One of the most used tax forms for self employed folks and also used mainly by sole proprietors to report profits from the services rendered to other clients it the Form 1099-MISC. If for instance that you’re either a sole proprietor or a self-employed who has performed services for another client or business and has been paid for 600 dollars or maybe more for the services offered, then that business has to send you a 1099-MISC tax form.
Once you have acquired your 1099-MISC form, you have to immediately look at the “non employment compensation” or the box number 7. This is actually the amount of your income from that business is recorded. You have to be sure to report this income on Schedule C as the IRS has obtained a copy of this form as well. With this in mind, File A 1099-MISC Form carries the function similar to the W-2 form by reporting your income from the source to the IRS. Even if you do not have your form 1099-MISC, you still are required to report the income when you’re filing the tax return.
If you generated less than 600 dollars annually from income source, you should still report the amount of your income. Less than this amount just means that the business you did work for doesn’t necessarily need to send you with 1099-MISC but, you still have to report your earnings.
Now if for example that there is inaccurate income reported on File A Form 1099-MISC, then it is critical to do a follow up on the issuing business and they have to send you the fixed form 1099-MISC and to the IRS. Under any circumstances, you have to wait until getting the right form before you file the income tax return. If for example that your Schedule C total as well as tally of all your 1099 forms don’t match, then the IRS is going to reach out to you and ask for an explanation.
If you receive a 1099-MISC form after you filed the income tax, you don’t have to do anything if you have reported the income as part of Schedule C earnings. If you fail to report the income, you will need to send the amended return and include all income that it states in your 1099-MISC. Well most likely, this will lead to owing bigger taxes and possibly, with interests and penalties if the amended return is acquired after April 15 by the IRS. To know more about taxes, visit this website at https://en.wikipedia.org/wiki/Sales_tax.
Make sure to do your best in keeping the records accurate throughout the course of the year and report all earnings to IRS when you filed the return.