I got a 1099. What do I need to know?
In our last blog, we talked about Form W-9 and how it was the way that companies determine if they owe you a 1099 come tax time.
At the end of last month, you may have received one of these 1099s (they were supposed to be mailed no later than January 31). You might be wondering, what in the world is this and what do I need to know?
Here are four things you need to know about the 1099 form:
You can’t just ignore it
The IRS gets a copy and they match all submitted income documents like the 1099 to each person’s Tax Identification Number (either your Social Security Number or EIN). This means that the IRS will know that income was received.
You can deduct expenses
As a sole proprietor or single member LLC, you can deduct any expenses that are “reasonable and necessary” for your job. This reduces your tax liability.
You must report all income even if you don’t receive a 1099
Any company that paid you $600 or more must issue you a 1099. But what about those that didn’t send you a 1099 for whatever reason? You must still report that income by law, even if it was cash. If you didn’t get a 1099, don’t worry. Just report the income and as long as your total reported income is equal to or greater than the amount that companies you worked for submitted to the IRS, you are fine.
You don’t have to wait for a 1099
Did you know that you don’t have to wait until you receive all your forms to submit your taxes? As long as you’ve kept accurate records of your income all year, you can use that to file your taxes. As I said above, as long as your reported income is greater than or equal to what is reported on your 1099 forms, you are in the clear.
By using a professional bookkeeper, you are making it easier to keep track of all your income and expenses. If you’re a company issuing 1099s, good financial records will make the process of issuing those documents much easier. If you’re on the receiving end of a 1099, you can rest assured that you have your income and expenses properly recorded for when it comes to file taxes. Give me a call today so we can get started on making your business finances easier and more accurate!