Tax Time and Reporting Income Question

supersupps

Guru
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This is my first time doing taxes as an agent. I have 2 friends that have very different opinions on reporting income.. One friend says that if you get no 1099 ( less than $600 ) then you don't report it. The other friend says to report all because if you get audited they go thru your checking accounts etc to see your income. What are you doing?
 
I bet you will get 1099 even if it is below the $600. Most insurers just 1099 everyone as a part of their business. They want to be able to show all expenses.
 
I bet you will get 1099 even if it is below the $600. Most insurers just 1099 everyone as a part of their business. They want to be able to show all expenses.

I have many times not recieved 1099s from Carriers that I have done less than $600 in business for....My take is that you are supposed to report your income and pay taxes on that income...Yes a 1099 is helpful in reporting your taxes but like many other things with the IRS you are ultimatly responsible.
 
You should receive a 1099 no matter if you made a dollar or a hundred thousand. If you don't you can call the company and request a copy of your 1099. Also you do want to report it. It's reported to the IRS and the Franchise Tax Board under your SSN, TIN or EIN.

What do with taxes?
Not a hard question, everything is a write off. A lot of people will say this will get you audited. Not likely. If your worried about being audited incorporate and use an S Corporation. These are the least audited type of corporation and less so then large money makers that are self employed.

Your then a W2 employee instead of a 1099, your company is the tax shelter. Plus as a principal of the corporation you can make a defined benefit plan and literally suck hundreds of thousands out and there all tax deductiable. In CA in a 32% federal tax bracket a contribution to a defined benefit is a savings of 42%

100K into a DB give you a tax break of 42K. Not bad! This is why 412(i)'s now 412(e)'s had such a problem with the feds. No its not illegal, no its not unethical and those telling you a Roth is the way to go I would beg to differ.

As most are individuals you'll want to use a 1040 to file income taxes. Schedule A is where deductions can be made. Plus don't forget there are killings on self employment tax, that's why some people choose to incorporate.

Just use an itemization of all your deductions, plan it carefully, have the bank records in case you get audited. Not much trouble. Also depending on what state your in gas is reimbursed either by a set limit or cents per mile.

I love preparing taxes its great to see how much you can screw the government out of! Not to mention taxes a basically legalized theft.
 
I use the S corp. And yes it saves me a ton in taxes. I also report every dime that was deposited in my business account and go off that number not my 1099s.
 
Best advice you'll get on this thread; call the IRS toll free number and ask. They give free tax advice.

Other than that, just use your common sense. Let's say you made 50K last year but all of it was from 85 different vendors who each gave you less than $600. Do you think you need to report that you made 50K?
 
Best advice you'll get on this thread; call the IRS toll free number and ask. They give free tax advice.

Other than that, just use your common sense. Let's say you made 50K last year but all of it was from 85 different vendors who each gave you less than $600. Do you think you need to report that you made 50K?

I'm sorry John I can not support calling the IRS as the best advice. Yes it is free but you are responsible even if the info you recieve from the IRS is wrong and many times it is.
 
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.
 
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