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- Penalties for Not Filing a 1099 Misc Form
- How Much Tax to Withhold as an Independent Contractor?
- Who Needs Tax Form 1099?
If a company hires you as an independent contractor and pays you more than $600, it must send you a Form 1099-MISC. If the company fails to give you a 1099-MISC by the Internal Revenue Service deadline, which is usually between the middle and end of February, you still must report the income on your tax return.
The IRS classifies you as an independent contractor if you are a business owner or contractor who reaches the result a company asks for with no instruction from the company on how you reach the result. For example, if a company hires you as an independent contractor or your company to install pipes, but gives you no instructions on how to install the pipes, you are considered by the IRS to be an independent contractor.
A Form 1099-MISC is IRS proof of how much money you received for independent contract work from the company that hired you. If the company paid you less than $600, it doesn't have to send you a 1099-MISC. A Form 1099-MISC is to independent contractors what the Form W-2 is to employees. Use the information, primarily how much a company paid you to fill out your sole proprietorship tax forms, 1040, Schedule C, 1040, Schedule C-EZ and if you use it, 1040-ES for estimated taxes.
They Made a Mistake
A company must issue you a Form 1099-MISC to document the expenditure. Companies do not pay taxes on money spent hiring independent contractors. Additionally, if they fail to give you a 1099-MISC by the IRS deadline, which is usually in mid- to late February, the company may face a $250 or higher IRS penalty. This penalty has no ceiling. For these reasons, companies benefit from issuing you a 1099-MISC. If you have not received your 1099-MISC, contact the company and ask when you can expect it. It may have made a mistake, or your 1099-MISC may have been lost in the mail.
Report the Income
You cannot control whether the company sends you a Form 1099-MISC. Even without the form, report the income you received with your other gross receipts on Schedule C or Schedule C-EZ of Form 1040. You must report all gross receipts, including income under $600. Include a note with your return, giving details about the income for which you need but lack a 1099-MISC. Explain why you don't have it, and describe the source of the income. The IRS will deal with that company.
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