Independent Contractor one 1099 form?

Question

I've been working as an independent contractor for the last threes years. I keep a log of the income I bring in and use that at tax time. (most of it cash, checks) However, last year I was issued a 1099 from a company that I did some consulting work for. For this year taxes I have the one 1099 from this company plus other cash income from the business. I heard having one 1099 form maybe a problem for the IRS. Is this correct? ANy advice would be greatly appreciated

Answer 1

As long as you report the income you received, it would already include the amount on the 1099. Companies are required to issue you a 1099 when they pay you over $500. The IRS will only check to make sure that if your 1099 says 1,000 there is at least that much on your gross income line on your Schedule C tax return. This won't be an issue as long as you are reporting all of your income.

Answer 2

That is not a problem at all. As long as you report all of your income, whether it was 1099'd or not, you'll be good with the IRS.

The IRS starts asking questions when you report LESS total income than was reported to them on the various 1099s that you received.

As long as you have accurate business records, you have NOTHING to worry about.

Answer 3

As an independent contractor you basically are self-employed. You should fill out a Form C, or, Form C-EZ, depending on your income and expenses. You can deduct business expenses that you incurred including mileage, office supplies, etc that you paid for. The reason you owe more than if you received a W-2 is that as an independent contractor you are paying all of your social security tax and medicare tax. As an employee you pay half and your employer pays half.

Answer 4

Whether having one or twenty 1099's is irrelevant or unimportant..

The only concern I have is why your employer pays you in cash rather than in a check? It appears that you are reporting all of your collections as income.
But how much does your employer report as a deduction on his tax returns?

If you ever get audited, it would be quite difficult to trace the source of your funds without a cancelled check. Tell your employer that you want to be paid
by check from now on. That way if there is any question as to what you received and/or reported, there will be proof of it.

Answer 5

it is not a problem for you as long as you report all your income. it is pretty common that payors don't always issue 1099's as they are supposed to. just make sure that the amount you report for the one 1099 you did receive matches the amount on it.