive a 1099-MISC form after you have filed your income tax, you do not have to do anything if you reported the income as part of your Schedule C earnings. If you did not report the income, you will need to send an amended return and include the 1099-MISC and the income it states. This will likely result in you owing higher taxes, possibly with interest and penalties if the amended return is received by the IRS after April 15.
Remember to keep accurate records of everything you earn in the course of the year and report all of these earnings to the IRS at the time that you file your return, whether you have received all the necessary forms from other sources or not.
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Form 1099-MISC is one of the most commonly used tax forms for the self-employed and is primarily used by sole-proprietors to report profits from services performed for other businesses. If you are a sole-proprietor who performed services for another business and you were paid $600 or more for those services, that business is required to send you an IRS form 1099-MISC.
When you receive the 1099-MISC, review box number 7, “non-employment compensation.” This is where your income from that business should be recorded. You must be certain to report this income on your Schedule C because the IRS has also received a copy of this form. In this respect, the form 1099-MISC serves the same function as a form W-2, in that it reports your income from this source to the IRS.
Even if you do not receive a form 1099-MISC, you are required to report the income when you file your tax return.
If you earned less than $600 in a tax year from an income source, you must still report the income. Less than a $600 income simply means that the business you did the work for does not, necessarily, have to provide you with the 1099-MISC, but you must still report the earnings. Because you earned less than $600 from that source in no way exempts you from paying taxes on the income.
If the amount of income reported on the form 1099-MISC is incorrect, you must contact the issuing business and they must send a corrected form 1099-MISC to you and the IRS. Under these circumstances, you should wait until you receive the corrected form 1099-MISC before filing your income tax return. In the event that your Schedule C total and the tally of all of your 1099s do not match, the IRS will contact you and require an explanation.
If you receive a 1099-MISC form after you have filed your income tax, you do not have to do anything if you reported the income as part of your Schedule C earnings. If you did not report the income, you will need to send an amended return and include the 1099-MISC and the income it states. This will likely result in you owing higher taxes, possibly with interest and penalties if the amended return is received by the IRS after April 15.
Remember to keep accurate records of everything you earn in the course of the year and report all of these earnings to the IRS at the time that you file your return, whether you have received all the necessary forms from other sources or not.
Create a video blog…instantly.