If you're a freelancer, an independent contractor or simply do some part-time job you get paid for, you're supposed to tell the Internal Revenue Service about that income when you file your federal tax return. Anybody who pays you more than $600 in a year must report that to the IRS, with a copy to you, by Feb. 15, but it's up to you to tell the IRS about smaller amounts.
Yes, you can, and should, report miscellaneous income without a 1099 on the new IRS Schedule 1.
Reporting Without 1099
If you don't get a 1099-MISC form, you still must report any money you received for work, royalties or services, whether it's for cutting grass or selling a manuscript. The IRS wants to know about all your income. Set up a spreadsheet or use accounting software to track your earnings throughout the year. This will be easier than trying to backtrack through your records at tax time. When you file taxes, you'll list your miscellaneous income on a Form 1040 Schedule C, Profit and Loss from Business. Add smaller payments to money that was reported on a 1099-MISC and put the total on the "gross receipts" line. You just have to note the total, not list where it came from.
Include all your miscellaneous income to calculate your Profit and Loss from Business. Add up everything you received, with or without a 1099, and subtract your expenses to get a net profit. Report that profit on line 12 of your Form 1040 for tax year 2017 or line 21 of the new Schedule 1 for the 2018 tax year. You'll also have to fill out a self-employment tax form if your total miscellaneous income is more than $400.
Other miscellaneous income may not trigger a 1099-MISC, but still must be reported. That's such things as online payments, tips or gambling winnings. PayPal now produces 1099s for online payments over $600. Restaurants and similar service operations that compile tips for employees also are supposed to report anything over $600 a year with a 1099. Casinos report large winnings. You're supposed to include them as income, however, whether you get a 1099 or not.
Failing to Report
You're not likely to get caught by the IRS if you don't report $200 or $300 you got in cash for some work, but if you're ever audited and do get caught, you'll face serious penalties. Any payment you got with a check but wasn't reported to the IRS on a 1099 still can leave a paper trail for the IRS, if the payer claims a deduction for paying you. It's best to be honest with the IRS even if it costs you a buck or two.
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- How to Calculate Gross Receipts for Self-Employment Income
- How to Dispute Form 1099
- What Are the Rules for Giving Out a 1099 Tax Form?
- IRS Penalties for Underwithholding
- Can You Apply for Unemployment After Receiving a Severance Package?
- How Much Do You Need to Earn to Receive a 1099?