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1099-MISC IRS Forms Coming Due

By January 14, 2010

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It's that time of year again when people start name-dropping IRS form numbers, such as 1099-MISC. This form is part of what the IRS calls "Information Returns". There are two basic reasons why self-employed or freelance individuals should know about IRS form 1099-MISC.

  1. If you worked as an independent contractor or freelancer, or were otherwise self-employed (unless you operated as a corporation) during tax year 2009, you should be receiving 1099s from any clients who paid you more than $600 over the course of the 2009 tax year.
  2. If, as part of your work as an independent contractor or freelancer, or during the operation of your own business - regardless of whether you operate as a sole proprietor, LLC or corporation, you are required to provide completed 1099-MISC forms to any independent contractors, subcontractors, freelancers, etc. (not employees and not corporations) to whom you made more than $600 in payments over the course of the 2009 tax year. Attorneys' fees of $600 or more paid in the course of your trade or business are reportable in box 7 of Form 1099-MISC. Some of these payments may go in box 14, Gross Proceeds if they include amounts paid in a legal settlement. (Don't shoot me, I'm just the messenger). See the IRS instructions (links below) for details.
Direct from the IRS
Report on Form 1099-MISC only when payments are made in the course of your trade or business. Personal payments are not reportable. You are engaged in a trade or business if you operate for gain or profit. However, nonprofit organizations are considered to be engaged in a trade or business and are subject to these reporting requirements. Organizations also subject to these reporting requirements include trusts of qualified pension or profit-sharing plans of employers, certain organizations exempt from tax under section 501(c) or (d), farmers' cooperatives that are exempt from tax under section 521, and widely held fixed investment trusts. Payments by federal, state, or local government agencies are also reportable.
What You'll Need to Complete 1099-MISC

If you are required to submit Form 1099-MISC to someone you paid, you will need their social security or tax identification number (TIN). For this purpose, you should ask the receiving party to complete a W-9 form, Request for Taxpayer Identification Number and Certification, if you don't already have one in your possession. While you could ask for the information over the telephone, you should ask for the W-9 as it certifies the number that the party has provided you and gets you off the hook for misreporting the number to the IRS.

Likewise, if you provided services in excess of $600 and are expecting a 1099-MISC, you might volunteer a completed W-9 form to your client(s) if you haven't already provided one, as a way of reminding your client(s) that they need to prepare one and send it to you. Whether you are the employee or the employer, you don't need to submit the W-9 to the IRS unless and until you are asked to produce it.

This Year's Deadlines

In any case, this year's deadline for providing 1099-MISC forms for the 2009 tax year is Monday, February 1st, 2010. There are a few exceptions that extend the deadline to February 15th, but they only apply if payments are being reported in Form 1099-MISC box 8 (Substitute Payments in Lieu of Dividends or Interest) or box 14 (Gross Proceeds Paid to an Attorney). Since, for the most part, payments to independent contractors are reported in box 7 (Nonemployee Compensation) of the form, it's highly likely the February 1st deadline will apply to you.

Most tax software programs, at least those with an available business edition, will include the form and instructions and make the form fairly easy to complete. If you made payments that are subject to from 1099-MISC and use an accountant or bookkeeper, be sure to provide the information to them in a timely manner, as they get extremely busy this time of year.

The appropriate copies of any 1099-MISC forms you complete for tax year 2009 must then be submitted to the IRS no later than February 28, 2010. Unless you file the forms with the IRS electronically, you will need to include IRS Form 1096 (Annual Summary and Transmittal of U.S. Information Returns) to transmit the "Information Returns" to the IRS.

Related IRS Links

Form 1099 MISC Instructions
IRS Guide to Information Returns
Order IRS Forms Online
Instructions for Form 1096 (PDF)
Comments
January 14, 2010 at 4:45 pm
(1) http://freemoneymakingideasfromhome.blogspot.com/ says:

Great stuff, keep up the good work

January 14, 2010 at 8:12 pm
(2) Ilka Marsh says:

Thank you for the helpful information. But the one thing it seems nobody can tell me is whether or not you have to issue a 1099 to an advertising (magazines, yellow pages, etc.) vendor who is not incorporated and has been paid more than $600. And if so, in which box should it be reported?

January 15, 2010 at 8:33 am
(3) homebusiness says:

Ilka:
Please don’t take this as tax advice – you should confer with your accountant or directly with the IRS – buy my thinking in layperson’s terms is that it would depend on how services are provided. For one thing, the IRS provides an exception in which you are not required to report:

“Payments for merchandise, telegrams, telephone, freight, storage, and similar items;”

So actual advertising fees – costs to place ads in publications, etc. – would not be reported. But if you are paying someone other than a corporation that provides layout services, ad copywriting, or brokerage type, all-inclusive services, the portion of what you pay them that is not related to the actual ad fees (if you can separate the two) would be reportable.

I would also check with our Guide to Tax Planning – William Perez – as he is an accountant and would probably be able to help you with a more definitive answer.

Randy D.

February 1, 2010 at 10:47 am
(4) LadyMuse says:

So let me get this straight. If I work for one company as a W-2 Employee my deadline for filing those taxes is April 15th? But if I ALSO worked a side job as an independent contractor for another company my deadline for filing my 1099 taxes is February 28th?

Is that correct?

February 1, 2010 at 11:12 am
(5) homebusiness says:

LadyMuse:

No, that’s not it at all. The end of February deadline is the deadline for employers to file copies of 1099s for those contractors they hired and paid more than $600 to over the course of the year. Those same employers need to get the 1099s out to the contractors by today, February 1, but don’t need to send the IRS copies until the end of February.

As an independent contractor or an employee, your taxes are due April 15th – doesn’t matter how the income was received. The only exception would be if you have declared a tax year of other than Jan 1 through December 31. If you earned more than $400 as an independent contractor and didn’t have taxes taken from your payments, you will also need to file Schedule SE with your return – to calculate how much self employment tax you owe.

Randy D.

February 2, 2010 at 3:35 pm
(6) Lindsey says:

What happens if your payer doesn’t get the 1099 to me (the contractor) by the Feb. 1 deadline?

February 3, 2010 at 8:57 am
(7) homebusiness says:

Lindsey:
That happens a lot. In fact, if this is the first year you’ve worked with this payer, they may not even realize they need to prepare one for you.

What I do is send them a gentle reminder that they need to send you a 1099 form for your earnings so you can file your taxes. You probably have a very good idea of how much they’ve paid you during the year. If it exceeded $600 and you’re not operating as a corporation, they owe you one. Tell them what your records show as your earnings for the year and ask them to see if that agrees with their records.

By sending them a reminder and making it easy for them to comply, you’ll have a high chance of success in getting them to send you a 1099. If they still don’t send you one, you’ll still need to report your earnings and there’s not much else you can do. Any penalties, etc. are between the payer and the IRS – if it’s beyond your control the IRS realizes there’s nothing you can do about it. But I would definitely send them a reminder and keep a copy of it for your records.

Randy D.

February 3, 2010 at 11:33 am
(8) MegM says:

So, if an employer has not sent me (sole-proprietor) a 1099 Misc form as of Feburary 1st 2010 and I want to go ahead and file- do I consider the income as general or include it in the 1099 MISC SECTION?

February 3, 2010 at 4:38 pm
(9) homebusiness says:

MegM:
Not at all sure what you mean. As a sole proprietor you would complete Schedule C and Schedule SE. You would then transfer amounts to your 1040 and report by April 15. Which form and line numbers are you referring to?

Randy D.

February 4, 2010 at 12:07 pm
(10) kj says:

Where can you find the forms? The Post Office had them at one time but no more. If ordering from the IRS will they ever sent them?? help.

February 4, 2010 at 4:17 pm
(11) homebusiness says:

Go to http://www.irs.gov/

Look for Forms and Publications at the top left – or go to

http://www.irs.gov/formspubs/index.html

When you click on a form it opens as a PDF file, which you can type into directly and save on your computer, or save on your computer and print out.

There are also links on that last page above with info on ordering forms, etc.

Randy D.

February 5, 2010 at 5:18 pm
(12) Brooke says:

Hello! I did supply the 1099 Misc to contractors that I paid over $600 to, sent in the forms to the IRS, and have gathered all of my information for write-offs, etc. Do you know where in Turbo Tax I am supposed to input the numbers of the amount I paid out to the subs? Or do I go through everything, efile, and then wait for the IRS to figure out the final number I owe based on the forms I sent them?

February 6, 2010 at 8:52 am
(13) homebusiness says:

Brooke:
The total gets entered on your Schedule C – Profit or Loss from Business – Part II Expenses – Line 11 – Contract Labor. If you used TurboTax to prepare the 1099s, when you go to input the amount, the total of the 1099s you issued should show on that line. Don’t forget to add any contract labor expenses you paid that didn’t require a 1099.

If you didn’t use TurboTax to prepare the 1099s you’ll need to enter the amounts manually. Open the Schedule C from the Forms menu in TurboTax. You can enter the total on line 11, or click the Plus sign to the left of the box there and open a worksheet where you can input amounts individually and TurboTax will total for you.

If you didn’t use TurboTax for the 1099s this year, I think you’ll find it much easier if you do use it next year for completing your 1099s.

Randy D.

February 8, 2010 at 5:09 pm
(14) Tabatha says:

If I performed work during the Year 2009, but I did not receive payment for all of my invoices ’til the following year (Year 2010). Will my 1099 only reflect actual payments received in 2009, as opposed to the total compensation of all of the invoices I submitted for the Year 2009?

February 9, 2010 at 8:37 am
(15) homebusiness says:

Tabatha:
That mostly depends on the employer issuing the 1099. If you are on a “cash” accounting system, only the money you actually received in 2009 is considered 2009 income. If you are on an “accrual” system then the money you billed out during 2009 – regardless of when you received it – is taxable in 2009.

It pays to check your own records for accuracy. If you records don’t agree with the employer issuing the 1099 (say, for example you are using a cash accounting system and they are using accrual) you can ask them to correct it for you. But even if they refuse, you can just state the amount you show as received in 2009 – just be prepared to back it up if the IRS questions it.

Randy D.

February 14, 2010 at 10:14 am
(16) Nathan Simmons says:

The church I provided audio help with on Sundays sent me a 1099 Misc. Will I have to complete a Schedule C and pay Self employment Tax? or is this a tax exempt organization and they did it incorrectly???

February 14, 2010 at 11:56 am
(17) homebusiness says:

Nathan:
Churches that are tax exempt are not required to withhold Social Security or medicare taxes (what you pay from Schedule SE), even from employees, so filing a 1099 is probably routine for them.

The Schedule SE instructions are clear that you must file a Schedule SE if your net earnings from self employment from other than church employee income total $400 or more, or you had church employee income of $108.28 or more. So it looks to me like you will have to pay self-employment taxes.

Schedule C is used for reporting income or loss “from a business you operated or a profession you practiced as a sole proprietor. An activity qualifies as a business if your primary purpose for engaging in the activity is for income or profit and you are involved in the activity with continuity and regularity.” A a sporadic activity or a hobby does not qualify as a business.

Randy D.

February 14, 2010 at 12:37 pm
(18) Diane says:

Randy, I worked part-time for a realtor. He spaid me very sporadically when he could and did not withhold taxes. He said he is going to report it as contract labor but as of today 2/14 I have not received a 1099. I have to file my taxes because I have to file FAFSA for a child going to school in the fall. What should I do. Should I include the income I know I earned and assume he will eventually give me a 1099 misc? Do I file the taxes this way even though the IRA won’t have a 1099 to compare against? won’t this trigger an audit? But I have to file so that I can file the FAFSA….
Diane

February 14, 2010 at 2:26 pm
(19) homebusiness says:

Diane:
Just prepare and file your taxes including that income just as though you had received the 1099. No, that will not trigger an audit in and of itself. The responsibility for filing the 1099 is the employer’s – you can ask, but in the end if he doesn’t provide it, he doesn’t provide it and there’s nothing you can do to force him to do so. He is the one who is asking for trouble with the IRS.
Every year I have at least one employer who doesn’t bother to send me a 1099 and it’s never been a problem. I wouldn’t rely on the employer to tell me how much they paid me anyway.

Randy D.

February 14, 2010 at 12:50 pm
(20) Diane Simmons says:

Randy, I asked this a bit ago, but do not see my question, so here it is again. I apoligize if it is duplicated.

I worked part time for a Realtor. He paid me very sporadically and did not withhold any taxes. I have asked him directly and he is going to claim me as contract labor, but I have yet to receive a 1099. Since I know the amount I received, should I go ahead and claim this a 1099 misc income in my Turbo Tax program? You see I have to file ASAP so that I can file my FAFSA now for my son going to college in the fall. I really can’t wait. But if I file my taxes with no 1099, will this not trigger an audit when it gets to IRS with no 1099 on their part??? Any suggestions? Thanks, Diane

February 14, 2010 at 2:28 pm
(21) homebusiness says:

Diane:
I’ve replied to your first post. Sometimes it takes a while for comments to show, and some comments get held in a moderating queue until I approve them (which was not the case with yours). The system at About seems to be slow to respond today as well, as I’ve updated both the spotlight at the top of the home page and the area at the bottom left of the home page over an hour ago and they are still not displaying.

Randy D.

February 16, 2010 at 6:23 pm
(22) jayne doughe says:

I received 1099 misc forms from overtime wages. My employer sent me my w-2 for straight time wages. Where and how do I report this 1099 misc income and why did he not include my overtime in my w-2. Will this cost me more money? Please let me know what I do?

February 17, 2010 at 7:58 am
(23) homebusiness says:

Jayne:
Where and how you report it depends on your situation. It sounds to me like your employer did not take withholding from your overtime. My best suggestion on where to start would be with your employer.

Randy D.

February 19, 2010 at 11:28 am
(24) Julie says:

I received a 1099 from doing part-time fitness instructing. The 1099 is for an amount over $600, however, the owner is very behind on payroll and I did not recieve over $600 in 2009 (and still have yet to see this amount in 2010). How do I handle this? Do I have to pay taxes on this? I have tried working with the owner on this, but he is very difficult. Is there somewhere I can report this?

February 19, 2010 at 4:25 pm
(25) homebusiness says:

{Response updated on 2/23/2010}
Julie:
Assuming you are filing on a cash basis and not an accrual basis (I assume you wouldn’t be bringing this up if you weren’t), my best advice is to document your efforts of asking for a corrected 1099. That’s about all you can do. It would be to your benefit to delay filing a return until you receive the corrected 1099 so you should stay on top of the situation and be persistent.

It’s my understanding that if you complete a Schedule C or Schedule C-EZ (short form) to report self employment income and the amount you report as earnings is less than the amounts shown on all 1099-MISC you have received, it is an automatic audit trigger.

When the time comes to file your return, if you don’t have a corrected 1099, you could report the amount you know to be correct on your return – make sure your records back it up as you will likely trigger an audit. Otherwise, you’ll need to complete your return with the overstated earnings and then file an amended return once you get the corrected 1099.

For additional information you might visit IRS.gov. Information on calling the IRS for advice is available at:

http://www.irs.gov/help/article/0,,id=96730,00.html

Randy D.

February 20, 2010 at 8:29 am
(26) Nicole says:

I recieved a 1099 misc and have no idea what form to use to file the taxes for it. I had no income outside this 1099 and it was over $600 – any advice on which IRS form to use?!

February 20, 2010 at 9:15 am
(27) homebusiness says:

{Response Updated on 2/25/2010}
Nicole:
1099MISC in come is usually reported on Schedule C or Schedule C-EZ if you worked as an independent contractor. Schedule C/C-EZ allows you to deduct any qualified business expenses from the income reported on 1099-MISC. If you have less than $5,000 in business expenses and are not taking the office in home deduction, most likely you will be able to file Schedule C-EZ (the short form). If, after your expenses, your net profit exceeds $400, you’d also have to file Schedule SE – Self Employment Tax and pay SE (social security/medicare) tax on your earnings so it will go there and be included in your earnings elsewhere (I’ll get to that in a sec).

Because 1099-MISC income is money you made for which no withholding was deducted, the employer didn’t pay any SE taxes on your behalf. Typically, when you have a salary and withholding, half the SE tax is withheld from your pay check and the employer pays the other half on your behalf. If you have income where nothing was withheld, you’ll have to pay both halves of the tax, but you’ll get an adjustment on our income for half of that amount. Schedule SE tells you where to put that on your 1040 form (hint – line 27, if I remember correctly and you are filing the 1040 long form).

I encourage you to check out irs.gov as you should find tons of information along with answers to specific questions there. They don’t make it easy, but they do try to help. I try to translate, but it isn’t easy and there may be special circumstances that apply to you that I’m not aware of.

Randy D.

February 22, 2010 at 1:32 am
(28) Elsa says:

I have received a 1099 that is not correct! As a contractor, I have labor charges and I submit expenses for reimbursement. The 1099 in question combined both labor charges and reimbursed expenses of $750. Now what am I supposed do do? Use my figures or the 1099?

And yes, I’ve already spoken to the contractor who isn’t interested in making it right.

February 22, 2010 at 9:08 am
(29) homebusiness says:

Elsa:
Report the total amount on your 1099 as income and then deduct the reimbursed expenses on Schedule C as a cost of doing business. In the end, the effect is the same.

You don’t end up paying more in SE taxes because SE tax is calculated on your NET earnings reported on Schedule C after expenses.

Randy D.

February 26, 2010 at 1:42 am
(30) Linda says:

It’s Feb 26 and I have yet to receive my 1099 from my contract employer. They claimed to have put it in the mail 2 weeks ago. They are not returning my calls requesting copies or even the bottom line numbers.
What is my reourse?
L

February 26, 2010 at 8:49 am
(31) homebusiness says:

Linda:
You really don’t have any. Report the income you’ve documented. You don’t have to attach a 1099MISC to your return anyway, so if they aren’t going to get off their butts and cooperate with you, go ahead and file your return when you’re ready. Provided your income you report on Schedule C/Schedule C-EZ is at least as much as all of the 1099s that were sent in on your behalf, you should have no issues. Perhaps they can at least confirm that what they supposedly reported matches your figures – by phone, email, or whatever? If they are going to be that difficult, I’d think twice about continuing to work with them unless you absolutely have to.

I sent out about 7 requests for 1099s just this week. You wouldn’t believe some of the responses I got. I think the IRS needs to do a better job of publicizing the requirement to employers and enforcing the rule when they don’t comply. In the contracts I use, I include wording to the effect that the employer agrees to send me a 1099MISC within the IRS deadline. Very few honor it anyway. It’s like pulling teeth.

Randy D.

February 27, 2010 at 12:10 am
(32) Amy says:

I received a 1099 today (Feb 26, 2010), do I have to report this on my taxes for 2010 since they sender missed the deadline (Feb 1, 2010)?

February 27, 2010 at 9:36 am
(33) homebusiness says:

Amy:
Whether they missed the deadline or not (or even if they never sent you one), if the money was paid to you in 2009 it’s 2009 income, not 2010 plain and simple.

Randy D.

February 28, 2010 at 7:42 am
(34) Marty says:

I received a settlment where my attorney received the check first. Took his fee, then the balance to me. My 1099 shows (it was first sent to my attorney) me receiving the “full” amount. My tax obligation is just on what I received correct ?
There are sealed documents etc… HELP.

February 28, 2010 at 9:49 am
(35) homebusiness says:

Marty:
This doesn’t sound right, and you may even have to file a 1099 for the amount the attorney received, but I can’t really advise you as my experience with 1099s is limited to non-employee compensation. I’d suggest you check with our Tax Planning Guide, William Perez, who is a practicing tax accountant over at http://taxes.about.com/.

Randy D.

February 28, 2010 at 5:39 pm
(36) Margie says:

I work as a nanny and our agreement was that they take care of my part of the taxes, so there were no witholdings from my paychecks. How come I received a 1099 from them instead of a W-2?

March 1, 2010 at 8:24 am
(37) homebusiness says:

Margie:
Exactly because nothing was withheld from your paychecks. You get a W2 when taxes are withheld and a 1099 when they are not. I don’t know what your agreement specifically covered, and you’ll want to clarify that. Are they agreeing to take care of half your SE tax, all of the taxes you’ll owe, or what?

Randy D.

March 2, 2010 at 1:57 am
(38) Adrian C says:

My wife and I received W-2s for our regular jobs. But she also did some independent contractor work on the side, earning only $380. We did not receive a 1099-MISC b/c not enough income. And it appears from the discussion above that since this income is below $400 I do not need to file and SE report to pay payroll taxes.

Do I just add the $380 to line 7 wages of my W-2? Or is there something else I have to do? Or do I ignore it since less than $400?

Thanks

March 2, 2010 at 7:48 am
(39) homebusiness says:

Adrian:
If it were me, I’d report the earnings on Schedule C-EZ. If your earnings were less than $400 and not received from a church, you would not need to file Sched SE.

Randy D.

March 2, 2010 at 1:59 am
(40) Adrian C says:

Edit: I meant to say Do I add to line 7 or my 1040 (not W2)

March 2, 2010 at 7:50 am
(41) homebusiness says:

Adrian:
See my prior reply. You’ll transfer the amount from Line 3 of Sched C-EZ to line 12 on your 1040, per the IRS instructions.

Randy D.

March 2, 2010 at 8:03 pm
(42) Kerry says:

Randy — I work for a state university and put in last year for reimbursement of some moving expenses, which was part of the deal in my job negotiations. I was surprised then to receive a 1099-MISC in January from the independent non-profit foundation that is associated with the university. Apparently it was the foundation rather than the university that reimbursed me. But they say that since I am not an employee of the foundation, they had to report the payment on a 1099. Not only that, it is in box 7, which my tax program says means I have to pay self-employment tax on the money. I’ve talked to everyone about it but no resolution. I could give the money back, but that is now and this reimbursement was done in 2009 so it seems I’m stuck for my 2009 taxes. Is that your read?

March 3, 2010 at 8:51 am
(43) homebusiness says:

Kerry:
Your question is well beyond any expertise I can offer you. I suggest you consult a qualified tax advisor or the IRS directly. There are additional questions that need to be considered, such as did you claim your moving expenses, what year this all took place, etc.

I’ve claimed and have had moving expenses reimbursed in the past – many years ago. Essentially the process involves reporting your expenses on the appropriate form and then deducting amounts you were reimbursed. This obviously has nothing to do with self employment income.

You might also try our U.S. Tax Planning Guide, William Perez, over at: http://taxes.about.com/

Randy D.

March 2, 2010 at 8:29 pm
(44) Andrew S. says:

I am an independent contractor working for a middle school radio station. The radio station is a business in itself, separate from the school. I was paid monthly by the radio station starting in September 2009 – December 2009. I’m very new to this process, so can someone please inform me what tax forms I am required to file and by when, and of course, where to find them? Thank for very much.

March 3, 2010 at 9:00 am
(45) homebusiness says:

Andrew:
Essentially, as I understand it, you are an independent contractor working for the company hired by the school to run the radio station. That means you would file Schedule C or Schedule C-EZ, which will allow you to deduct any unreimbursed expenses you may have had (if any). Since I suspect your expenses will be minimal, you’ll probably be able to use Schedule C-EZ, which is much easier to deal with.

If you had net earnings (after expenses) of more than $400 for the year, you will also be required to file Schedule SE and pay Self Employment Tax.

The forms and instructions available at http://www.irs.gov will guide you on where to transfer the information from those forms to your 1040 if you are doing your own taxes and are not using a tax software program, like TurboTax. Just look in the Small Business – Self Employed section of the site.

If the radio station paid you more than $600 you should have received a 1099-MISC from them. If not, ask for one and check it for accuracy with the amounts you show as having been received. You don’t attach the 1099 to your return, but the radio station is required to file an informational copy with the IRS, so it’s important that the amount you say you earned matches up with what the employer reported.

Randy D.

March 10, 2010 at 9:40 am
(46) billy says:

have yet to recieve 1099misc is there any way to get amount from irs so i can file ? it is a relative who is not sending it dont want to get anyone in trouble just want to file taxes without creating more arguing in the middle of family fued

March 10, 2010 at 2:03 pm
(47) homebusiness says:

Billy:
Thanks for stopping by. In answer to your question, No, the IRS can’t give you the information because the employer didn’t file it with them. You just need to know how much you made during the year from this employer and go ahead and file your taxes. You should have been keeping records – can you go back and check your bank account deposits, etc.? Did you submit invoices you can work off of?

Randy D.

March 10, 2010 at 2:10 pm
(48) billy says:

i am sure he reported it on his taxes as he would need to get it off his income i have no records they were destroyed in fire as i said i am sure he filed his forms just did not give me my copy

March 11, 2010 at 8:23 am
(49) homebusiness says:

If you didn’t get a copy, there’s no way you can assume he filed a 1099MISC. He doesn’t have to file one to claim his expenses. You’re not going to get this from the IRS anyway – try calling them and see. Meanwhile, perhaps the bank can help by giving you copies of your bank statements. Request the info from him again and document your attempts. Worse case, you may need to estimate your earnings, but document what you’ve been doing. If you only had one employer and you claim that you earned less than what was on a 1099 (if he ever filed one, which I doubt), the IRS will notify you and you can amend your earnings at that time. You can only do what you can do.

Randy D.

March 14, 2010 at 10:39 pm
(50) Steve says:

Hi. I am using Turbo Tax and filing a married joint return for the first time. We have several W2 forms, but now we have one 1099-MISC to include for $1645. Something peculiar and frustrating is happening once it is added. Without including the 1099, our refund is a reasonable amount. When it is included, the total refund goes down by over $700! It comes out to about 45% on such a small amount! Am I doing something wrong here. I went over the numbers and options in Turbo Tax a number of times. Can a return go down by so much when adding such a small figure?

March 15, 2010 at 12:49 pm
(51) homebusiness says:

Hi Steve:
I’m afraid it could. In addition to paying income tax on that $1645, TurboTax may have also added SE tax to your bill. You are required to file Schedule SE when you have self employment net earnings in excess of $400. That means you not only have to pay your own portion, just like you do on your W-2s, you’ll have to pay an equal amount over and above because no employer has contributed the other half for you.

It’s also possible that the additional income has put you into a higher tax bracket.

As a TurboTax users myself for many years, I can offer a suggestion that might make it easier to see where the differences lie. You could print your return as a PDF file (you don’t have to print on paper) both with and without the 1099 income. Then open the PDF file – there will be a list of bookmarks on the left – like a Table of Contents. You can expand and collapse those sections to see what extra forms were added to the return and can access those forms directly to see what effect they had on your tax liability.

If you incurred unreimbursed expenses to generate the 1099 income, you can claim them on Schedule C-EZ. That will help offset the tax on that income.

When you pay SE tax, you are entitled to a reduction in your adjusted gross income in the amount of one half the amount you owe in SE tax. You should check to make sure TurboTax has picked this up. The reduction is listed on the first page of the 1040 and is applied before your Adjusted Gross Income (AGI) is calculated at the bottom of the first page.

You might also want to check to see if filing Married Filing Separately results in a lower tax liability for the two of you combined. It usually doesn’t, but sometimes extenuating circumstances can make it worth checking into.

Randy D.

March 16, 2010 at 2:40 pm
(52) Jack J. says:

I have a feeling it doesn’t matter, but I’m a Single-member LLC providing a 1099-MISC to an IC. Do I use my EIN or my SS# as the Payer? It says, “Sole Proprietors who are not required to have an EIN should use their SSN’s”. I’m not required to have an EIN, but I do have one.
Later in the instructions, it says, “For a single-member LLC…-snip-… For the TIN, enter the individual’s SSN (or EIN, if applicable).”
Which should I use? Thanks!

March 17, 2010 at 7:37 am
(53) homebusiness says:

Jack:
You’re right, it doesn’t matter. In most cases the IRS prefers you use your SSN. However, I would never put my SSN on a form like a 1099MISC and then mail it out to an independent contractor! So as long as you have an EIN, use it to protect yourself.

Randy D.

March 17, 2010 at 1:30 am
(54) Jigar C says:

Hi Randy,

I am an international graduate student. I worked at a LLC as part of my internship and they have sent me a 1099-MISC form with income reported in box 7. Now, I am aware that as a nonresident alien, I do not have to pay self employment tax on that income. Does that mean that I do not have to pay any kind of tax on that income? Where and how to report this income on the 1040NR form then? I was classified as an independent contractor. Does that mean I will have to fill Schedule C or C-EZ form?

Let me know. Thanks!

March 17, 2010 at 7:45 am
(55) homebusiness says:

Jigar:
I don’t have any experience with your situation and cannot accurately advise you. You may be right that you don’t have to pay SE tax (which is for social security/medicare, which I assume you couldn’t collect anyway) but I doubt that your earnings are free from other taxes.

I refer you to IRS Publicaiton 519 as well as to the reference materials linked to from that publication and other materials on the very comprehensive IRS.gov website. If you still cannot make a determination, I’d suggest you either contact an IRS representative (info is provided on irs.gov) or a qualified tax advisor.

Best,

Randy D.

March 17, 2010 at 9:37 pm
(56) Barney says:

If the company I worked for sent me a 1099 say for 28,800 but they were withholding 10 % of that for chargebacks. When all is said and done and the requests for that witholding amounts to 2% and I never recieved the other 8%, Yet my 1099 has the 100% of 28,800. What do I do?

March 18, 2010 at 7:20 am
(57) homebusiness says:

Barney:
My thinking is that you would report the full amount and then report the amount of the chargeback as an expense on Schedule C or Schedule C-EZ (if your total expenses are less than 5K and you otherwise qualify to file the short form).

However, I’m not a qualified tax advisor and would suggest you confirm that with one or directly with the IRS.

Randy D.

March 20, 2010 at 4:23 am
(58) Jeff C. says:

My customer sent me a 1099-Misc just yesterday, glad they did not wait until April 15th – jeez! Problem is that I am an LLC and they instead put my personal SSN on the 1099-MISC instead of my company name and TIN. Now I want to report this income for my LLC and be able to write off my LLC expenses against it. I file LLC Partnership taxes separate from my personal. So now how am I going to do this? Do I have enough time for them to correct this?

My worry is that the IRS lists the #1 red flag for audits being that income reported from payers does not match the totals that individuals or business reported income. The last thing I want is an audit.

March 20, 2010 at 7:41 am
(59) homebusiness says:

Jeff:
I am not a qualified tax advisor so I can only give you my opinion and not qualified tax advice.

The IRS is able to match your EIN to your SSN. In your next comment you indicate all payments were made to the LLC. If you were to get audited (because your share doesn’t match up with the 1099MISC issued with your SSN) you would easily be able to document what happened.

The employer is already in violation of IRS regulations as it missed the deadline for providing you with a 1099MISC. I have to wonder if they even sent this to the IRS, which they are supposed to do by the end of Feb., I believe.

I’d request a correction and document that you did so. Beyond that, you have to do what you have to do – file on time. You can request an extension, if you have to, provided you pay what you owe. So request the correction and send a W-9 with it. That way the employer can’t say they didn’t have your EIN and you’ve fulfilled your obligations. Beyond that, it’s out of your control.

Randy D.

March 20, 2010 at 4:34 am
(60) Jeff C. says:

Forgot to add to my previous post that all checks to me were issued in my LLC name and deposited into my LLC Bank account and all contracts with them are in my LLC Name. And they never provided me with a W-9 form.

March 21, 2010 at 6:31 pm
(61) Lara says:

Is there a minimum paid (not $600, but another amount) for which you do not need to make estimated quarterly payments? I use Taxcut software and last year I didn’t get a message about estimated tax, but this year I did for about an income of $4000.

March 22, 2010 at 9:52 am
(62) homebusiness says:

Lara:
See my Filing Estimated Taxes article to see who must pay and who is not required to pay estimated taxes. The cutoff is based more on the tax you owe than any amount of earnings, and it’s a bit much to explain in a comment. That may be why Taxcut triggered the message.

Randy D.

March 22, 2010 at 6:02 pm
(63) Susan says:

If I received a 1099 from a contractor but it displays a different amount than was paid to me.
#2 I received another 1099 from a contractor for whom I have no record of work or payment.

March 23, 2010 at 8:31 am
(64) homebusiness says:

Susan:
You can only contact them both and see if you can get things corrected. The reason the first may be incorrect is that you may be on a cash accounting system while the employer is on an accrual system (meaning they may have included amounts they owed you at the end of the year even though you hadn’t been paid yet). The other one is a mystery and all you can do is contact the issuer and see what is going on.

Randy D.

March 23, 2010 at 11:46 pm
(65) Kristina says:

I am in need of a desperate help! I sold handmade jewelry to one of the Resorts in Hawaii on consignment basis. I received 1099-misc from the resort with a nonemployee compensation of almost $7,000. How do I go about it? I’m doing it first time and am afraid I will have to pay huge taxes on it. Any suggestion or explanation is really appreciated. There is nothing in nr4 under Federal income tax witheld. Thank You,
Kristina

March 24, 2010 at 9:18 am
(66) homebusiness says:

Kristina:
I assume that no taxes are shown as withheld because taxes were not withheld. The only box that should show an amount is the Non-Employee income box.

Welcome to the land of paying taxes. You’ll want to file a Schedule C (or Schedule C-EZ if you qualify) and show the $7000 as earnings there and deduct whatever expenses you incurred to make the jewelry as well as any other selling and/or administrative expenses you may have had. You will also need to file Schedule SE for self-employment earnings on your net after expenses.

If your income from your other job was as an employee you should have received a W-2. That amount will go on the front of your 1040 under wages and salaries. The other forms will guide you where you need to include your net earnings on your return.

Your net earnings from the jewelry sales and your loan assistant job will then be combined to determine your total tax liability.

There are a number of free tax assistance centers now open around the country. If you need further assistance you could go to one for help or direct to the IRS which also offers access to free tax help. Or you could visit a local H&R Block or other tax service for paid assistance. As it’s likely you’ll owe a lot more than you’d like and could be subject to interest and penalties, paying to have your return done by a reputable preparer may just be the best advice I can give you at this point, rather than try to “gut this out” on your own.

Randy D.

March 24, 2010 at 12:13 am
(67) Kristina says:

Also, I forgot to add that I didn’t earn enough in my regular job (I worked as a loan assistant also on consignment) to file any taxes.

March 25, 2010 at 10:44 am
(68) AL says:

I forgot to mail the 1096 before February 28th. What are the consequences of sending it late by mail (besides using electronic services)?

March 25, 2010 at 4:12 pm
(69) homebusiness says:

Al:
Regardless of the consequences, it has to be better late than never, so I’d suggest you get it done ASAP.

More info on Form 1096 is available at http://www.irs.gov/pub/irs-pdf/f1096.pdf

Randy D.

March 27, 2010 at 2:28 am
(70) Hamza says:

Hi Randy,

I was a intern at a company which usually gives me a 1099. This year they still haven’t sent me one. I have been emailing them for about a month now and they are delaying it. What can I do at this point? How would I go about reporting my income? I can maybe piece together what I had received from bank statements but it definitely would not be the same as what I had actually earned? Please let me know if any advice you have. Thank you!

March 27, 2010 at 9:37 am
(71) homebusiness says:

Hamza:
The only thing you can do is put together your earnings as best you can and report what you believe you earned. In the future I’d suggest you make an attempt to keep better records of your earnings and any expenses. As it stands right now you have no way of confirming or denying any amount they were to provide on a 1099.

Not receiving a 1099 doesn’t relieve you of reporting your income and paying your taxes. If you’ve asked them and they still haven’t complied, it’s out of your hands.

Randy D.

April 2, 2010 at 7:58 am
(72) Aslam says:

I’ve not received the 1099-MISC for the work I did in 2009. I’ve called them and they have told that IRS send them the wrong form and now they are still waiting for these forms to be received. But now since the tax filing deadline is approaching fast I want to know what my options are:
1. Can I still report my income without 1099-MISC being actually received? Here the school can help me getting exact $ numbers of my income.
2. Can I file for a tax late-filing procedure till I receive 1099-MISC?

Thanks
Aslam

April 3, 2010 at 9:59 am
(73) homebusiness says:

Aslam:
The answer to both questions is YES.

1. You don’t need a 1099 to file your taxes, provided you can figure out how much you were paid. Even if you had one, you wouldn’t be required to send in a copy with your return, because your employer is supposed to file a copy with the IRS. The part about receiving forms is ridiculous – all the forms they need are readily available online in an instant.

2. Yes, you can file for an extension, but you’re required to pay what you think you owe in taxes, and if you don’t pay enough, you could be subject to interest and penalties. See IRS Form 4868 – Application for Automatic Extension of Time to File U.S. Individual Income Tax Return for details and instructions.

Randy D.

April 2, 2010 at 10:37 am
(74) Julie says:

I received a 1099-MISC in February for contract work I did in 2009. I filed my taxes shortly after and received a return. In mid-March, I was contacted by the company I did contract work for to inform me that the 1099 they sent me was wrong and they were sending a corrected form. (I just received the new tax form yesterday, but it’s a 1099-R. So, I had to deal with them on sending me a new 1099-MISC.) Anyway, my question is how do I go about correcting this on my taxes that I’ve already filed? The difference is less a little less than $200.

April 3, 2010 at 10:03 am
(75) homebusiness says:

Julie:
You’ll want to file an Amended Return, via Form 1040X. You should file this before April 15th to avoid any penalties or interest.

See IRS Topic 308, Amended Returns for detailed instructions and links to the form.

Randy D.

April 6, 2010 at 10:22 pm
(76) Amanda says:

Hi Randy,

My husband is a self-employed contractor who receives 1099-MISC from all of his employers. However, one particular contractor who has been a problem all year decided to mail his 1099 today (April 6, 2010). We have already filed our taxes and tried our best to include the amount we calculated from this particular contractor. Now that we have the 1099 what do we need to do with it, since we have already filed our taxes? I know that he was suppose to mail it out by February.

Is this going to throw an audit flag from the IRS because he filed the 1099 and we did not?

Thank you for your help!

April 7, 2010 at 9:01 am
(77) homebusiness says:

Amanda:
You don’t attach the 1099s you receive to your return anyway, so it makes no difference from the standpoint of physically having the 1099 in your possession.

1099s are considered “informational returns”. Meaning the employer is required to send them to the IRS by the end of February and to the worker by the end of January. The intention is for the employer to alert the IRS they paid the worker such and such an amount. The copy to the employee is a courtesy of sorts as it indicates what the employer is planning to report to the IRS as compensation paid to that worker.

You really don’t have to do anything unless the numbers on the 1099 are inaccurate – in which case you’d work directly with the employer – or cause your return that was filed based on the information you didn’t have then to be erroneous, in which case you’d need to file an amended return via form 1040X.

Information about amended returns is provided on the IRS website at: http://www.irs.gov/taxtopics/tc308.html.

Randy D.

April 11, 2010 at 7:05 pm
(78) Mike M says:

I received a 1099-MISC that was incorrect by $15. I have contacted the employer and they have sent me a new one, but I have not received it yet. However, when I contacted an accountant, she said I should file my return with the original, incorrect amount because I might have problems with electronic filing and to just deduct the $15 somewhere on Schedule C. Presumably, the IRS might not have the new one yet. Is this OK?

April 12, 2010 at 10:16 am
(79) homebusiness says:

Mike:
While I’m not a qualified tax advisor, I’d have to disagree with your accountant’s advice. First, I dont’ think the IRS is going to have a problem with $15 – the tax on the difference is going to be next to nothing. Second, I don’t think it’s a great idea to fudge the numbers anywhere on your return.

I can only tell you what I would do. I would report the correct number and file the return. It’s likely by the time the IRS raises a concern (if they ever do), the amended 1099 will have been filed. Also, if they contact you about it, just document your situation and you shouldn’t have any problems at all.

To me, being honest on your return is a pretty darn good defense to any issues the IRS might raise – if they even raise them at all. Fudging numbers, etc. is what makes people dread getting audited. Honesty always helps in getting a good night’s sleep!

Randy D.

April 14, 2010 at 1:35 pm
(80) ChrisPDX says:

While I was unemployed last fall I did some consulting work where I earned $4,050. Total payments received were $4,059.51 (including some misc. minor printing expenses). I kept track of mileage, expenses, and tools I bought for the work.

Only this past Monday night did I see a request from the company I worked for asking me to fill out a W-9 so they could provide a 1099-Misc. This was in my Junk e-mail folder from back in March. I called the accountant and company and have not heard back.

Since I know the amount I was paid, should I just go ahead and include it in the “Other Income” in Turbo Tax? (I think this takes you to a schedule C.) Do I really NEED the 1099-Misc?

Last time I was self-employed or did any consulting work was 10 years ago so I’m rusty on this and didn’t realize I should be receiving a 1099-Misc.

Thanks for any last minute help!

April 15, 2010 at 8:58 am
(81) homebusiness says:

ChrisPDX:
No, you don’t really NEED the 1099-MISC – you’re not required to provide a copy. The employer is the one in hot water. However, I’d send along your W-9 to the employer as they requested so they can’t blame you. I’m glad you kept good records – I can’t believe how many don’t!

Randy D.

April 15, 2010 at 1:44 pm
(82) Wes says:

If I did not receive a 1099-MISC from a customer, can I assume 100% that the customer also did not send the IRS a copy of this 1099-MISC?

If the customer did not file a 1099-MISC with the IRS, would the IRS ever know that I received this money from the customer?

I know that you need to report all income regardless if you received a 1099-MISC or not, but I’m just curious as to how all this works.

Thanks!

April 16, 2010 at 1:17 pm
(83) homebusiness says:

Wes:
You have no way of knowing if the customer submitted the 1099 to the IRS without sending you a copy.

Yes, it is best to report your income. Keep in mind that the customer will report your cost as an expense, so if that customer were ever to get audited to document their labor expenses, your name could come up, you could get audited and then conceivably be subject to prosecution for tax evasion.

‘Nuff said?

Randy D.

April 15, 2010 at 11:42 pm
(84) XY says:

Hi,

I just found out that i reported the income for contractor in the wrong box (3 vs 7). Should it be correct?
Thanks,

April 16, 2010 at 1:19 pm
(85) homebusiness says:

XY:
Yes, you need to correct it. You can do so by issuing a corrected 1099 and marking the box at the top “Corrected if Checked” or whatever the exact wording is. Be sure to send a copy to your contractor and to file the correction with the IRS.

Randy D.

April 16, 2010 at 1:48 pm
(86) leah says:

Hello Randy,

I am doing my tax on turbotax and I received my 1099 misc how do I do all my tax deduction for my homebusiness?

April 17, 2010 at 10:46 am
(87) homebusiness says:

Leah:
TurboTax makes it quite easy, but you’ll need the Home & Business version, which includes step-by-steps for Schedule C where you record your business expenses. It also handles taking care of your SE taxes.

Randy D.

April 21, 2010 at 9:03 pm
(88) patsy says:

Randy:
a friend is engaged in laundry pick up and delivery business since june 2009. she applied for tax extension since her records are being consolidated. hence, she is to issue 1099s to her dry cleaners yet. questions: 1. can she adopt tax year other than the regular tax year. 2. what will be the penallties for her late issuance of 1099misc. thanks.

April 22, 2010 at 11:04 am
(89) homebusiness says:

Your friend may not be able to change it at all, may be able to change it automatically or may have to apply to the IRS to make the change. Info on changing your tax year is available here –

http://www.irs.gov/businesses/small/article/0,,id=98673,00.html

Getting information directly from the IRS on penalties for late or inaccurate filing of 1099s is more complicated. From what I’ve read, penalties for not filing or late filing increase with time, ranging from $15 to $50 per form.

Randy D.

July 22, 2010 at 9:38 pm
(90) Kristy Blake says:

I found http://www.wagefiling.com as the best way to report 1099 MISC forms without having to purchase forms or software. We review a ton of software each year and their web based application is by far the best and it only cost $3.49. Give them a look you can even file past year tax forms.

July 23, 2010 at 9:19 am
(91) homebusiness says:

Thanks, Kristy. Looks like a pretty good service.

In my case, I’ve never had to purchase tax forms, which are readily available for free online from the IRS and also built into TurboTax, which I buy every year to complete my returns anyway, and which I sync with QuickBooks. That way I don’t have to rely on anyone to protect my information online.

For others though, it might be a useful solution.

Randy D.

July 30, 2010 at 11:48 am
(92) Sharndelle says:

I received a 1099-MISC where it listed non-employee compensation for an internship I did. I was shadowing a pastor for a few months. I did a sermon outline, reflective journaling, lead a leadership class, and preached a sermon. I was required to read monthly, and meet with the pastor for counsel. I received a stipend for this and later received a 1099. Was this reported properly? I wasn’t sure, since church employees don’t get taxed the same, and I was not an employee, but I didn’t consider myself self-employed either. The internship is done through a program at my job. I work for a church conference office. I was not to be paid as an employee though, because non-employees also do the internship.

July 30, 2010 at 3:23 pm
(93) homebusiness says:

Sharndelle:

Sounds like an interesting internship. You’re right, churches and certain other organizations do receive different tax treatment. My guess is, that for all intents and purposes, you were an independent contractor in the eyes of the IRS. I suspect the amount you earned would be the determining factor. However, when in doubt, you should always seek clarification from the IRS or a qualified tax advisor.

Thanks for your comment.

Randy D.

August 16, 2010 at 3:17 pm
(94) Melissa says:

Hello. My husband is going to be receiving a 1099 for some “side work” he did. It was a one time job. He does do some side work, however it is not “with continuity and regularity”. Most anything he does is for friends and family and the occasional business friends work at. His side work is sporadic. He has a full time job and basically just “helps people out”. Wouldn’t this be considered an activity or a hobby and not qualify as a business. Even though he will be receiving a 1099, does he need to file the Schedule C and Schedule SE? Thank you for your time and advice.

August 17, 2010 at 9:34 am
(95) homebusiness says:

Melissa:
First, there are not enough facts to go on here. Secondly, I’m not a tax professional and suggest you seek guidance from same. However, you should keep the following in mind:

a. The IRS states in Publication 334, Tax Guide for Small Business:

You can have business income even if you are not involved in the activity on a regular full-time basis. Income from work you do on the side in addition to your regular job can be business income.

b. The differentiation between a “Hobby” and a “Business” in the eyes of the IRS is not about whether you are required to report the income, it’s about whether or not you can deduct your expenses against that income. See Is Your Hobby a For-Profit Endeavor?

In short, unless your husband meets one of the few exceptions and he received more than $400 in income from his “side work”, it’s likely you will need to submit at least Schedule C-EZ to report the income and Schedule SE to calculate the amount of Social Security tax owed.

While it’s not uncommon for people who do work on the side to do so “under the table”, once the 1099 form was submitted, the IRS became aware of the income, so it is no longer “under the table”.

Here’s another quote from Publication 334:

A trade or business is generally an activity carried on to make a profit. The facts and circumstances of each case determine whether or not an activity is a trade or business. You do not need to actually make a profit to be in a trade or business as long as you have a profit motive. You do need to make ongoing efforts to further the interests of your business. You do not have to carry on regular full-time business activities to be self-employed. Having a part-time business in addition to your regular job or business may be self employment.

In short, with the information you’ve provided, it appears your husband needs to report this income if it exceeded $400. However, I do not have all the facts, nor am I a qualified tax professional, so I can only give you a “layman’s opinion”.

Randy D.

October 11, 2010 at 7:11 am
(96) Confused says:

Hello,

I am just wondering if the nonemployee compensation amount listed in that 1099 misc form is the leftover from the total income earned minus the personal exemption as well as the standard deduction.

On my 2009 form, I had 3488.5 reported, but I had made close to 13081.5 for the year. 13081.5 – 9350 = 3731.5 (Very close to the number reported)

And I was paid in cash a lot.

October 11, 2010 at 8:33 am
(97) homebusiness says:

Confused:
Your standard deductions and personal exemptions are not reflected in the 1099 at all. In virtually all cases, the employer doesn’t even have access to that information, since they don’t need it.

Randy D.

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