Read This Before Ignoring a 1099 Form
A 1099 Form is a helpful document to let self-employed individuals or independent contractors know their reported income for the past year. The form is not a document you need to fill out when paying your taxes. Instead, it simply is informational and convenient for filling out the 1040 Form.
There are various types of IRS 1099 forms. No matter which form type it is, they all serve the same purpose as described above. Most 1099 Forms are required to be sent to you by January 31st, but there are some instances when they can be provided by February 15th instead.
Can I Ignore My 1099?
Technically speaking, the 1099 Form is just an informational document. As a result, there is nothing outright to do with the 1099 when you first get it.
However, you should never ignore the 1099. The 1099 provides pertinent information needed to correctly fill out your taxes. Plus, the 1099 is sent to you by the IRS, which means they know how much you have made and you cannot report a different income amount.
If you fail to pay your taxes, the owed amount will begin to accrue interest and penalties. If the issue continues, the IRS could put liens against your property and garnish wages. In a worst-case scenario, you could even spend up to five years in jail.
Because of these high penalties, do not ignore your 1099. Instead, review it carefully and use it to pay your taxes, which we will describe below.
What Should I Do After Receiving My 1099?
The main thing you need to do after receiving your 1099 is to figure out your taxes. Just because you receive a 1099 does not mean you actually owe taxes on the money. Instead, there might be some deductions that end up offsetting the income.
In other words, there is not something you actually need to do with the 1099 specifically. The 1099, once again, is an informational document to let you know what your reportable income is.
How Do I Use My 1099s?
After you receive your 1099, you should keep it in a safe place until it comes time to fill out the 1040 Form. As you are filling out this document, you will need to report the income from the 1099 Form. This is why you cannot ignore the 1099.
Upon completion of the 1040 Form, you will then file your taxes as normal. It is recommended to keep the 1099 for further reference or in case there is some hiccup along the way.
If you receive a 1099, it means that your independent work has been reported to the IRS. The IRS is sending you this form to help you out whenever it comes time to pay your taxes. What this means is that the 1099 is a helpful document, but you cannot ignore it. Ignoring the 1099 can cause you to incorrectly fill out your 1040, which can have serious legal ramifications in the future.
So, use your 1099 to correctly report your earnings on your 1040 so that you correctly file your taxes this year.