For freelancers, tax season starts early — around February, to be exact.
If you do independent contract work or run a small business, you'll probably get at least a few 1099-NECs from your clients and work platforms — not to mention 1099-Ks from apps like PayPal.
These tax forms should be submitted by January 31, and they normally start to trickle in by early February.
Still, not everyone gets their 1099 forms when they're supposed to.
What happens if you're missing a 1099? Are you still supposed to report the income anyway?
Read on to find out.
Why you might not get a 1099
1099-NECs report self-employment income, but that doesn't mean all self-employed people get these forms.
There are a few reasons you might not receive a 1099 for every freelance job you did. Some of these reasons are perfectly valid. Others mean someone made a mistake (and that person wasn't necessarily you.)
Good news: No matter who's at fault, you won't get in trouble for a missing form.
Without further ado, here are the most common explanations for your missing 1099 form.
1. You earned less than $600 from that client
If you earned less than $600 from a single payer, they aren't required to send you a 1099 at all.
Remember: The $600 minimum applies to the tax year.
If you started working with a certain company — or signed up for a certain job site — later in the year, you might not have hit the required threshold yet. It's possible you won't get a 1099-NEC till the following year.
2. You were paid with a payment app — and you used your personal account
Most freelancers know that Form 1099-NEC is for independent contracting income, and that's true. But the real situation is a little more nuanced since the IRS made some changes in 2022.
These days, 1099-NEC forms are for independent contractor payments made through check, cash, and direct transfers to your bank account. Payments made through credit card, debit card, and apps like PayPal, however, get reported on Form 1099-K instead. (Form 1099-MISC, which you might also have heard of, isn't used for freelance income anymore. Learn more about the differences between these forms in our guide to 1099-NEC vs. 1099-MISC.)
1099-NECs are sent directly by the client or platform you worked for. 1099-Ks, on the other hand, are issued by the credit card company or payment app used to pay you.
The situation with 1099-Ks is a little complicated, and that can lead to even more questions. Here are some complexities you should keep in mind.
The 1099-K threshold has changed
Before, freelancers who got paid through these third-party services needed at least $20,000 in payments, across 200 transactions, to get a 1099-K. Now that threshold has dropped down to $600 — just like the 1099-NEC.
You need certain settings on your payment app account to get a 1099-K
Just like with 1099-NECs, you're supposed to get a 1099-K as long as you earned more than $600 from a freelance job.
There's just one problem: apps like Venmo and PayPal find it hard to tell which payments are for work and which payments are personal.
For example, your brother paying you back the cash you spotted him doesn’t look any different to PayPal than a customer paying you for services. That's why they'll only issue you a 1099-K if you either:
- Use an account that's specifically for work, or
- Have at least $600 in payments tagged as business-related
This is where the system breaks down: most freelancers don’t realize they need separate business accounts, and most clients forget to designate their payments as work related.
All that can lead to some missing 1099-Ks.
3. Your forms got lost in the mail
These days, most clients and work platforms can give you your 1099s electronically, either through email or by directing you to a website where you can download the form.
Still, some companies (and some freelancers and business owners) prefer snail mail.
Relying on the Postal Service can lead to issues. There's always the possibility that your mail might get mysteriously delayed — or just vanish into thin air.
You might have to take action if you recently moved
If you recently moved, your forms might wind up your old place by mistake.
In that case, you might want to follow up with your client and provide them with your correct address.
4. Your client forgot
Your clients are only human, and we all know that humans can be forgetful.
Good news: As far as the IRS is concerned, there's no need to remind them to send the forms. The responsibility lies completely with them.
Do you have to report the income if you didn't get a 1099?
Yes. If you didn’t get a Form 1099, you're still required to report all your freelance income.
You might be thinking, “What about the $600 threshold?”
Unfortunately, that only applies to the clients (and third-party payment processors) issuing 1099 forms for income. When it comes to taxpayers reporting their own income, there is no minimum threshold. You have to report it all.
This unfortunate rule might have you groaning, but don't give up on having a good tax season just yet. Underreporting your income isn't the way to go, but there's another — 100% legal — way to lower your tax bill.
Lowering your reported income with business write-offs
Everything you spend on work — gas for your car, your computer, and maybe even your rent — is a write-off. You can use it all to lower your taxable income. Of course, that requires some recordkeeping: the IRS won't let you claim these deductions with zero proof.
Enter Keeper. Our app takes the grind and the guesswork out of tracking deductions by automatically finding write-offs in your bank and credit card transactions.
Why should you report your income if you didn't get a 1099?
Some people might ask why they should bother reporting their earnings without a 1099. Without the form, the IRS won't know about the income, after all.
That line of thinking is tempting, but it's also dangerous. Here's why.
The missing 1099s could get filed late
Maybe your client forgot to issue a 1099 by the end of January. The fact is, that form won't necessarily stay forgotten.
If someone fails to issue a required 1099 by the deadline, the IRS will make them pay a penalty.
Penalties for late 1099s increase over time. So your forgetful client has good reason to take care of their late filings quickly, before their $50 mistake balloons into a $270 catastrophe.
The penalties keep getting bigger till August, so there's a possibility you could get slapped with a late 1099 all the way in the middle of summer.
If that happens, the IRS will suddenly catch wind of the income you failed to report and come knocking.
If you get audited, the IRS will dig through your bank statements
A client's late filing isn't the only way you might be found out.
If the IRS audits you, they'll look through your bank statements with a fine-toothed comb.
Soon enough, they'll find all the deposits you didn't get a 1099 for.
You're at risk of paying some steep penalties
It's expensive to get caught underreporting.
You'll have to pay taxes on the income you didn't tell the IRS about the first time around. And on top of that, you'll have penalties to deal with. These go up to 25% on late income taxes and 50% on late self-employment taxes.
Worst case scenario, if the IRS thinks you've committed fraud, they could charge you a whopping 75%.
Not reporting your income might feel like a good idea in the short run, but there's a good amount of money at risk.
What to do if you didn't get a 1099
When you're dealing with a missing 1099, here are two truths to keep in mind.
- You won't get in trouble for the missing form
- You can get in trouble if you don't report the income
With that in mind, here's how to handle things.
Step #1: Stay calm
Don’t worry too much about not receiving a 1099-NEC or 1099-K.
It can be annoying not to get a form when you're supposed to, especially if you did everything right — keeping your address up to date and opening a separate PayPal account for your business.
However, know this: the IRS doesn't actually care whether or not you were at fault in any way.
Because the onus is on the payer to issue the form, they're the only person who can be penalized if you don't receive one. (The same is true if you lost a 1099 — you won't get in any trouble!)
Step #2: Don't bother asking for the missing form
If it's well past Valentine's Day, and you're still waiting on a 1099 that you know should have been sent, don't waste time requesting it.
Why? Well, for starters, if you do call or write to ask for the form, there's a small chance you might end up with two of them from the same client. It’s highly unlikely two will be filed with the IRS, but why risk complicating things.
But more importantly, you don’t have anything to gain from asking for the form. If one of your customers messed up, they’ll be on the hook for the fee, not you. So there’s no reason to potentially jeopardize your relationship by making this extra ask.
Remember, not receiving a 1099 doesn’t affect you at all.
You can simply report your income without the 1099. Speaking of which....
Step #3: Report the income on your own
Instead of worrying about late or missing forms, report the income yourself.
You might have to reconstruct it by digging deep: looking through your profit and loss statements, bank accounts, payment app accounts, and — if you earn tips — possibly even records of your cash income.
If you file through Keeper, our app makes it easy to fill in income without a form.
Step #4: Be proactive next year
To encourage your clients to send you 1099s in the future, you can take matters into your own hands.
Just fill out a W-9 and send it to all your clients before the end of the year.
Filling out Form W-9
Form W-9 is simple to fill out, and you won't have to send it to the IRS at all. Getting it to your client is enough.
This form helps your clients fill out the 1099s they're required to send you. Essentially, a W-9 ensures they have all the information they need to fill out a 1099-NEC.
Here's what you'll need to fill out:
- Your name or your business's name
- Your federal tax classification: Sole proprietor, partnership, S corporation, or C corporation
- Your address
- Your Tax ID: Social Security Number, EIN, or ITIN
- Your signature
- The date
A late or missing 1099 can be stressful — especially if you're waiting on the form so you can sit down and file your self-employment taxes.
The good news is, you technically don't need these forms to file. And as long as you report all your income, not having a 1099-NEC won't cause you any trouble.
Over 1M freelancers trust Keeper with their taxes
Over 1M freelancers trust Keeper with their taxes
Over 1M freelancers trust Keeper with their taxes
Sign up for Tax University
Get the tax info they should have taught us in school
At Keeper, we’re on a mission to help people overcome the complexity of taxes. We’ve provided this information for educational purposes, and it does not constitute tax, legal, or accounting advice. If you would like a tax expert to clarify it for you, feel free to sign up for Keeper. You may also email firstname.lastname@example.org with your questions.