Business
Reporting 1099 Income
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What is a 1099?
If you are self employed or an independent contractor, then instead of a W-2, you will receive a Form 1099 MISC for services that you perform.
1099s are much more complicated beasts than W-2s, so this lens is dedicated to answering the following questions...
How does a 1099 work?
What do I do if I receive a 1099?
How do I report my 1099 income?
Got more questions about 1099s? Please submit them in the guestbook area below, and I'll be sure to add them to this lens!
*** Did you know that you can deduct expenses against your 1099 income? For a list of common deductions for independent contractors, check out our free report, '5 Tax Saving Tips for Ebiz Owners'. ***
1099 Basics
While most people are aware they must report wages, salaries, interest, dividends, tips and commissions as income on their tax returns, many don't realize that they must also report other income, such as:* cash earned from side jobs,
* barter exchanges of goods or services,
* awards, prizes, contest winnings and
* gambling winnings
You must report all income from any source and any country unless it is explicitly exempt under the U.S. tax code.
Most of the income above is reported to you on a Form 1099.
It is a common misconception that if a taxpayer does not receive a Form 1099-MISC or if the income is under $600 per payer, the income is not taxable. There is no minimum amount that a taxpayer may exclude from gross income.
All income earned through the taxpayer's business, as an independent contractor or from informal side jobs is self-employment income, which is fully taxable and must be reported on Form 1040.
Independent contractors must report all income as taxable, even if it is less than $600. Even if the client does not issue a Form 1099-MISC, the income, whatever the amount, is still reportable by the taxpayer.
1099 Questions
Reporting 1099 Income
If you work as an independent contractor, then instead of a W-2, you will receive a Form 1099-MISC reporting your earnings.However the company is not required to file this report unless you receive $600 or more in income.
The good news is that as an independent contractor, you get to deduct expenses against this income, assuming the expenses are necessary to run your business.
Report your income from your 1099 and any associated expenses on either Schedule C-EZ or Schedule C. This schedule is then attached to your Form 1040.
*** Are you an online business owner? Click here for a list of common deductions for online business owners. ***
Free Special Report - 5 Tax Saving Tips for Ebiz Owners
Announcing the free '5 Tax Saving Tips for Ebiz Owners' special report! This ebiz tax guide will show you:* How to file and pay income taxes on your online income
* How to qualify for and deduct your home office
* About self employment taxes and how to minimize them
* The most common deductions available to online business owners
* And much more!
Claim your free '5 Tax Saving Tips for Ebiz Owners' special report here!
Where to Find Free 1099 Tax Forms
So you need to send someone a Form 1099... but where do you go to find free 1099 tax forms?You can view Form 1099-MISC online at the IRS website.
However, this is an information copy only. It's not scan-able, therefore the IRS won't accept it (they may even fine you for using it).
However, you can order official IRS forms by calling 1-800-TAX-FORM (1-800-829-3676), or by clicking here.
Another resource that I love for filing 1099 forms is www.FileTaxes.com. While it's not free, you can complete and file various 1099 and other tax forms at FileTaxes.com for a very reasonable fee.
FileTaxes.com will even mail your 1099s for you (exception: they won't mail the state copies, but they mail copies to the IRS and to the recipient of the form, this is a very nice feature!).
This is a huge time-saver, and is definitely worth the small fee in my opinion.
Finally, you can always go to the office supply store to buy tax forms, but they usually come in packages of 10-50 forms and can cost up to $25.
Ebiz Tax Tips
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Got Questions About 1099s?
Submit them here...
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Susan52
I've dealt with 1099s for the last eight years of being an independent contractor. Good thing I keep very good records because one of the people I contract with always has to check with me to see if she has the amount right on the 1099 she prepares for me. My tax guy (who happens to be my dear hubby) gets very frustrated, but it all works out in the end. And quarterly. And especially on April 15th. (Oh, how I support the FairTax!) Posted June 19, 2008 |
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Brassoo78
Cool lens. Awesome information about 1099 Basics. 5 Tax saving tips are very useful. Thanks for your effort and sharing the information. A good informative site about 1031 Exchange Information on 1031 Exchange Information Please step into this site to find details about 1031 Exchange Information. Posted May 11, 2008 |
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Look who made this lens!
KristineMcKinley
I am a CPA and Certified Financial Planner, and the author of Top 5 Tax Tips for eBay Sellers. I offer fee-only financial and tax planning on an...
moreWhat's here
- 1099 Basics
- 1099 Questions
- Reporting 1099 Income
- Free Special Report - 5 Tax Saving Tips for Ebiz Owners
- Where to Find Free 1099 Tax Forms
- More...
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