Filing taxes can be a complicated process. For those who are not paid through a weekly paycheck from an employer, filing can become even more complicated. Independent contractors and freelancers need to be aware that some companies may not send a 1099 to the IRS for their work. This can happen for many reasons. Some contractors may not earn enough from a single employer to be issued a 1099. Other exceptions exist, and it is the independent contractor's job to understand what forms to fill out to report income that was paid whether a 1099 was issued or not.
Keep records on how much money was earned in the tax year. If a person earns more than $600 from a single employer, a 1099 must be issued. Exceptions to this exist, making it important to know who you earned it from and how much.
Obtain a Schedule C. This form is used by independent contractors to calculate profit and loss in the tax year.
Mark "cash" as the method of accounting on line F of the Schedule C.
Total the gross amount of income for the year and enter it one line 1 in Part I of the Schedule C. This is the total amount you were paid, whether this income was reported on a 1099 or not. Money that is not part of a 1099 is classified as additional revenue generated from the business.
Fill out a Schedule SE for self-employment tax. This form has a long version and a short version. A chart provided on the form will determine what version you have to file. If you made more than $400 from self-employment that year, you must file this form.
Things You Will Need
- Receipts or a record of payment
- Schedule C
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