Why Did I Receive Form 1099-MISC?

You do not necessarily have to “have a business” to receive a 1099-MISC- you’re still considered “self-employed” by the IRS

If you opened up your mail to find a Form 1099-MISC rather than a W-2 form, you may think someone sent you the wrong paperwork.

Don’t throw it away. Don’t shred it. Don’t use it to write notes on.

You most likely received this form because you were paid to do freelance or contract work. Hold onto it.

Although you may not consider yourself “self-employed” or a business owner, you’re required to report this income listed on the 1099-MISC on a business tax return (a Schedule C).

What is Form 1099-MISC?

If you’re only familiar with your salary, wages and tips being reported to you on a W-2 Form,  then a 1099-MISC may be completely foreign to you. It’s actually not that complicated. Here’s what you should know;

• the IRS requires any person or company to report certain types of payments on a 1099-MISC
• 1099-MISC can cover a range of different payments such as independent contractor earnings, rent, royalties, prizes, & awards
• if you’re a freelancer or independent contractor then you probably received a 1099-MISC
• you’ll have to report the income listed on your 1099-MISC as self-employment income on a Schedule C tax return
• since the employer isn’t taking out social security and medicare taxes from your pay, you’re liable to pay them

What to do with the 1099-MISC Form you received

Not sure what to do with the 1099-MISC form? You’ll need to hold onto it so that you can report the income on your tax return.

You won’t report independent contract or freelance income listed on the 1099-MISC exactly as you would report wages and salaries listed on a W-2 form. Instead, you’ll have to report the 1099-MISC income as self-employment income on a Schedule C (Business tax return).

Feeling overwhelmed? No need to worry, it’s a fairly easy process if you use tax preparation website like PriorTax. You’ll simply create an account, and simply add your 1099-MISC income by checking the box titled “Business & Self-Employment Income”.

You’ll be able to file your 2014 Taxes between January and April. Until then, you can get caught up on previous year tax returns with PriorTax! 

If you have any questions along the way, the PriorTax team is available via phone, chat or email to help you!

Photo via dt2indenton on Flickr

This entry was posted on Thursday, October 23rd, 2014 at 6:31 pm and is filed under Tax and Life Changes. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.