Taxes are an essential thing that everyone goes through to avoid any problems with the IRS, and there are specific forms that should be filed with your taxes. One of them is the 1099 form, and many people wonder if it can be skipped in the process. In this article, we will explain whether it’s possible to file everything without this form or not.
What Is a 1099 Tax Form?
These forms were specifically designed for freelancers and people who have sources of income other than their salaries given by employers. A 1099 tax form reports the earnings from self-employment, dividends, interest, and many more. These forms can be easily generated using online tools, so you can create a 1099 online form in just a few minutes. By doing that, you can avoid any costly mistakes resulting from preparing faulty documentation. Freelancers are responsible for estimating their taxes and carrying out the self-employment tax payments. It gives people an overview of their miscellaneous earnings from each place or client.
Is It Crucial for Filing Taxes?
If you aren’t making any money from different sources, then you shouldn’t worry too much about 1099. But forms like these are the IRS’s way of letting you know that they are aware of your freelance work and earnings, politely hinting that you should provide the government with its cut of your income. The clients that pay you can perform this procedure for you, similar to how an employer completes employee tax forms. So, as an individual, you don’t necessarily need the form when you file your taxes, but you must report everything you earn regardless. If you are earning more than 600 dollars a year, then you should let the IRS know.
The possible negative outcomes affect the clients or companies that pay your fees. They have to file the 1099-MISC form that reports your earnings, so they have to send those forms to you. If somehow you didn’t get one, then it’s their problem; all you have to do is accurately report your earnings. It could cause some sort of tax liability to your tax return if you haven’t reported your earnings at all, and that’s a whole different story with different penalties to be paid. So, play it safe, and report anything even if you don’t have the form.
Reporting the Form on Your Return
In some cases, the IRS might think you got paid twice if you file your own form that is different from your client’s. This can cause a major problem, so it’s smart to just ignore the form if you didn’t get the initial one. If that happens and there are two forms, you should report to the IRS immediately about this mistake to avoid any underpayment penalties.
The most important thing for you to do is make sure you file everything properly and in a timely manner; the repercussions of late entries or missing forms can lead to penalties and much more. Be sure to ask for an accountant’s assistance or insight when it’s tax season, and you might get decent tax returns if you filed your documents correctly.