I made money n 2005 that the contractor did not report. Irs doesn't find it reported? What do i do..?

Question

I normally file self employed. In 2005 I changed employers and my first employer closed the doors and went back to Canada.The IRS is now wanting my 2005 tax return and I informed them that I did not have any documents to file with, they then sent me a document regarding reported income with all the wages reported by my second employer only.Please note 1st employer was 1099,2nd employer witholds taxes.I really have no way of knowing what I received different amounts sometimes cash, sometimes check. This employer hated the goverment their taxes and their laws about taxes i can truly see him not filing and giving them the bird as he crosses the border.

? What am i to do.
? If I do not file and they find out later, what are my problems?

With a Uncle like this, who needs family?

Answer 1

If your contractor did not report the income that they paid you in 2005 to the irs, then there's no way that the irs will find out about it, unless you tell the irs. My advice to you would be to be honest and report the amount of income that you received (add up all the cash & checks that you got and report that amount), but it's your choice what to do.

Answer 2

Legally, as self-employed you were required to keep good records of your income so you could file an accurate tax return. When you are an employee, your employer keeps track and sends you a W-2 at the end of the year showing everything. As a self-employed person, you are the one responsible, whether you get a 1099 or not.

But if you didn't do that, about all you can do now is estimate as closely as possible what you were paid, and file that amount on your schedule C and the employee wages directly on your 1040.

If you don't file the self-employment income and they find out later, you'll owe a lot more money that you will if you do it now, for more interest and penalties.

Answer 3

You are responsible for paying your taxes and keeping records of your income. Sorry. There are penalties for your employer for not sending in your 1099. If you made under $600, he is not required to give you a 1099 but you are requried to report it on your income tax. I didn't say this but to resolve the issue, I would file without reporting the income that was not reported. If the IRS has no record, what else can you do and at this time the IRS can do nothing to you? As self employed, why didn't you keep records of income and all your expenses. You pay on net income not gross. Approach your second employer for a copy of your W-2 and he should give it to you. I hope your first employer doesn't come back, but then he might have substantial fines for not filing the proper 1099s should they ever catch up to him.

Answer 4

The IRS will ask you to fill out a form stating what you "think" you made. Not that'd I'd advocate trying to deceive the gov't however... If the employer never filed taxes (therefore never reported the 1099 income) you are OK and they'll never know. Just file like you know nothing about it. If the IRS knows about the 1099 income (he did file) you'll get a "corrected" tax return as their computer will pick it up. Unless you are Wesley Snipes trying to avoid millions in taxes they won't do anything. Maybe a 10% penalty and monthly interest.

Answer 5

Damn IRS.