1099 Tax Reporting – How Responsible AM I?
Question
January got the best of us and we’re now just in the process of finalizing and issuing our 1099s.
At least we’re not late in filing with the IRS (due February 28th).
In our efforts to collect names, addresses and social security numbers, one of our contractors said she wasn’t aware that she would be getting one and has already filed her taxes. Do you know what she needs to do about this?
Answer:
The contractor will have to amend her return if she did not include the nonemployee compensation earned from your company on her originally filed tax return. Please note that it’s the taxpayer’s (payee) responsibility to report appropriate income to the Internal Revenue Service. You as the payor are responsible for merely assisting the IRS in determining if individual taxpayers report accurate and correct information on their Form 1040, individual income tax return.
In other words, the contractor did what many taxpayers do in reporting only the income that was issued on W-2s and 1099s and elected not to report any earned income that wasn’t evidenced by a tax document.
“Tax Cheat” might be a little harsh, but in essence cheating is what your ‘payee’ did ….as she intentionally did not report all of her earned income to the Internal Revenue Service.
That’s her problem, not yours.
