Tax Time and Reporting Income Question

[Norwayguy]

I'm saying I'd rather do that then get the advice from a message board full of strangers.

And a very simple question like whether or not he has to report income even though he didn't receive a 1099 would be answered correctly.

Point taken and agreed.

But beyond that I'm leery of using the IRS to answer Tax questions because they have no liability to me...The better answer would be your CPA and yes a board full of agents is like using the ask the audience life line in who wants to be a millionaire and how many of those people walk away unhappy.

 

[arnguy]

I agree with Peter's observation about the IRS as a source of information. At times they do give the wrong advice, but they cannot be held responsible. A CPA's advice would be more appropriate for compicated questions.

Suoersupps, as a former IRS Revenue Officer, my sage advice is report it. Believe me, you are responsible for reporting all income unless it is specifically excluded by the Internal Revenue Code. Lack of a 1099 is no defense.

 

[ShanHikari]

I'm saying I'd rather do that then get the advice from a message board full of strangers.

And a very simple question like whether or not he has to report income even though he didn't receive a 1099 would be answered correctly.

I would beg to differ about calling the IRS. There's no reason I can agree to take advice from someone that is unknown and on an insurance forum lol. But calling the IRS or the State Franchise Tax Board will get you one result. "Sir yes you must report all income that is received."

If you don't know that answer then you haven't dealt with the IRS or if you did have someone say that let me have that name and direct extension! Would save my clients money lmao!!!

If you must ask someone call a CPA and ask them or an accountant, odds are they're going to say yes as well in hopes for your business.

If you report it, it not really a serious loss, I mean 600 at even a 32% bracket is only 192, you can come up with deductions for that!

If you don't report it then you have the chance "very small" of being audited since the insurance company will and has reported it. Since insurance companies get audited quarterly not annually its very strict about where money has gone. I can imagine that will get worse soon too... But too each their own. I mean whether your filing for a corporation with a K-1 or a individual on a 1040 just make sure to take your deductions, your charities, losses, etc and you'll be fine.

I can't honestly say but in reality for 600 dollars its doubtful your going to raise a lot of hell for that, not when the government drops trillions at the drop of a hat.

 

[669comche]

But if its below $600 then the company does not have an obligation to report it......so how does the IRS know about it?

 

[Franz Kafka]

There's certain amount of income tax the IRS expects you to pay as a self-employed. If you pay that, they will never bother you. If you pay less than that, they may bother you. It's more about the amount than the paperwork. JMO

 

[ShanHikari]

But if its below $600 then the company does not have an obligation to report it......so how does the IRS know about it?

They might not have an obligation too but why wouldn't they report it? That's a 600 dollar undeclared expense, not to mention I can't imagine how many people they have that earn less than 600, probably a lot...
It's not like their paying payroll on a 1099 so why would you leave a business expense for an independent contractor unstated? That wouldn't make much sense...

That's like you paying a telemarketer, paying him under your business as a 1099 employee and not declaring that as a business expense?! That wouldn't be all that bright, all those insurance companies have their own internal CPA's I can guarantee they report it knowing that its a business expense.

 

[VolAgent]

They might not have an obligation too but why wouldn't they report it? That's a 600 dollar undeclared expense, not to mention I can't imagine how many people they have that earn less than 600, probably a lot...
It's not like their paying payroll on a 1099 so why would you leave a business expense for an independent contractor unstated? That wouldn't make much sense...

I believe you are a bit confused about the purpose of a 1099. A 1099 is necessary to take the deduction when the payment exceeds $600. If it is less, I can still deduct it, but it isn't necessary to send out the 1099 as well.

 

[ShanHikari]

I believe you are a bit confused about the purpose of a 1099. A 1099 is necessary to take the deduction when the payment exceeds $600. If it is less, I can still deduct it, but it isn't necessary to send out the 1099 as well.

Well aware of that, I never stated he needed the 1099 that why would the company not report it and deduct it. He doesn't need to get a 1099 to report it on his side either.

 

[VolAgent]

Well aware of that, I never stated he needed the 1099 that why would the company not report it and deduct it. He doesn't need to get a 1099 to report it on his side either.

Quite right. He should report it, but the 1099 is what helps the IRS track the income. Again, the right thing to do is to report it, but without the 1099, odds are the IRS will never associate the income with him.

 

[ShanHikari]

Quite right. He should report it, but the 1099 is what helps the IRS track the income. Again, the right thing to do is to report it, but without the 1099, odds are the IRS will never associate the income with him.

Better to be safe than audited lol. I'd rather pay taxes on 600 than spend the time and money doing an audit.