November 1, 2019

Every year around tax filing time as the deadline draws closer many employees scramble to file their taxes, however many seem to make the simplest mistakes that may end up costing them in the end. Some even meet the unfortunate fate of having Uncle Sam knock on their door or more realistically come to the mail to open an audit notification from the IRS.

What is a 1099 form?

For those that don’t know, 1099 forms are for people who are self-employed, have stocks dividends, capital gain distribution, or are receiving unemployment benefits. They are given to the employee from the company who has made them an independent contractor and pays them over $600 for their services. The company has a copy, and they send you the form to fill out as well. Before filing your 1099, here are a few tips that can help 1099 employees avoid these common pitfalls.

What are the Different Types of 1099s?

To not be confused there are several types of 1099 forms to file. They all can be found at the IRS website. Don’t file the wrong one or you will get fined from the IRS.

1099-DIV

The 1099-DIV is for those who need to report stocks and dividend as well as capital gain distributions.

1099-MISC

The1099-MISC is for those who are independent contractors or collect real estate disbursements or tips. It is also the one form you will fill out if you are considered an employee.

1099-INT

The 1099-INT is used to report interest income, and several other variations of the form.

How do You File Taxes with a 1099?

Need to file your taxes with a 1099? Follow these tips to help you.

1. Make sure the information is accurate. Report your income that you make right. Not only do you have a copy of your 1099, but the company, and the IRS have the copy that the company has sent them. So whether you report the correct information or not, the IRS already knows what it should be, if you report less than earned income they will tax you, add on interest to the tax you owe, and probably audit you.

2. Always, always, always file the W-9. People seem to always make this common mistake, but you must fill it out correctly if you are hired as an independent contractor. If you made more than $600 from the contractor, you must report it.

3. The 1099 form is not a tax return but rather valuable information that the IRS needs. You still need to file you 1040 and input the information where designated from your 1099.

4. Be extra careful when filling out your 1099 that you have the right account number, especially if you have to file multiple 1099-MISCs. Just like filing your regular tax returns, remember to sign and date all your pages. Include the right social security number and if needed, always have a professional look over your form or use a tax software.

Still need some assistance? Consider working with a tax relief company. Unsure if you should work with a tax preparer? Learn more about the tax preparers and how you can avoid getting scammed here.