Most employees across America will receive their W-2 forms and immediately begin preparations for filing their taxes prior to the April deadline. For some, this requires gathering numerous documents pertaining to retirement, savings, stocks, rental properties, etc. and for others the simple W-2 may be all that is required.
Typically, an individual’s tax situation doesn’t fluctuate too much from year to year but picking up a second job, getting married, or a family addition can definitely impact the results. Especially when finding new employment or a way to earn extra spending money, an individual must consider the tax implications of their earnings.
This is where a form 1099-MISC from the Internal Revenue Service (IRS) comes into consideration. Instead of a W-2, which is given from an employer to employees reporting their earnings during the prior tax year, the 1099-MISC must also be considered if applicable for a given situation. Companies issue 1099-MISC forms to those individuals who they have paid over $600 to in the prior year. These miscellaneous earnings
then become the responsibility of the individual to report on their income tax.
Individuals who should expect to receive 1099-MISC forms from others include: Lawn Care Providers, Farmers, Child Care Workers, Barbers, Hairdressers, Artists, and Freelance writers. These service occupations are typically performed for others and the individuals are either independent contractors or self-employed.
While the limit for distribution of a 1099-MISC form may be limited to the $600 threshold, the IRS definitely expects any monies made under that mark to be reported by the individual. For example, if you are a child care provider who earned $550 over the past year through employment with an agency or family, the employer is not required to distribute a proper 1099-MISC form to you but this income should be shown when filing your taxes for the year.
While tricky, the 1099-MISC form is a way for the IRS to track monies earned for services which may not have easily traceable income methods over a wide variety of individuals. For those receiving a 1099-MISC, remembering and accounting for the taxes that will be taken out on the money earned during the year is an important step to avoid any surprises when filing.
The tax specialists at Bloch, Rothman, and Associates
will be happy to help you determine your individual tax implications and filing status, assist you in determining which deduction would be right in your situation and answer any questions regarding individual or business income taxes. We can also assist with a variety of bookkeeping and other payroll options. It is recommended for those who are selected for an audit, that they enlist the services of a professional tax service before they begin engaging with the IRS auditor, especially before they submit any information.
In addition, a fully detailed review of your tax situation can be completed alongside resolution to your issues and estate compilations. All services will be completed in a timely manner, depending on your restrictions and possible tax deadlines. Whether you need a simple explanation on a random tax form, are in need of representation, or would like help in a variety of other services our tax experts are ready and willing to assist. Contact us
or call 303-321-7160 for your initial free no obligation consultation.