If you’re a self-employed freelancer or you own a small business, you may receive one or more 1099 forms from your clients. As a general rule of thumb, any client that paid you more than $600 for goods or services during the 2021 tax year is required by law to send you one.
You should also keep in mind that each 1099 form you receive is also reported to the IRS. Additionally, each form will include your name, address, and taxpayer identification number (or your Social Security Number.) What does this mean for you? It means that the IRS will know about all of your various sources of income, even if you forget to include that information on your tax return.
So what do you do in the event you forget to include one or more pieces of 1099 income on your 2021 tax return?
If you catch your mistake before the IRS does, you’ll want to talk to your accountant about filing an amended tax return. (Keep in mind you’ll also need to include a copy of the 1099 in question as part of the amended return.) On the other hand, if the IRS catches the mistake before you do, you won’t need to file an amended return. Instead, the IRS they’ll notify you of their findings and they’ll charge you retroactive interest and penalties on your under-reported 1099 income.
Types of 1099 forms
It’s worth noting that there are numerous types of 1099 forms—and you may receive one even if you’re not a small business or self-employed freelancer. Examples of 1099 forms include the following:
- 1099-INT / 1099 DIV
If you’ve received a 1099 form in the mail after you’ve filed your 2021 taxes, or you find a 1099 form that you inadvertently stuck in a desk drawer (and you didn’t find it until after you filed.) It’s best to contact your accountant or CPA as quickly as possible. On the other hand, if you filed your 2021 taxes yourself using online software, it’s best to contact a licensed tax professional to help you correct your mistake.
For more information about what to do if you forgot to file one or more 1099 forms, or for more information about the types of penalties you could be facing, we can help. Call the office of Hughes, Snell & Co., PA today to speak with an expert.