If you need to report income that was not derived from your place of employment, you need to use a 1099-MISC form. Some employers might fail to issue a 1099-MISC even if it was necessary to issue the form. Do not assume that you do not have to file a 1099-MISC. If your employer did not issue you a 1099-MISC, you should consult with an experienced Roseville tax return attorney today. The NewPoint Law Group, LLP understands the complexity of IRS tax rules and is prepared to help you if you are having issues regarding your 1099-MISC form. Our firm is here to explain your options if you did not receive a 1099-MISC in California.
When Must a 1099-MISC be Issued?
1099-MISC forms are typically issued by a company that hires independent contractors and other external companies. The purpose of this form is to report miscellaneous income, also referred to as non-employee income. Non-employees like freelancers and outsourcing companies need a 1099-MISC to successfully report their self-employment income.
A 1099-MISC form is different from a W-2 form because a W-2 is used to show an employee’s gross taxable earnings. 1099-MISC forms only document payments that are made to a non-employee during the tax year. It is also common for no taxes to be withheld on a 1099-MISC, that includes FICA tax withholdings.
1099-MISC forms must be issued when a contractor or business was paid at least $600 for services in a single tax year. The following list details expenses that can trigger a need to issue a 1099-MISC:
- Prizes and awards given to non-employees
- Cash payments for fish paid to an entity that operates in that market
- Health care payments
- Payment for attorney services
- Large golden parachute payments
This is not an exhaustive list. Additionally, there are exceptions to when a business must issue a 1099-MISC form:
- Payments made to corporations or limited liability companies (LLCs) that elected to be taxed as an S corporation or C corporation (unless legal services were received)
- Payments for storage, freight, merchandise, and similar transactions
- Rent paid to a rental agent
- Payments for business travel expenses for employees
To learn more about 1099-MISC forms and what to do if you did not receive your form, you should continue reading and speak with an experienced California tax return lawyer today.
Common Reasons Why Employers Fail to Issue a 1099-MISC
A non-employee should receive their 1099-MISC for the previous tax year no later than January 31st of the current year. This is also the day that your 1099-MISC forms must be filed with the IRS. However, it is common for some employers to fail to issue these forms on time, meaning some non-employees could receive their form in February or much later in the year.
If your client did not issue a 1099-MISC form by the January 31st deadline, there could be a number of reasons behind their actions. For example, the client may not be aware of the IRS rules that require them to distribute a 1099-MISC. Other reasons why a 1099-MISC was not distributed include:
- The client does not have your correct address on file
- The client may believe they met a certain exception that did not require them to issue a 1099-MISC
- The client is attempting to conceal the hiring of independent contractors
Fortunately, it is not the obligation of a non-employee to ensure that a business provides them with a 1099-MISC form. If your client did not issue this form when it was legally required, they could be subject to IRS fines and penalties.
Failure to receive a 1099-MISC does not exempt a non-employee from filing their self-employment taxes. While it may be difficult to calculate your self-employment income without a 1099-MISC, it is still possible. You should examine your bank records, any checks received for services, and other financially-related documents that can help you calculate your income. The IRS may also be able to help you reconstruct your income as they likely have some information regarding your self-employment income.
Using the lack of a 1099-MISC as an excuse to avoid filing your self-employment taxes will likely result in serious tax penalties from the IRS.
Our Sacramento Tax Lawyers are Prepared to Help You File Your 1099-MISC
If you did not timely receive a 1099 form from your employer, you should contact an experienced California tax lawyer today. The legal team at the NewPoint Law Group, LLP possess decades of legal experience that we are prepared to utilize to help you successfully file your tax return. Our firm has provided legal representation to residents of Roseville, Sacramento, Huntington Beach, and across California and we would be proud to represent you. To schedule a confidential legal consultation to discuss your tax situation, contact the NewPoint Law Group, LLP at 1 (800) 358-0305, or contact us online.