You may go ahead and file your tax return without all the 1099s, but there will be more work ahead if there are discrepancies when your return is matched against information in the Internal Revenue Service database. Typically, 1099 forms are just information returns for your benefit, detailing the exact income you received from various sources such as business income, bank interest, self-employment income or Social Security income. The IRS will be interested in you reporting the income you received; otherwise you could be penalized. The 1099 is just to verify the accuracy of the reporting.
If someone fails to send you a 1099 tax form, you should contact the organization and, if that doesn't get you a form by the end of February, contact the IRS. If you still don't have the forms by the tax deadline, file and pay with figures from your own files and amend your return later if needed.
The IRS has many different types of 1099s, each specific to a particular source of income you may receive in the tax year. For example, if you are an independent contractor, such as a freelancer, and you were paid $600 or more, the company that hired your services is obligated to file with the IRS and send you a copy of the 1099-MISC by January 31 of the following year. Similarly, your 1099 should be transmitted or posted to a website for your access by the same date if you opt to receive it electronically.
Filing with Missing 1099s
If the organization that ought to send you the 1099 is late in doing so, you can go ahead and file so long as you already know the dollar amount and there was no income-tax withholding involved. Otherwise, contact the responsible party for a copy of the 1099 or ask to be given the information over the phone. If the sender has not sent you the forms by the end of February, call the IRS at 800-829-1040 for further assistance.
Amended Tax Return
If the 1099 arrives after you have filed and you realize the information you submitted to the IRS differs from what is on the form, you need to file an amended tax return to fix mistakes and errors. Fill out Form 1040X to reflect the correction. Since your income and taxes owed have changed, you will have to pay any taxes due on that amount unless the error is in your favor, in which case you have a refund coming. Note that if your return is rejected, you don't have to file 1040X. Rather, just fix the error and submit, since the IRS did not accept your return.
Penalties for Underpayment
If you file without your 1099s and fail to report income on an amended return even after receiving the 1099s, you may have understated your tax liability. The IRS will impose an accuracy-related penalty, typically 20 percent of your underpayment. In addition, the IRS will fine you at the rate of 0.5 percent per month for each month the taxes are late and charge you additional interest. If you attract an audit and it is discovered you were fraudulent on your return, you may be prosecuted for attempting to evade tax, with fines up to $250,000 and up to five years of jail time.
- IRS: Part 20. Penalty and Interest
- IRS: Important Facts about Filing Late and Paying Penalties
- The Motley Fool: Just How Bad Do Tax Evasion Penalties Get?
- IRS: Instructions for Form 1040X
- IRS: Topic Number 154 - Form W-2 and Form 1099-R (What to Do if Incorrect or Not Received)
- IRS: Reporting Payments to Independent Contractors