Quast

If you are an independent contractor, you should receive a 1099-MISC form from businesses that paid you more than $600 for your services. Ah, but what if you dont receive one?

The 1099-MISC form is misunderstood by most people. It is not a tax return per se. Instead, it is what is known as an information return. The IRS essentially uses it to track how much revenue an independent contractor pulls in from clients.

A party that pays $600 or more to an independent contractor must file one of the forms with the IRS. There are exceptions to this $600 figure, but this is the general rule. A person issuing the form must send it out to the contractor by the end of the day on January 31st. They then must file the same form with the IRS by the end of February. If you receive a 1099-MISC form, you dont need to do anything with it other than check to make sure the payments reported are accurate. Ah, but what if you do not receive the form?

First off, many people forget to file the form. Since it is an information return, they just dont get around to it or it slips their mind. There is a penalty for failure to file the form with contractors and the IRS, but it is under $100. In short, not enough of a fine to motivate people. If you failed to receive the form, the party in question is probably not up to anything. Furthermore, you do NOT file the 1099-MISC forms you receive with your tax returns, so it is not a critical problem for your own tax return preparation.

If you fail to receive a 1099-MISC form, you still have to report the revenue earned from that business. The fact it was not reported to the IRS does not mean you get a free break. Sorry. You are responsible for reporting all of your revenues regardless of where they came from and whether they were reported to the IRS or not by a third party. You should be able to look at your books and determine how much you were paid from each customer.

Ultimately, the 1099-MISC form stresses out more people than it should. It is a necessary form, but the IRS is not going to be breaking down anyones door for 1099-MISC problems. If you didnt get all the forms you were expecting, just figure out your total revenues and go from there.

Richard A. Chapo is with BusinessTaxRecovery.com - providing free tax tips.