The Form 1099-MISC is basically the most used tax form both by sole proprietorship business and self-employed individuals for the services they rendered to clients. If for instance that you’re either a sole proprietor or a self-employed who has performed services for another client or business and has been paid for 600 dollars or maybe more for the services offered, then that business has to send you a 1099-MISC tax form.
Once you have acquired your 1099-MISC form, you have to immediately look at the “non employment compensation” or the box number 7. This is where your income from that said business will be recorded. The IRS is going to get the exact same copy of it and thus, you must be certain that the report made on this income on Schedule C is correct. In this regard, the 1099-MISC form has the same function as W-2 form in that, it is reporting your income from this source to IRS. Keep in mind, despite not receiving your 1099-MISC form, it doesn’t exempt you for not reporting your income when filing tax return.
If you have earned less than 600 dollars yearly from the income source, then you must still report it. Less than this amount may seem to be that the business you did the work for does not have to send you a 1099-MISC but still, it’s your responsibility to report your earnings.
If the amount of reported income on the form 1099-MISC is not correct, then you must message the issuing business ASAP and they have to send you the corrected form 1099-MISC and to the IRS as well. Under any circumstances, you have to wait until getting the right form before you file the income tax return. If for instance that your Schedule C total as well as tally of all your 1099 forms is not a perfect match, then the IRS will be reaching out to you and ask for explanation.
Say that you receive a 1099-MISC form after filing the income tax, you don’t need to do anything if you’ve reported the income as part of the Schedule C earnings. Say for instance that you have not reported your income, you will then need to send an amended return and incorporate the income that it states in 1099-MISC form. Well most likely, this will lead to owing bigger taxes and possibly, with interests and penalties if the amended return is acquired after April 15 by the IRS.
See to it that you are doing your very best in ensuring that in the course of a year, everything is filed accurately, to avoid problems as well.