Jan 5, 2023
Happy new year!
The new calendar year always marks the time to get your 1099s in process. 1099s are issued to service providers in your business from the prior year. Yes, in your business. 1099’s protect and secure your business income tax deduction.
There is so much misinformation on the web and in social circles about 1099s. Service providers try to avoid 1099s. Business owners dont realize they need to issue them and when. If you own a business and you paid a service provider in the prior year, please reach out to me or your tax advisor to see if you need to issue 1099s.
A common misonception amongst service providers is that if they don’t receive a 1099 then they don’t need to pay tax on their earnings. FALSE! Income taxes are due on all monies earned, irrespective of whether you receive a 1099 or not. This is critical. So as a service provider, dont worry if you dont receive your 1099s from your clients, you can still file your tax returns. You file your tax returns based on income you earned. Now if the 1099 you received is incorrect, that is worth disputing with your client. Got it?
As the business owner, issueing a 1099 to a service provider is not for the service providers tax return, it is to secure your own business income tax deduction. If you are audited and the IRS finds service fees for which no 1099 was issued then you could lose that business tax deduction. Got it?
1099s have become serious stuff since the onset of the growing gig economy. Make sure you understand your responsibilities and take 1099 filing seriously.
