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If you earned revenues as an independent CONTRACTOR this past tax year, you should have received a 1099 Form for the work. So, what if you haven’t received one?
WHY A 1099?
If you earned over $600 from one person or company as an independent contractor in 2005, that company or person is supposed to issue you a 1099-MISC form. The form is applicable to revenues, rents, royalties and other categories of income beyond the scope of this article. In issuing you a 1099, the business or company is also supposed to send a duplicate of the form to the IRS. This allows the Internal Revenue Service to keep a tab on how much money you earned in 2005. Lucky you.
THE DEADLINE
1099 Forms are supposed to be issued to independent contractors by January 31. Businesses, particularly small businesses, are famous for FAILING to get the forms out on time. They have to be filed with the Internal Revenue Service by the end of February, so businesses often send them out at that time. If you haven’t received a 1099 by the first week or so of March, it is time to take ACTION.
TAKING CARE OF BUSINESS
The first step to resolving the problem is to CALL the business or person and ask about it. Some aren’t even aware they are SUPPOSED to issue the forms and file them with the Internal Revenue Service. They are focused on their businesses, not tax documents. Giving them a heads up will almost always take care of the problem.
THE PURPOSE OF THE 1099
1099 forms are not filed with your tax return. They are INFORMATION forms only, so failing to receive one is hardly the end of the world. You should already know how much revenue you earned in the tax year. A 1099 form doesn’t really help you figure taxes. It just keeps the Internal Revenue Service INFORMED. If you don’t receive a 1099, you can determine your revenues by totaling invoices for the client or reviewing bank account statements.
DON'T RISK IT
If you don’t receive a 1099 form, it does not mean you can FORGO reporting the revenue on your tax return. If you take this course of action, you run the risk of being AUDITED and charged with tax evasion by the Internal Revenue Service. It isn’t remotely worth the risk.
Richard Chapo is with BusinessTaxRecovery.com -- providing information on taxes. Would you like to reprint this article in your publication -- or distribute it to a wider audience? Click here for reprinting instructions. Want to receive these kind of articles via e-mail each month? Sign up for a free newsletter subscription. Click here to return to "Organized For A Living" -- July 2007... Add this page to your Bookmarks!
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