John Bullis: Will the Form 1099-MIDS be correct?
There are lots of folks that receive a form 1099-MISC that shows the total income they received in the year. Sometimes that form is not correct. Maybe the person issuing the form just made a mistake in listing and totaling all the payments to you for that year.
So, it is good to keep your own record of those payments to you, as the year goes by. Then you can compare your total to the amount on the form. If the totals don’t agree, contact the issuer of the form and find out if your records are incomplete or if they made a mistake. Corrected forms 1099-MISC are easy to do, especially if the correction is done early in the year.
I hope you are keeping good records of all your business expenses as the year goes by. Then you can do a reasonable estimate of what your net profit or taxable income might be.
I remember when years ago one of our clients received a form from the State of California that was not correct. It took some time and effort, but a corrected form was finally done.
We have seen where the total commissions paid on the form 1099-MISC was not correct. The sooner a mistake is discovered, the sooner the correction can be done.
Some folks were surprised to learn that IRS gets a copy of form 1099-MISC. IRS computers then compare that form with what is reported on the individual income tax return.
IRS has improved their website in recent years. Now, it is fairly easy to request and receive a transcript of the “Wage and Income” items IRS has for a particular year. The only problem is you need to wait until June or July to get that transcript. Since Extensions of Time to File are almost always approved and accepted, waiting a little bit is not a problem.
If you don’t receive a form 1099-MISC timely, you can contact the firm and ask for a copy or at least what the form will show when it is issued. Most firms are pretty good at getting those in the mail by late January or at least early February. If there is a delay in getting that form, it is even more important for you to verify the total amount shown.
If you are issuing form 1099-MISC, now is a good time to see if you have all the necessary information (address, Social Security number, etc.).
Did you hear “Every time I feel depressed or frustrated, I just have to drive on the highway during rush hour, then I feel very grateful I don’t have to do this everyday.” Ann Shin