Picking Your Panic Buttons: 1099s Aren't Among Them
Tax time is panic time for many people, but, as a working mother, you'll need to pick your crisis issues. Many tax forms are essential for filing your federal taxes, but 1099s are not one of them. If you didn't receive your 1099 or need to report income from a source that did not provide a 1099, no problem. Take a deep breath and repeat to yourself: I can file my tax return just fine without a 1099 form.
The Purpose of 1099s
When you start worrying about not receiving a 1099 form, remember the purpose of the form. Unlike so many other IRS forms, a 1099 is simply a reporting device. If you work as an independent contractor, you don't earn wages – you earn "non-employee compensation." You are responsible for paying your own taxes on that compensation, and your clients don't pay Social Security or other taxes or benefits for you. What does the 1099 form do, then? It reports the income to the taxing authorities so that they can catch you if you fail to report it.
It works like this: If you are an independent contractor, you receive 100 percent of the compensation you earn. Out of that, you must pay self-employment tax (to cover Social Security and Medicaid) and regular income tax. Because you aren't an employee, you don't get a W-2 form, and no tax is withheld. The government requires the person paying you to report how much they paid you on a 1099 form, with a copy to you and copies to the taxing authorities. The IRS checks your return against the 1099s it received for you to make sure you reported everything you should have.
No 1099, No Problem
Anyone paying you $600 or more in non-employee compensation is required to send out a 1099. If they don't, it doesn't really matter. As long as you know (or can find out from your client or the IRS) how much you made, you just go ahead and file the return. This means that you simply treat the income the same way you would if it were less than $600 and didn't require a 1099: You report it and pay tax on it. The only difference is that the IRS doesn't get advance notice of the amount from the person paying you.
So what exactly should you do? If you do not receive a 1099 by early February, call or email the client. The form may have been lost in the mail to you but reached the IRS. The company paying you can tell you over the phone how much you made, or they can send you a copy of the 1099 as an attachment to an email. You will report the same amount as the IRS expects you to report, so there won't be a problem.
Similarly, if you work for someone and make less than $600, just report the accurate amount you earned. Remember, you have to report all income, including cash income. You also have to report all income from foreign sources. But as long as it is accurate information, the IRS won't have any reason to find fault with you.
No W-2, Potential Problem
Unlike a 1099, employers file W-2 forms for their employees. The forms contain more information than simply the total amount earned. They also detail the amounts withheld for state and federal taxes as well as tax amounts paid by the employer for the employee. It is hard to file your return without one if you are an employee.
However, the process is the same if you don't get your W-2 in the mail by early February. You should contact your employer and ask for a copy of the form to be sent to you. If that doesn't work, contact the IRS and ask for assistance. You can still file your return by estimating the figures, and using Form 4852 or Form 1099R. Alternatively, you can ask for a six-month extension while you track down your W-2 form.
- IRS: Reporting Payments to Independent Contractors
- 1040.com: How to File without a 1099
- IRS: Missing Your W2?
- Prior Tax.com: How to File Taxes without a W-2
- IRS: Income from Abroad is Taxable
- Internal Revenue Service. "General Instructions for Certain Information Returns (2019)." Accessed Jan. 9, 2020.
- Internal Revenue Service. "Am I Required to File a Form 1099 or Other Information Return?" Accessed Jan. 9, 2020.
- Internal Revenue Service. "Instructions for Form 1099-DIV (2020)." Accessed Jan. 9, 2020.
- Internal Revenue Service. "Form 1099-DIV," Pages 1-8. Accessed Jan. 29, 2020.
- Internal Revenue Service. "Instructions for Forms 1099-INT and 1099-OID (2020)." Accessed Jan. 9, 2020.
- Internal Revenue Service. "Form 1099-INT," Pages 1-8. Accessed Jan. 29, 2020.
- Internal Revenue Service. "About Form 1099-MISC, Miscellaneous Income." Accessed Jan. 25, 2020.
- Internal Revenue Service. "Form 1099-MISC," Pages 1-8. Accessed Jan. 29, 2020.
- Internal Revenue Service. "About Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc." Accessed Jan. 9, 2020.
- Internal Revenue Service. "Form 1099-R," Pages 1-11. Accessed Jan. 29, 2020.
- Internal Revenue Service. "Publication 505 (2019), Tax Withholding and Estimated Tax." Accessed Jan. 9, 2020.
- Internal Revenue Service. "About Form 1099-MISC, Miscellaneous Income." Accessed Feb. 16, 2020.
Teo Spengler is an attorney, specializing in personal finance and business writing for the past 15 years. Her personal finance work has appeared in numerous online publications including Go Banking Rates, Legal Zoom, eHow Business, Livestrong, the Houston Chronicle, Navy Federal Credit Union, Pearson, Quicken.com, TurboTax.com, and numerous attorney websites. She holds a J.D. from U.C. Berkeley, as well as an M.A. in English and an M.F.A. in fiction.