A person who has 1099s can get into trouble if they try to save on their taxes by simply not reporting the income.
Oakland, CA – When it comes time to file taxes, many people get a form that has all of their wages and income from the year that must be reported to the IRS. However, others have more complex tax situations with different forms. A 1099 is a standard form that is used to report income that comes from sources other than a regular full time job. People who are independent contractors or self employed tend to receive several 1099s annually, and those who do extra work aside from their regular job may have to report income from 1099s as well. Lawyers who are dedicated to tax law matters can be a great resource for those who have issues with reporting their income and remaining compliant with IRS demands.
When are 1099s issued?
Transactions that are for at least $600 for various services tend to require a 1099 to be filed with the IRS to record the transaction. A copy is given to the person who received the money as well.
What is a 1099 needed for?
All of these 1099 documents need to be used to prepare taxes annually and counted towards the person’s total income for the year that they were issued. This is true regardless of whether the form was from work as an independent contractor, or things like rental income or money from investment dividends. Even things like prize money and royalties are issued a 1099 so the IRS has a record of the transaction and they will know it is taxable. Missing large amounts of income by not reporting the amounts on the 1099s may cause the IRS to look more closely at the person’s taxes and conduct an audit or take other actions. Oakland tax lawyers should be contacted immediately when someone finds out they are under investigation by the IRS or being subjected to an audit.
Ways to save when filing taxes with 1099s
A person who has 1099s can get into trouble if they try to save on their taxes by simply not reporting the income. However, there may be legitimate deductions related to expenses incurred by the person performing the work or services that can be factored into taxes. California tax lawyers can provide advice about legitimate deductions for business expenses. Some common deductions tend to include home offices and equipment, computer, internet, and phone expenses for business purposes, travel expenses for work, and other costs that were necessary to provide services or get the work done.
Additional info for self employed people
Those who are self employed may want to speak with tax lawyers about things like paying for their own health insurance and how this affects taxes. Estate planning lawyers can also be consulted to assist with setting up retirement accounts, investments, or trust accounts.
Learning more about these issues
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