The Form 1099-MISC is basically the most used tax form both by sole proprietorship business and self-employed individuals for the services they rendered to clients. 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.
After you get the 1099-MISC, you have to review the box number 7 or “non employment compensation”. This is basically where your income is recorded from that business. The IRS is going to get the exact same copy of it and thus, you must be certain that the report made on this income on Schedule C is correct. For this reason, the 1099-MISC form has the same function as the W-2 in a way that it reports your income from this source to IRS. Keep in mind, despite not receiving your 1099-MISC form, it doesn’t exempt you for not reporting your income when filing 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 may seem to be that the business you did the work for does not have to send you a 1099-MISC but still, it’s your responsibility to report your earnings.
Now if for example that there is inaccurate income reported on 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 instance that your Schedule C total as well as tally of all your 1099 forms is not a perfect match, then the IRS will be reaching out to you and ask for explanation.
Say that you receive a 1099-MISC form after filing the income tax, you don’t need to do anything if you’ve reported the income as part of the Schedule C earnings. Say for instance that you have not reported your income, you will then need to send an amended return and incorporate the income that it states in 1099-MISC form. Most likely, this is going to lead in owing bigger taxes and potentially with penalties and interests if the amended return is received after April 15 by the IRS.
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.