As an independent contractor and business owner, you often freelance with new clients. You expect those clients that hire you to send you a 1099 so that you can complete your taxes on time.
Unfortunately, some companies and individuals don’t remember to fill out those 1099s, so you may never get a full accounting of how much you were paid. 1099s are due by January 31 in most cases, so if you have not received one by the end of February, it’s time to start taking action.
When won’t you receive a 1099?
Remember that you won’t get a 1099-MISC form if you earn less than $600 from an employer. Some people believe that this means that they don’t need to report that income, but that is incorrect. You should report your 1099-MISC income (or any income under $600) independently on your Schedule C.
If you have the receipts or invoices for those payments, make sure to keep copies of them.
Another time you may not get a 1099 is if a client forgot. In that case, you should reach out to the client to ask if they can send you a 1099. If you can’t reach them, simply report that income on your tax return based on the records you’ve kept.
You should always make sure you get the right amount on your taxes compared to the 1099 form because if those numbers are mismatched, you could get a notice from the IRS and end up being audited.
What do you do if you get paid in unusual ways?
If you receive third-party payments like those from Upwork or PayPal, you should look for form 1099-K. If you don’t get one, then you should still report the money that you received from those services on your taxes. Remember that there is no threshold for reporting income, so even if you only make a few dollars through one of these services, you should still report that income.
Self-employment taxes can be tricky. Report as much income as you can remember receiving so that you don’t run afoul of the law. Then, look into getting support if you’re faced with an audit or other inquiries.