Receiving or sending Form 1099, what if you forget?
Forget to File Your 1099?
Tax time is upon us. As we all scramble to get our tax documents together, you may wonder what the repercussions are if you forget to file some of that paperwork. In this post we take a look at the 1099.
What is the 1099?
If you receive income from anywhere that is something other than a wage or salary, a 1099 is necessary. The 1099 form is an informational form that you receive, not one that you fill out. If a business or government entity sends you money that is taxable, they should send you a Form 1099. Generally, this kind of income is subject to federal income tax and state income tax. The type of 1099 you receive depends on the type of work that you do and the type of employee that you are. They are all geared towards money you receive that are potentially taxable.
The IRS receives a copy of the 1099 form that a business sends to you. Thus, it knows about the taxable income you are receiving and should be including on your tax return. If you do not submit it, the IRS will notify you and charge you penalties for not reporting it with interest. You can always amend your report if you catch the error before the IRS catches it. To avoid penalties, you should include any miscellaneous income on your Form 1040.
The penalties imposed by the IRS are 0.5% of the amount owed for every month the payment is late, but the maximum penalty is 25%. There are different rules if your 1099 income is a large amount. The penalty will increase to 20% immediately if the tax on your income is greater than $5,000 or 10 percent of the correct income you should be showing on your return.
Whether you’re receiving or sending Form 1099, SimpleForms can keep you organized.
About the author
Angela Yu is a New Jersey and New York attorney with a multifaceted practice area focusing in corporate, real estate and general contract law. Ms. Yu is a published legal author and holds a J.D. and M.B.A. from Rutgers School of Law and Rutgers Business School.
Angela Yu does not provide legal advice on this website. This blog post and any blog posts authored by Angela Yu do not constitute legal advice.