How to Report 1099 Income
How to Report 1099 Income
With the increase in bloggers, affiliate marketers, eBay sellers and other online business owners, the topic of reporting miscellaneous income and 1099 forms has been coming up a lot lately.
While most people are aware they must report wages, salaries, interest, dividends, tips and commissions as income on their tax returns, many don’t realize that they must also report other income, such as:
cash earned from side jobs,
barter exchanges of goods or services,
awards, prizes, contest winnings and
gambling winnings
Basically, you have to report all income from any source (and any country) unless it is explicitly exempt under the U.S. tax code.
That means if you earn money from ads on your blog, selling items on eBay, selling products for a commission, or providing a service to another person (even if that service is all done via the Internet), then you must report that income.
If you work as an independent contractor and earn $600 or more (from one company or individual), you should receive a Form 1099-MISC reporting your income. Even if you don’t receive a Form 1099, your income is still reportable.
It is a common misconception that if a taxpayer does not receive a Form 1099-MISC or if the income is under $600 per payer, the income is not taxable. There is no minimum amount that a taxpayer may exclude from gross income.
Independent contractors must report all income as taxable, even if it is less than $600. Even if the client does not issue a Form 1099-MISC, the income, whatever the amount, is still reportable by the taxpayer.
The good news is that as an independent contractor, or as a self employed business owner, you get to deduct ordinary and reasonable business expenses against your income.
To report your income and expenses from your online business, use Schedule C: Profit or Loss From Business, which is then attached to your Form 1040 (your personal tax return). You must also complete Schedule SE to calculate your self employment taxes if your net profits from your business exceed $400 for the year.
As a self employed person you are responsible for self employment taxes on top of your regular tax for your net profits. Since the SE tax is 15.3%, this can add up quickly.
We hope you found this article about “How to Report 1099 Income” helpful. If you have questions or need expert tax or family office advice that’s refreshingly objective (we never sell investments), please contact us or visit our Family office page or website www.GROCO.com.
To receive our free newsletter, contact us here.
Subscribe to our YouTube Channel for more updates.
Alan Olsen, is the Host of the American Dreams Show and the Managing Partner of GROCO.com. GROCO is a premier family office and tax advisory firm located in the San Francisco Bay area serving clients all over the world.
Alan L. Olsen, CPA, Wikipedia Bio
GROCO.com is a proud sponsor of The American Dreams Show.
The American Dreams show was the brainchild of Alan Olsen, CPA, MBA. It was originally created to fill a specific need; often inexperienced entrepreneurs lacked basic information about raising capital and how to successfully start a business.
Alan sincerely wanted to respond to the many requests from aspiring entrepreneurs asking for the information and introductions they needed. But he had to find a way to help in which his venture capital clients and friends would not mind.
The American Dreams show became the solution, first as a radio show and now with YouTube videos as well. Always respectful of interview guest’s time, he’s able to give access to individuals information and inspiration previously inaccessible to the first-time entrepreneurs who need it most.
They can listen to venture capitalists and successful business people explain first-hand, how they got to where they are, how to start a company, how to overcome challenges, how they see the future evolving, opportunities, work-life balance and so much more..
American Dreams discusses many topics from some of the world’s most successful individuals about their secrets to life’s success. Topics from guest have included:
Creating purpose in life / Building a foundation for their life / Solving problems / Finding fulfillment through philanthropy and service / Becoming self-reliant / Enhancing effective leadership / Balancing family and work…
MyPaths.com (Also sponsored by GROCO) provides free access to content and world-class entrepreneurs, influencers and thought leaders’ personal success stories. To help you find your path in life to true, sustainable success & happiness. It’s mission statement:
In an increasingly complex and difficult world, we hope to help you find your personal path in life and build a strong foundation by learning how others found success and happiness. True and sustainable success and happiness are different for each one of us but possible, often despite significant challenges.
Our mission at MyPaths.com is to provide resources and firsthand accounts of how others found their paths in life, so you can do the same.
Benefits of Miscellaneous Deductions
Benefits of Miscellaneous Deductions Source: IRS.gov If you are able to itemize your deductions on your tax return instead of claiming the standard deduction, you may be able to claim certain miscellaneous deductions. A tax deduction reduces the amount of your taxable income and generally reduces the amount of taxes you may have to pay.…
Organizing Tax Records This Summer Can Help You Keep Your Cool
Organizing Tax Records This Summer Can Help You Keep Your Cool Source: IRS.gov If the sweltering dog days of summer aren’t incentive enough to get out of the sun for awhile, here is another reason to head indoors: organizing your tax records. Devoting some time mid-year to putting your tax-related documents in order may not…
Crazy Tax Deductions
Crazy Tax Deductions Every year at tax time, people try to come up with items to deduct or write off on their tax return. Sometimes the IRS allows them, and sometimes they don’t. We’ve compiled a list of our favorite crazy tax deductions, some were successful and others were not. Crazy Tax Deductions that the…
Renting Your Vacation Home
Renting Your Vacation Home Source: IRS.gov Income that you receive for the rental of your vacation home must generally be reported on your federal income tax return. However, if you rent the property for only a short time each year, you may not be required to report the rental income. The IRS offers these tips…