The Time Of Year For 1099’s Have Come Around Again, And For Businesses And Individuals There Are Questions About Exactly How The 1099 Works.
The 1099 is the way the government is tracking income; the rules changed for 2012, and now any company that pays you more than $600 for your services must issue you a 1099. These services can include nearly anything – independent consultant or contractor, writing services, legal services or more.
In almost all instances if you are earning money from a business or company the 1099-MISC will be the 1099 form that you receive. There are others, but they are for specific instances usually dealing with financial institutions of one sort or another.
When you receive the 1099-MISC, check the basic information to make sure that everything is correct – your name, your social security number or the TIN (Tax Identification Number) of your business, your address and most of all the total amount of payments.
If you know that you have done over $600 worth of business for a company, do not file your taxes until you receive the 1099. Even if you count the income from it when you file, the federal government will not know that. This can lead to double counting income, something which you must be careful of when using the 1099-MISC as well.
Make sure you check your recorded income from each entity against the 1099 they sent you to make sure the two numbers match and that you are not double counting any income.
Once you have verified the information and amounts contained in the 1099-MISC, there will be a few more forms that go along with your taxes. These will be a Schedule C or C-EZ, and a Schedule SE. These will be filed with your 1040 forms.
Do not forget, you must still report all income even if you do not receive a 1099-MISC. The Schedule C is used to report gross receipts (including income not reported on 1099-MISC because it was less than $600). The schedule C is also used to report deductible expenses. If you have filed a 1099 for someone to whom you have paid more than $600 to, that 1099 would go in this area.
Any deductible expenses are entered on the Schedule C (or C-EZ). These could include equipment and supply purchases, mileage, office expenses, advertising and more.
The final form is the Schedule SE. This will show the net profit from your business, if you had a profit. Many small businesses lose money the first year because of advance equipment purchases. If you did have a net profit, though, the Schedule SE will be used to calculate the amount of self-employment tax that you owe on your 1099/business income.
Online File Taxes can help you with every aspect of your income taxes, including 1099-MISC or any other sort of 1099 you may have received. We will make sure your income is not double reported, and that you are claiming all the business deductions on your Schedule C that you deserve.