Understanding the IRS 1099 Tax Forms
Irrespective of whether you are a sole proprietor or a corporate entity, any income you earn attracts the provisions of taxation. Filing taxes involve adhering to specific guidelines and filling up a lot of forms, from stating the revenue generated to knowing the total income on which tax is levied. The 1099 tax form is part and parcel of the forms you are required to fill.
A 1099 tax form falls under the IRS tax form category that states any amount received from fees, royalties, charges, rent and legal services.The 1099 tax form is a very crucial form for the IRS as it allows them to match data that taxpayers filled against their tax returns. For this reason, this editorial seeks to enlighten you about the tips concerning the 1099 tax form before filing your taxes.
It is of paramount importance to dispatch the 1099 tax form instead of waiting for the IRS to give it to you. Generally, enterprises except the commercial ones must give these forms to their employees who get a $600 wage a year. If your employer does not give you anything close to $600 a year, you are required to record your salary.Your service provider does not have to provide you with the 1099-MISc, but this does not mean you have been exempted from paying your levies on the total amount of money you earned that year.
Secondly, you need to fill the 1099 tax form before January 31. But if you do not receive the form by February or March, do not assume that you have been exempted from paying taxes. If you do not issue the 1099 tax form on time, you will end up paying a fine.
Apart from that, make sure you report any error you make while filing the 1099 tax forms immediately. This should allow the payer to correct the mistake before they send it to the IRS. But if the payer has sent the incorrect form to the IRS, just ask the payer to send the right form. For example, is the wage stated on the 1099 MISC is wrong, you need to call your service provider so that they can issue you and the IRS the right 1099-MISC. Fill the income tax return form after you receive the corrected 1099-MISC. Should the IRS find discrepancies in your form, you will have to explain them.
Most importantly, consider your state taxes. Both the IRS and the state need your income tax details. Therefore, failure to submit the 1099 tax form only attracts fines.
With this knowledge, you should be able to fill your correct 1099 tax form on time to avoid being penalized.
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