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How to Report Self-Employment Income Without A 1099

Owning your own business or working as a freelancer has many advantages, like setting your own schedule and choosing where you want to work. You have the freedom to choose without any restrictions and can pursue what interests you.

Let’s face it, there’s a lot on your plate as a business owner and countless things to keep in mind when it comes to reporting self employment income. You might take care to follow all the rules set by the Internal Revenue Service (IRS) for 1099 employee taxes, but  sometimes one of your clients might not do the same. They might neglect to send you a copy of the 1099 tax form they send to the IRS. What exactly happens when you don’t receive a 1099 from a client? Do you still have to pay taxes on the money you earned? Regardless of whether you’ve received every 1099 you should have, 1099 employee taxes aren't complicated as long as you follow a few guidelines.

What is the 1099 tax form?

1099 tax forms are used to report certain non-employment income that doesn’t come from your typical salary. These forms are a type of record and include the amount of money that was paid to you by an entity, client or customer other than your employer for any services you’ve provided. The payer sends the form to the IRS, and you should receive a copy by mail.

There are many different types of 1099s for various income situations, but only a few are relevant to independent contractors and freelancers.

What is a 1099 used for?

1099s help you see how much money you made in nonemployee compensation throughout the year and what type of income each payment you recieved was. The information gets reported in different places on your income tax return.

Those entities, clients or companies are required by law to send 1099s to the IRS, if a payment is $600 or more. The IRS uses this information to keep track of your taxable income. If you fail to report income from a 1099 on your tax return, the IRS will see this as you withholding information, since they will have already received confirmation of the payment on the 1099.

Who receives a 1099?

If you make $600 or more from a small business, freelance job or side hustle, you should receive a 1099 in the mail from the businesses or entities that paid you.  

If you work as a Doordash delivery driver, for example, and make $1,000 driving during the tax year, you should receive your Doordash 1099 electronically or in the mail.

Or, let’s say you’re an accountant and provided $800 of bookkeeping services to a local construction company. The company should send you a 1099 tax form.

Maybe you’ve got the luck of the Irish and win the St. Patrick’s Day sweepstakes worth $5,000 from the state draw. Expect a 1099-MISC with your prize money recorded on it. And yes, you do have to pay taxes on it.

Reporting self employed income without a 1099

It’s nothing new that the IRS requires you to report all income, including self-employment income. There are many different reasons why you might not receive a 1099. But this isn't an excuse for not reporting the income. Your self employment income tax return should include all the income you’ve received during the tax year or you could face some hefty penalties. Even if you made $200 from mowing your neighbor’s lawn, you should still report this on your tax return.

You might not receive a 1099 because:

  • You made less than $600 in nonemployment compensation
  • It got sent to the wrong address
  • The client forgot to send one
  • You received the payment in cash

It’s always a good idea to be proactive when it comes to taxes. One thing you can do is send a W-9 to all the clients you’ve worked with during the year. The W-9 will guide the client on how to fill out the 1099.

If you’re short on time, it probably won't be possible to send W-9s to your clients. In this case, you’ll just have to report the income yourself, which might entail sorting through old invoices, bank statements and receipts to figure out how much money you actually received. If you estimate and record a certain amount, then later receive the 1099 showing a different amount from your client, you could face a penalty for underreporting income.

If you work as a freelance landscape architect, for example, and complete a project for a client worth $2,000, and you earn $1,000 in cash from your neighbor for lawn maintenance, you would need to report $3,000 on your tax return. This is required regardless of whether you receive a 1099 for the project worth $2,000.

Tax deductions for self employed

One simple way to save on taxes is by claiming tax deductions. Tax deductions are items you can subtract from your taxable income. It’s up to you whether you want to take the standard deduction or itemize your deductions. All your deductions are reported on Schedule C.

Tackling taxes as a freelancer can be a total headache. This is where FlyFin comes in to save the day. You’ll finally be able to track your expenses all in one place, and A.I. will help find every possible deduction. The expert CPA team is on hand 24/7 to answer any question and file your 1099 employee taxes. Let FlyFin help with all your tax needs.

FlyFin CPA Team

FlyFin CPA Team

With a combined 150 years of experience, FlyFin's CPA tax team includes tax CPAs, IRS Enrolled Agents and other tax professionals, offering users the most comprehensive tax advice and preparation.

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