What Do I Do If I Don't Receive A 1099?
As a freelancer, it is typical to get Form 1099-MISC in the mail in January from your clients or employer. This form which reports your income for the previous tax year. Then, you enter the income on your tax return. However, there are instances where you may not receive one and you may be questioning “What If I Didn’t Get a 1099?”
Fear not, my friend, because we’ve got your back. Continue reading for exactly what to do when you’re questioning “What If I Didn’t Get a 1099?”.
Reasons Why You May Not Have Received a 1099
Since 1099s are due typically by January 31st, you may feel a sense of panic if you don’t receive one by February at the latest. However, sometimes there are valid reasons why you may not have received a 1099.
You Earned Under $600
If you earned income for 1099 under $600 in a tax year, your client or employer is not required to issue you a form 1099-MISC based on the IRS’s guidelines.
That being said for your freelancer taxes, you are still required to report that income on Schedule C of your personal tax return. Keeper Tax will walk you through how to fill out Form Schedule C as part of our tax filing software designed for freelancers.
The best way to track all of your income throughout the year is to utilize an accounting software or spreadsheet to track all of your income for tax purposes. It’s also very important to track your business or freelance expenses, which will also be where Keeper Tax comes in handy with our effortless 1099 expense tracking.
Your Client or Employer Forgot
Your clients are humans too and we all know that humans can be forgetful. That being said, you do not have responsibility as a freelancer to remind your client or employer.
Because the responsibility lies with them, you would not incur penalties if they failed to issue you a 1099. Instead, you would simply just report the income on your tax return based upon your own records.
However, if you moved recently there may be more due diligence on your end. There is a risk that your employer or client prepared a Form 1099 for you and filed it with the IRS, but it got lost in the mail or was sent to an incorrect address.
If that is a possibility, you may want to follow up with your employer or client and provide them with your updated address and contact information.
If the IRS received a Form 1099 and you reported less income than the form, you could be sent a notice from the IRS that you owe more taxes. In some situations, you could also be flagged for an audit. We definitely want to prevent that from happening.
You Were Paid Via a Payment Card, Upwork, PayPal, or Another Third Party
Third party merchants and payment card processors (credit cards and debit cards) issue Form 1099-K instead of Form 1099-MISC to report your income. Form 1099-K serves the exact same purpose as Form 1099-MISC, which is to report all of the payments to you during the tax year. In turn, you are required to report these payments as income.
However, thresholds that third parties are subjected to are much higher than the $600 threshold for individual clients or employers.
For example, for PayPal, and Upwork 1099 taxes they will only send you a form 1099-K if you’ve received more than $20,000 in deposits within a tax year.
What To Do If You Did Not Receive a 1099
Listen, the IRS will know if you don't file a 1099. Unless you didn't make over $600, then here is what you should do next if you didn't receive a 1099.
Don’t worry too much about not receiving Form 1099-MISC or Form 1099-K for your employer or payment processor. The burden of providing this form to you lies on them. With that fact, you can stay calm and not lose any sleep thinking “what if I didn’t get a 1099?” or “who do I need to contact?”.
Instead, you will just take the appropriate measures to report the income that you’ve tracked during the year using your accounting system or profit and loss statement.
Report the Income Anyway
If you didn’t get a Form 1099, you are still required to report all income. You may be thinking “What about the $600 threshold?” Unfortunately, that only applies to your employers and clients preparing form 1099-MISC. There is no threshold that applies for reporting income.
To ensure that your employers and clients send a Form 1099-MISC to you going forward, take some proactive measures.
One simple proactive measure you can take is by filling out form W-9 on behalf of yourself or your freelancing business. Then, you can send this form to all of your clients or employers.
Form W-9 is simple to fill out and is purely for informational purposes only, so there is no requirement to also send this form to the IRS. The main purpose of this form is to instruct your clients as to how to fill out your 1099, including which address and tax ID to utilize.
To fill out form W-9 you must have the following information:
- Your Name or Your Business’s Name
- Your Federal Tax Classification (Sole Proprietor/Individual, LLC, Partnership, etc.)
- Your Address
- Your Tax ID (Social Security Number or EIN)
- Signature and Date
What Happens If You Don't Get A 1099 From Lyft
If you didn’t receive a 1099 from Lyft, Uber, or another ride-share service, it’s likely because you didn’t earn enough money during the year.
Lyft and Uber are only required to send 1099s to those drivers who have reached $20,000 in driving sales or more than $600 from driver referrals or other payments.
If you were under this threshold, you will still have to report the income. The easiest way to calculate your total income is to login to the driving platform and view all of your transactions from the tax year. You will then add these up manually or run a report to get the subtotal.
The Bottom Line
If you are asking the question “What If I Didn’t Get a 1099?”, don’t worry! Stay calm and make sure to report all of your income, whether or not you got a 1099. Going forward, be proactive and send your clients or employers form W-9 so they know where to send your 1099 come tax season.