If you’re a self-employed independent contractor, every client who pays you more than $600 during the year is required to report the payments to the IRS (and your state tax agency) on IRS Form 1099-MISC. This year, there’s a new 1099-MISC deadline.
For the first time, all 1099-MISC forms must be sent by hiring firms to both independent contractors and the IRS by January 31 to report payments during 2016. In past years, the deadline was February 28, or March 31 for 1099-MISCs filed electronically.
However, a client must file a 1099-MISC only where you are paid by check or cash. The form need not be filed if you are paid electronically—for example, through PayPal; or with a credit card or debit card. But, if you have enough transactions, the electronic payment provider or credit card company may file a form 1099-K reporting the payments.
Be sure to check all 1099-MISC forms you receive to make sure they are accurate. The IRS matches the amounts on these forms with the income you report on your tax return. If they don’t match, you’ll get a letter from the IRS. So you don’t want the IRS to think you were paid more than you really were. If a 1099-MISC is wrong, ask the client to issue a corrected form.
A new IRS rule that went into effect this year provided that a payer does not have to issue a corrected 1099-MISC if the error is $100 or less unless the payee—you—ask for a corrected form. If you do ask for a corrected form and one isn’t provided, the payer will be subject to IRS penalties.
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MileIQ’s blog does not constitute professional tax advice. You should contact your own tax professional to discuss your situation.