As freelancers, there’s nothing more satisfying than getting paid to do what you love, especially when your check shows up on time. But there are a few headaches that come with getting paid, too…namely, the 1099 form.
At the end of the year, in order to document that you were paid, clients should send you a form 1099-MISC. These forms are also sent to the state and federal government (that’s how they know what to expect on your tax returns).
How to Read a 1099
Below you’ll see a blank form 1099, highlighting the most common boxes you may see. The arrows include notes on what to expect.
If boxes other than the ones highlighted above are filled in, you may be a special case and should check out the super technical IRS instructions. Make sure to keep records of how much you were paid so that you can double check these amounts.
Overall, 1099s are pretty simple: people pay you, then report it to the government.
Form 1099 FAQs
Here are some of the most frequently asked questions that we get about 1099s:
Who will send you a 1099?
You should receive a 1099 if you, as an individual, earned over $600 from a single client/ employer.
What if I have an LLC or Corporation?
If you are doing business through an LLC or other form of corporation you typically will not receive a 1099.
What if I get a 1099 but I shouldn’t have?
If you receive a 1099, it means that the IRS is expecting you to report it on your taxes. If you should not have received this 1099 at all, your client will need to submit a “corrected” 1099-MISC with 0 for the amount and also submit a Form 1096 summary sheet.
What if I never received a 1099?
If you haven’t received a 1099 by February, you should get in touch with your client or employer and see if they plan on sending it. It’s possible that they have the wrong address listed. You should report the income whether or not you receive a 1099; this way, when they do submit it, you don’t have to revise your tax returns.
If you have any additional questions, feel free to email me at firstname.lastname@example.org. I’m always glad to help independent workers by providing them with great tax resources. And while you’re at it, sign up for access to GoodApril’s Tax Planning software, which is especially useful for freelancers.
**Editor's Note: **Guest blogger Graham Hunter is a resident Tax Nerd and Marketing Guy at GoodApril, an online tax planning service for freelancers.