Tax question: Employer doesn't give 1099 form, what happens?

[SweetHomeColorado]

Okay, to preface, I'm not asking for legal advice as I know you are not my lawyer and I'm not asking for tax/financial advice as I plan on going to a professional to take care of my taxes. With that said, if you feel comfortable, please answer hypothetically.... I will not take any answers as anything more than personal knowledge.

So, I was contracted on to a company which didn't take taxes out of my paycheck. This is the first time anything like this has happened. I consulted a financial adviser who informed me that I should save about 25% of my income for taxes at the end of the tax year. Okay, no problem.

January ends and I'm expecting a W2 to come in the mail (I later found out it's a 1099). Nothing. I'm told it usually comes in feb from my company (former company). That's a little odd in my mind since I'm used to this coming earlier. So the other day I inquired again and found out that it should have been sent to me. I know for a fact that it wasn't sent to me. I still don't have it.

So, i'm between a rock and a hard place since I called the other day asking the financial person to send it to me and haven't heard back. Obviously we're getting down to the wire and I'm not too thrilled about waiting.

I was signed on to a corporation out of state and for about two weeks have not been with that company so future transactions aren't important. What can be done? Is there any repercussion against the company for failure to provide me with the information? I know there will be repercussions against me if I don't pay taxes so I'm really pushing for this.
Logically it seems that there would be some default if a company doesn't provide the form......
So, what's the straight dope on all of this and what can I do?

[Scarlett67]

I'm having trouble finding an official IRS cite, but here's a quickie answer until somebody official comes along . . .

Any company that pays you $600 or more during the year as an independent contractor (that is, no taxes withheld) is required to file Form 1099-MISC (for miscellaneous income) with the IRS, and provide you a copy, by January 31. Your responsibility is to pay taxes on that income that was reported. Reporting (and paying tax on) less income than the total of your 1099s would be A Bad Thing.

You should be able to go ahead and file your return, reporting the income that they paid you (you do have a record of that, correct?), probably on a Schedule C. The onus is on them to file the 1099, and I'm sure there must be some kind of penalty. About the only way I can think of that it would create a problem for you would be if they try to file a 1099 showing more than what you were actually paid (that is, making it look like you underreported your income). Again, if you kept good records (check stubs, invoices, etc.) of the work done and payment received, you should be OK.

I once had a client send me a 1099 for about $4500 more than it should have been. I contacted them and they sent me a corrected form. (It was either that or pay me the $4500. ) Most of my 1099s arrive on time, but a few come rolling in around this time, 2nd week of February or so. I don't sweat it, but if I wanted to I could lower the boom. (But I'd like to keep working for these people.)

[Shagnasty]

Well, Turbo Tax allows you to enter this information to the best of your ability to create your own 1099. If you have to pay, you have to pay. My contribution is that it can be done without an actual statement from your employer.

[LiveOnAPlane]

Alternatively, you can file, citing this company, with your estimated wages and taxes.

Later, IF you get the 1099 form, you can file an amended return.

Whatever, file with best intentions./guesses, and that at least, will somewhat cover you, legally speaking..though I Am Not A Lawyer.

[Exapno Mapcase]

The 1099 form gives the IRS the ability to cross-check your income. However, it would be rare for a contractor or freelance for all your income to come from 1099s so the IRS won't be at all surprised to see that your total reported income doesn't match the 1099s you send in. As the others have said, if you report your income properly and pay the appropriate taxes you've done your part.

If you want to report to the IRS that you didn't receive a 1099 you expected, by all means do so. Technically, the company has until the end of February to send them in to the IRS so no action will be taken before then.

[Keeve]

Ditto what most others have said: Fill in your forms as best as you can and just not include the 1099 that you don't have.

Only two things I'd add: If you never gave them you Social Security #, then they are not going to be able to create a proper 1099 for you, so stop waiting for it. Also: If you don't have their Employer I.D. #, and you try to create your own 1099 like Shagnasty suggested, it will have a blank spot in it, but again, I suggest not worrying.

[Scarlett67]

Originally Posted by Exapno Mapcase

However, it would be rare for a contractor or freelance for all your income to come from 1099s

I'm curious why you would say this . . . it seems that the very definition of a freelancer would indicate that all of his/her income would come from 1099s. I know mine does, and I also know that many of my fellow editorial freelancers turn down work that would involve a W-2.

(Mind, I just returned from a very decadent dinner involving 4+ glasses of wine, so it's entirely possible that I've overlooked some angle)

[Exapno Mapcase]

It depends on the type of work you do. Since the bottom limit for generating a 1099 is $600, I can freelance articles or stories for a number of publications without them reporting anything to the IRS. Book royalties, small projects, web income from ads, all kinds of things can add up. There's usually a sizable difference between my 1099 income and the total I report.

[DrDeth]

Why not just ask for another copy?

[SweetHomeColorado]

Originally Posted by DrDeth

Why not just ask for another copy?

I never received one to begin with. To boot, I've never dealt with a 1099 so I don't know if an employer has to fill anything out before giving me the form.

I asked for it once and never received it so I don't see how asking for another copy would make sense.

[LSLGuy]

Unlike W2s, there is NO need for you to turn in the physical 1099 form with your return.

As long as you know how much they really paid you, just use that number as input into your Schedule C. Whether they ever send a 1099 to you, or to the IRS, is really their problem not yours.

As others have said, the only danger comes in if they send the IRS something grossly larger than what you report.

My wife's self employed. About 1/3rd of her total income comes from entities that provide 1099s and another 1/3rd comes from entitites that should provide 1099s but don't. And the final 1/3rd comes from customers who don't need to provide 1099s (and don't).

That's never an issue for us at tax time. We report our income according to what our books show & stick the pile of 1099 forms in our filing cabinet along with our copy of our tax returns. BFD.

If we ever tried to report total income less than the sum of the 1099s, now that'd probably arouse the suspicions of some computer program someplace in the bowels of the IRS.


Bottom line: Don't sweat not getting one, at least as long as you have some way to determine about how much they actually paid you over the year.

[postcards]

Originally Posted by Exapno Mapcase

(snip)
Technically, the company has until the end of February to send them in to the IRS so no action will be taken before then.

Is this true?

I freelanced for some real pr*cks two years ago whose bookkkeeper swore up and down to me that she wasn't required to send me my 1099 until Feb. 28. Even after I showed her the IRS regulation stating W-2's and 1099's were due by 1/31.

I wonder now if not having to report to the IRS til 2/28 made her think she didn't have to send it to me until then, either.

[Exapno Mapcase]

The 1099s have to go to the payee by January 31, 2007. The cover sheet, along with a 1096 form have to go to the IRS by February 28, 2007. I assume that the extra month is so any mistakes discovered can be corrected. The 1099 form has a box to check if it is a correction. That company was probably confused. However, just look at the back of a 1099 MISC form and it gives those two deadlines in plain language. The actual date can vary a day or two if one of the days is on a Sunday. For example, the deadlines were February 2 and March 1 in 2004. The principle is always the same, though.

And LSLGuy is correct that you report the income on a Schedule C and the tax on a Schedule SE. That's what's really important.

[DrDeth]

Originally Posted by SweetHomeColorado

I never received one to begin with. To boot, I've never dealt with a 1099 so I don't know if an employer has to fill anything out before giving me the form.

I asked for it once and never received it so I don't see how asking for another copy would make sense.

They claim they sent you one, you say you never got it. So contact them and say you never got it and ask for one.

However, as LSLGuy mentioned, you don;t attach the 1099 so if you have the correct info, go ahead. But you have until 4-17 to file, so no hurry.

[SweetHomeColorado]

Okay, so it looks like I'm going to just turbotax a 1099 form to the best of my knowledge. My earnings are very clear and precise (and really, aren't that much.)
I have a lot of write-offs since those are very prevalent in the work I had done. Do I reflect them on the return?
Any other tips for the 1099? Do you think I'm doing the right thing?

[Ass For A Hat]

Originally Posted by Exapno Mapcase

The 1099s have to go to the payee by January 31, 2007. The cover sheet, along with a 1096 form have to go to the IRS by February 28, 2007.

For what it's worth...electronic filers don't have to submit 1099s to the IRS until 4/2/07.

[Exapno Mapcase]

Originally Posted by SweetHomeColorado

Okay, so it looks like I'm going to just turbotax a 1099 form to the best of my knowledge. My earnings are very clear and precise (and really, aren't that much.)
I have a lot of write-offs since those are very prevalent in the work I had done. Do I reflect them on the return?
Any other tips for the 1099? Do you think I'm doing the right thing?

You don't do anything with a 1099. You submit a Schedule C and put your income and expenses on it.

[Billdo]

Originally Posted by Exapno Mapcase

You don't do anything with a 1099. You submit a Schedule C and put your income and expenses on it.

Nitpick: Instead of a Schedule C, taxpayers may be able to alternately file a Schedule C-EZ if you have (I believe) less than $5,000 in business expense deductions (subject to some restrictions).

However, Schedule C or C-EZ filers will also be required to file a Schedule SE, and pay self-employment taxes on any Schedule C income.

Note that this is just general discussion of tax filing, not relating to your particular situation. I am not your lawyer or tax advisor, and you should consult a qualified tax professional for any specific questions. Good luck.

[Keeve]

Originally Posted by SweetHomeColorado

I have a lot of write-offs since those are very prevalent in the work I had done. Do I reflect them on the return?

If you are referring to business expenses, oh yes, definitely. Read Schedule C carefully, and you'll see lots of different kinds of expenses that you might deduct.

[Rusalka]

All kinds of contractors do work without getting a 1099. The construction trades, for example. When is the last time you called a plumber or carpenter for a major job and then sent them a 1099 at the end of the year?

If an artist does a portrait or a painting, or sells a painting, none of that involves a 1099. Those are just a few examples.

1099s have mostly to do with people who subcontract to others. The 1099 provides proof to the IRS that the subcontractor is a business expense, if I'm not mistaken. It is in the company's interest, not yours, to file a 1099.

[SweetHomeColorado]

I guess I'm getting confused now. Can someone break this down into the bottom-line consensus? I appreciate the discussion but some is a bit hard to follow.

[Shagnasty]

Originally Posted by SweetHomeColorado

I guess I'm getting confused now. Can someone break this down into the bottom-line consensus? I appreciate the discussion but some is a bit hard to follow.

You owe the taxes on your income regardless of what forms you did or didn't receive from the people that paid you. You can make your own 1099's if you need to based on income that you received throughout the year.

[SweetHomeColorado]

okay got it, thank you.
What about Schedule C or C-EZ
Should I bother with those?

[DrDeth]

Originally Posted by SweetHomeColorado

okay got it, thank you.
What about Schedule C or C-EZ
Should I bother with those?

Yes. You have expenses. Deduct them.

[What the .... ?!?!]

Originally Posted by Shagnasty

You owe the taxes on your income regardless of what forms you did or didn't receive from the people that paid you. You can make your own 1099's if you need to based on income that you received throughout the year.

There is no need, in fact there is no purpose whatsoever, in "making your own 1099". You simply report the gross income that you received whether or not it was reported to you and the IRS on a 1099.

[Billdo]

Originally Posted by SweetHomeColorado

okay got it, thank you.
What about Schedule C or C-EZ
Should I bother with those?

In general, if you have business income (1099 or otherwise) you must reflect it on Schedule C/C-EZ and, the Schedule C/C-EZ income on Schedule SE, though there may be exceptions and variations (for instance, farm income is reported differently).

When someone has self-employment income, his or her return becomes more complexand consultation with a tax professional may be called for. If you are having questions of this type on the process, it may save you quite a bit of trouble down the road to discuss your particular situation with someone familiar with these issues.

Once more, I am not your lawyer or tax professional, and this discussion does not and cannot address the particulars of your issues.

[Fear Itself]

Originally Posted by What the .... ?!?!

There is no need, in fact there is no purpose whatsoever, in "making your own 1099". You simply report the gross income that you received whether or not it was reported to you and the IRS on a 1099.

So what happens if an employer files a 1099 with the IRS claiming you were paid $1000, but you don't file a 1099 that matches up with it? Even if you included it as income, the IRS is still going to think you didn't because they never got the paperwork to match up.

[Billdo]

Originally Posted by Fear Itself

So what happens if an employer files a 1099 with the IRS claiming you were paid $1000, but you don't file a 1099 that matches up with it? Even if you included it as income, the IRS is still going to think you didn't because they never got the paperwork to match up.

Unlike W-2s, you don't file 1099s with your tax return. You must simply reflect all business income you receive on your Schedule C or other appropriate place on your tax return. If your total 1099-Misc income is greater than the self-employment or other business income you record on your tax return, the IRS may flag you for investigation. Otherwise, there is nothing to match up.

[FatBaldGuy]

Originally Posted by SweetHomeColorado

I guess I'm getting confused now. Can someone break this down into the bottom-line consensus? I appreciate the discussion but some is a bit hard to follow.

Let me see if I can try to clear up the forms mumbo-jumbo.

Form 1099 is the form you receive from the company you contracted with. If they paid you more than $600 they are required to give you this form. The reason you need this is so that you know what amount to put on your Schedule C (or C-EZ) as income. If you already know the amount, you don't need the 1099 form.

Schedule C (or C-EZ) is the form you use as a self-employed individual to report your business income and expenses. You report the amount paid to you as income, and any legitimate expenses to offset the income.

Schedule SE is for computing Self Employment Tax. If you were working as a regular employee and got income reported on a W-2 form, your employer would pay half of the Social Security and Medicare taxes, and you would pay the other half. As a self employed individual, you must pay 100% of these taxes.

If you are using a tax program like Turbo Tax, you can enter your income and expenses and the program will take care of the details for you.

If you are still confused, this may be the year to consult a professional tax preparer.

[DrDeth]

In some rare cases, a 1099 includes Witholding. This is the only time you need to include a copy of it with your 1040.However, my Bro suggests that if they issued you a corrected 1099, you include copies of both.

[Rusalka]

YOU NEVER FILE A 1099 FOR YOURSELF! 1099s are for companies to show your services were a business expense and therefore tax deductible. Please ignore any advice that suggests you should file a 1099. It is simply WRONG.

Just file whatever return you file (probably a 1040 schedule C as suggested by others) and list your income. You don't have to worry about the 1099, especially if the company didn't file one. If they did, and the amount is greater than what you report, the IRS will let you know and probably ask you to clarify. It's really not a big deal if there's a mistake, you can always fix it.

Here's more on 1099s: http://www.irs.gov/faqs/faq-kw5.html