If you did contract work over the past year, chances are your physical mailbox and your email box is currently blowing up with 1099-MISC forms. (Or, if you’re an online seller, 1099-K forms.) So what do you do with these little pieces of paper?
Check Form 1099-MISC Over Carefully
You kept track of all of your income over the past year, right? Now’s the time to make sure your totals match the total found on Line 7 – “Nonemployee Compensation” on the 1099-MISC. Remember, these forms are prepared by humans, and there could be a mistake. These numbers are being reported to the IRS as your income, so if they are wrong, it could have negative tax consequences for you. If you find that your income totals do not mesh with the total reported on your 1099-K, contact the company who issued your 1099-MISC immediately.
File Your Schedule C
ALL income needs to be reported to the IRS. If this is your first year in business for yourself, you may be unsure how to do this. Self-employed income is reported along with your regular 1040 tax return. It’s reported on a separate sheet called the Schedule C. For more on Schedule C and how to file taxes as a self-employed person, follow our handy checklist to get started on your self-employment taxes.
File 1099′s Away
Keep your 1099′s handy for now. If there’s any problem with your returns, you will want to have them on hand. A good rule of thumb is to keep 1099′s and other supporting tax documentation around for about 3 years, until the statute of limitations runs out on filing returns of filing for a refund.
Did you receive a 1099-K? Learn more about this young tax form at our Outright’s 1099-K Tax Center