sole proprietors « Small Business Startup Information

Do You Have to Report Income if You Don’t Get a 1099?

Short answer:Yes

Longer answer: You’re required to report all the income your receive, regardless of how you receive it. That includes payments you get as cash, check, or property. Technically speaking, if you find a twenty dollar bill on the street and pick it up, that’s income. But we both know the IRS has no way to find out about it.

Does that mean you should make all your tax reporting decisions based on whether or not you think your income is traceable? Continue reading

What if Your 1099 is Wrong?

What should I do if my 1099 has the wrong amount?

Try to get the person or company who sent it to fix it. But I don’t advise you to report the corrected amount on your tax return because you can’t be sure that the IRS will get it before you file your 1040.

For your own records, you should always write out an explanation for the mistake and attach it to any bills or receipts you have to prove that your calculation of the number is actually the right one. If you get a corrected 1099, keep it in your files along with your documentation of the error.

Do NOT send this paperwork to the IRS.

The reason I recommend that you start off by reporting an incorrect number is Continue reading