As an independent contractor or self-employed individual, receiving a Form 1099 is an important part of filing your taxes properly. The 1099 forms report income you received from clients or customers over the course of the year. If you worked as an independent contractor but did not receive a 1099, you may be wondering what to do. Here are some quick answers about what happens if you don’t get a 1099.
Do I have to report income without a 1099?
Yes, you are still required to report all taxable income even if you did not receive a 1099. The IRS requires you to report all income sources when you file your taxes. Not receiving a 1099 does not exempt you from reporting client or contract income on your tax return.
What if my client didn’t issue me a 1099?
In some cases, a client may neglect to issue you a 1099 even though they should have. Reasons for this could include:
- They paid you less than $600, which is the threshold for mandatory 1099 reporting
- It was your first year working with them and they overlooked it
- They are behind on paperwork and administration
- They are purposely trying to avoid 1099 reporting requirements
Regardless of the reason, it is still your responsibility to report the income. Keep excellent records like invoices and bank statements so you can provide documentation if ever audited.
How do I estimate the income to report?
If you did not receive a 1099, you may need to do your best estimation of how much total income you earned from that source. Here are some tips for accurately estimating unreported 1099 income:
- Review bank deposits and match up with invoices and project payments
- Look at the dates and amounts of payments in your records
- Refer back to emails, contracts, and project management tools for payment notifications and project timelines
- Reconstruct records with the client to request their total paid to you, if feasible
What forms do I need to file without a 1099?
You will still need to file the normal tax forms required for self-employed individuals, including:
- Schedule C to report business income and expenses
- Schedule SE to calculate self-employment tax
- Form 1040 to file your overall tax return
Without a 1099, you may need to do a little more work to accurately calculate your earnings, but the required forms remain the same.
What records should I keep for proof?
Keep extensive records of your earnings and business activities, including:
- Invoices showing payments received
- Bank statements reflecting deposits
- Emails discussing work projects and payments
- Business receipts for deductible expenses
- Mileage logs if you deduct vehicle expenses
- Calendar or notes tracking work hours and projects
Having detailed records can help prove and explain the income sources reported on your tax return if the IRS ever flags your return for review.
Can I deduct expenses without documentation?
You can technically claim business expense deductions without documentation, but doing so raises your risk of audit. It is best to only claim expenses for which you have proper documentation and records. Keep receipts, invoices, mileage logs, and other evidence to support the business deductions you claim. Unsupported expenses may be disallowed.
What penalties apply if I underreport income?
Intentionally failing to report all your taxable income can lead to serious penalties, including:
- Underpayment penalties – 20% of the underpaid tax
- Civil fraud penalties – 75% of the underpayment from fraud
- Criminal prosecution – $100,000 fine and/or prison time
Claiming you did not receive a 1099 does not justify underreporting. The penalties make honest reporting the wise choice.
Can I file an extension if I’m missing a 1099?
Yes, you can file for an extension by submitting Form 4868. This gives you an additional 6 months to file your return. However, you still need to estimate taxes owed and pay by April 15 to avoid late fees. Extensions give more time to file, but not to pay what you owe.
Should I follow up again with the client?
It can be worthwhile to follow up again with the client and request they issue a corrected 1099 if they initially overlooked it. Send them a formal request in writing explaining that you need the 1099 to properly file and report the income. Be sure to keep documentation of your efforts to obtain the 1099 in case you are ever questioned.
Can I file without my 1099s if they arrive late?
Ideally you should wait to file until receiving all your 1099s for the year. However, if 1099s arrive late and you cannot obtain an extension, it is better to file on time with your best income estimates rather than filing late. Just be sure to amend your return later if necessary.
When do I need to file an amended return?
File an amended return if you receive a late 1099 that changes your previously reported income or deductions. Use Form 1040X to amend within 3 years of your original filing. You may face underpayment penalties if the late 1099 shows you underreported your taxes due.
Conclusion
Not receiving an expected 1099 from a client you worked for does not free you from reporting that income. You are still obligated to accurately report all taxable self-employment or contract income, even without documentation. Keep extensive records to support the incomes sources and business deductions you report. If possible, follow up with clients to request they provide a 1099. Underreporting income can lead to penalties, so honesty is the best policy when it comes to filing taxes, with or without a Form 1099.
Year | Income Reported | Additional Unreported Income | Total Actual Income |
---|---|---|---|
2019 | $55,000 | $10,000 (forgotten freelance income) | $65,000 |
2020 | $60,000 | $5,000 (client did not issue 1099) | $65,000 |
2021 | $70,000 | $0 | $70,000 |
This table provides examples of reported vs actual income when someone fails to report or document all their earnings sources. There are significant underreports in 2019 and 2020 that could trigger audits, penalties, and back taxes if discovered.
Warning Signs You Underreported
Here are some red flags that may indicate you accidentally underreported self-employment income:
- Cash deposits larger than reported income
- Income reported is unusually low for your hours worked
- Large unexplained deposits from PayPal, Venmo, etc.
- Income does not match records of payments received
- Poorly kept records make income tracking uncertain
If you notice any of these issues, it may be worth amending past returns or taking steps to improve income tracking going forward. Underreporting often happens by mistake, so correct it as soon as possible.
When to Seek Professional Help
Consider involving a tax professional or CPA if:
- You omitted major income sources from past years
- You receive late 1099s that contradict your prior tax return
- You have complex contractor work situations
- You are undergoing an IRS audit for underreporting
Tax pros can help reconstruct income sources, file amended returns, negotiate with the IRS, and generally guide you through the process of getting back into compliance.
Making Future Tax Filing Easier
Going forward, you can make things easier on yourself at tax time by:
- Keeping detailed records of all income sources
- Logging business expenses and obtaining receipts
- Staying organized with bookkeeping software or spreadsheets
- Calendar reminders to follow up about receiving 1099s
- Running periodic income and estimate tax payments
Making tax filing a priority throughout the year can prevent issues or surprises at tax time. You may still occasionally miss a 1099, but with good records you can still file accurately.
Key Takeaways
- You must report all taxable income even without receiving a 1099
- Keep detailed records to accurately track unreported income
- Request clients provide 1099s if they initially fail to issue them
- File on time using income estimations rather than waiting for late 1099s
- Consider amending returns if you receive late 1099s showing underreported amounts
- Report honestly to avoid penalties for intentional underreporting
Not getting 1099s from clients who should issue them can create challenges at tax time. However, with proper documentation and income records, you can still file accurately. Report all income sources to avoid IRS penalties and make sure you pay all taxes legally owed.
As a self-employed taxpayer, it is ultimately your responsibility to report your income, regardless of whether clients provide you with 1099s. Keep detailed records, follow up about missing 1099s, and file on time, even if that means using income estimations. By understanding and fulfilling your own tax obligations, you can avoid penalties and other problems that can arise if you fail to report income without a 1099.
Being thorough, organized, and proactive makes proper tax filing achievable, even when you encounter clients who do not comply with issuing you 1099s. Do your due diligence in tracking income sources, follow up about getting 1099s, maintain documentation, and file accurately based on your own records. Handling your side of tax reporting properly lets you avoid issues, even if clients fail to provide you with 1099s as they should. Stay compliant, report fully, and get the deductions you deserve based on good recordkeeping.
With the right systems and diligence, you can ensure you meet your tax filing obligations, report all income, and claim eligible business deductions. Do not let a lack of 1099s obstruct you from submitting an accurate return that reflects all your hard work as an independent contractor. The absence of 1099s does not preclude you from fulfilling your responsibility to report earnings. So implement organized systems that let you confidently file in full compliance, with or without 1099s to rely on.
As a self-employed worker, the absence of a 1099 does not justify failing to report associated income you received. You remain obligated to account for and properly document all taxable contract earnings. Reliable records, estimated calculations, amended returns, and requesting corrected 1099s from clients are all viable solutions when initially missing these tax forms. With the right preparatory steps, you can avoid penalties and file successfully even without 1099 documentation.
If you take the right approach, not getting one or more 1099 forms does not have to be an obstacle to accurate tax filing. As the taxpayer, the ultimate responsibility falls on you to report all taxable income, with our without 1099s to remind you of amounts. Through organization, estimation, recordkeeping, and proactive communication, you can ensure you file properly and do not underreport income just because you lack the 1099 forms. This requires diligence but prevents problems down the road.