My friend did his taxes on a website twice once claiming the info from the 1099, once without claiming it! He found out he would get more money back by not claiming it! What could happen if the irs found out?
2007-10-04 13:31:21 · 9 answers · asked by mbutterfly 1 in Business & Finance ➔ Taxes ➔ United States
They will send him a notice with interest, penalties and the additional tax listed as amounts due. The 1099 is supplied to the IRS and they will match it up against his return. It will probably take about a year or two to get the notice.
2007-10-04 13:50:20 · answer #1 · answered by BHWMST 3 · 1⤊ 0⤋
Well, of course he'd get more money back without claiming all his income.
It's not a matter of if he's found out, it's a matter of when. If he got a 1099,. it was also reported to the IRS by the company that gave him the 1099. The IRS matches up the W-2 and 1099 info that's reported to them with the returns filed, and when they do, his extra unfiled 1099 will pop right out, and he'll get a letter from the IRS demanding payment of the additional tax, plus penalties and interest. This isn't a maybe, it WILL happen. It can take a year or two before they get everything matched up and checked out - by that time the interest and penalties will have added up substantially. He'd be wise to file an amended return, claiming ALL of his income, as soon as possible to stop the interest and penalties from accumulating.
2007-10-04 14:43:16 · answer #2 · answered by Judy 7 · 0⤊ 0⤋
It's not even a question of "if" they find out. All the information on the 1099 was given to the IRS by the company that sent it to your friend. The IRS already knows he earned that money. Their system just goes through all the 1099 forms and looks at each person's income tax return to see if they claimed everything. They use the same system to match up W-2 forms and people's income tax returns.
In a year or two when they finish doing all the matching, they just send out notices to the people who didn't claim everything and they have to pay penalties and interest on the amount of tax they didn't report. It's completely automatic, and there's a 100% chance they will catch it.
2007-10-04 14:06:02 · answer #3 · answered by likepepsi 7 · 1⤊ 0⤋
If he received a 1099, the IRS already knows! They'll just send him a bill for the additional taxes due. Plus penalties and interest, of course! It may take a year or more for them to catch up with him but I guarantee that they will. In the meanwhile, the interest and penalties will continue to accrue.
2007-10-04 14:34:32 · answer #4 · answered by Bostonian In MO 7 · 0⤊ 0⤋
In addition to having to pay the money, he will be notified by the IRS that he is subject to backup withholding due to overreporting of interest or dividends. This means that every time that he opens a bank account, he will have to cross out the language stating that he is not subject to backup withholding, and the bank will have to withhold taxes from the interest that they pay him.
Additionally, as several other persons have noted, the IRS will charge him the tax that he should have paid plus interest plus penalties.
2007-10-05 09:56:25 · answer #5 · answered by StephenWeinstein 7 · 0⤊ 0⤋
the advantages needless to say would be to get distributors to checklist greater earnings, when you consider that they'd could. The purpose of the supply grow to be to get greater tax gross revenues with the help of making distributors could checklist smaller revenues to persons. In practice however, it does look like the effect would be to reason companies of all sizes the added difficulty of submitting 1099 types for all single transaction purchases of $six hundred or greater. It feels like alot of dems choose to repeal or regulate this provision too. Its not a great Liberal conspiracy to tutor small companies in "auditor bots". Its a competent theory, purely stressful to accomplish. In a suited international, distributors would checklist this earnings and pay tax on it out of honesty.
2016-10-21 01:56:54 · answer #6 · answered by ? 4 · 0⤊ 0⤋
He could be arrested for tax fraud. He'll probably just be audited and forced to pay a fine. 1099's are reported by the issuer to the government independently of the filer's actions.
2007-10-04 14:06:03 · answer #7 · answered by mcmufin 6 · 0⤊ 1⤋
they will find out and he will pay hefty penalties. It may take a year or two for them to figure it out, but i assure you, they will.
2007-10-04 13:34:42 · answer #8 · answered by Anonymous · 1⤊ 0⤋
taxes, penalty and interest, possible wage garnishment
2007-10-04 14:03:47 · answer #9 · answered by Anonymous · 0⤊ 0⤋