Careful! An incorrect 1099 that overstates your income is a problem that can lead to a painful tax audit.
What can cause errors?
One huge cause of incorrect 1099s is a misunderstanding of what 1099 income really is. Another cause of problems is correcting your 1099 the wrong way. But don’t worry. We’ll clear up the confusion when you read our brand new article titled Tax Tips: What Is 1099 Income and Why Does the Definition Cause an Incorrect 1099 and a Possible IRS Audit?
Three ways our fact-filled article can help you:
- We’ll explain how the IRS defines 1099 income. This is important information you should know. That’s why we’ll provide a quick, but comprehensive overview of how the 1099 rules work. You’ll learn plenty when you read the full article.
- We’ll outline correct reporting techniques. Reporting can be tricky indeed. For example, the Form 1099 that you received from the payor is supposed to report money received by you during the year — NOT the amounts paid to you during the year. We’ll tell you more when you read the full article.
- We’ve got a surprise for you. Did you know that the 1099 can contain a taxable amount to the payee that is different from the deduction amount of the payor? We’ll explain this point using an example when you read the full article.