Who Doesn’t Get a 1099? An Easy Breakdown Of The Requirements

11

Min Read

Saira Shabbir, CPA, MAcc

Every January, freelancers generally receive form 1099-MISC or the new form 1099-NEC in the mail from their employer or clients.

You should expect to get a 1099 from each employer or client who paid you $600 or more during the year. That said, not every business is on top of issuing 1099s to their contractors.

I have seen instances where form 1099-MISC or 1099-NEC is not received to report miscellaneous income or nonemployee compensation. It’s often due to the employer neglecting to send the form out. However, some employers might not know which contractors they need to send a form 1099 to and who doesn’t require one.

This leads to the question, who doesn't get a 1099 form?

Reasons a Form 1099-MISC/NEC Was Not Received

A 1099 IRS form is generally due no later than January 31st. If you have not received your form by February, I understand you may start to panic. There is no reason to be overly concerned because there is often a good reason why you did not receive a form 1099-MISC or form 1099-NEC.

In some instances, your form is lost in the mail. At other times this form is not issued when it is supposed to be.

If you do not know what to do because you did not receive your form, you may need to contact the issuer and request this form. Whether or not you need to take this step depends on the type of 1099 and your specific circumstances.

What is a 1099 form?

When you earn income separate from your paycheck, you should receive an IRS tax form with a summary of your earnings. A good example is if you are self-employed or an independent contractor. This form is called a 1099 form.

The 1099 form itself does not need to be included when you file your taxes. You just need to report the amount of income on the 1099 you receive. So, if you do not have the actual 1099 form from your client, it is not an issue provided you know how much you need to report.

The Different Types Of 1099 Forms

There are several different types of 1099’s used for reporting different sources of income to the IRS:

• 1099 MISC: The 1099-MISC form is for reporting miscellaneous income.

• 1099-NEC: Form 1099-NEC is now used to report non-employee compensation (learn more about the 1099-NEC deadline).

• 1099 INT: This form is used to report interest income.

• 1099 DIV: Dividend income is listed on this form.

• 1099 C: This form covers canceled debt in addition to other types of debt.

• 1099 G: To report unemployment benefits and local and state tax refunds.

• 1099 R: The 1099-R is used to report payouts from an IRA and pensions.

• 1099 B: To report barter exchanges and broker transactions.

• 1099 S: This form is for reporting real estate transactions.

What's the most common 1099 form?

The most common form for freelancers, self-employed workers and independent contractors is typically the 1099-NEC. This is because it reports the income clients paid to you for the tax year.

Whether or not you receive 1099 forms, you are legally required to report that income when you file your tax return. You may have been expecting to receive this form and are worried because you did not.

The truth is I have seen numerous 1099s turn up missing, but if you had a lean year or just no clients paying you over $600 in payments made for the year, you may not need a form.

Exceptions For Receiving A 1099?

There are a few exceptions for folks not receiving a 1099 form for payments. In the next section, we'll go over the times where one would not receive a 1099-MISC or 1099-NEC.

Earnings are Under 600

If your income for your 1099 is under 600, your employer or client is not required by IRS guidelines to send you form 1099. You must still report your freelancer taxes for your personal tax return on Schedule C.

When I help a client complete Schedule C, it can be a problem if there’s no income data on their end. I have found the ideal way to track your income for the year is by using a spreadsheet or an automated tax software for freelancers.

This ensures your income tax is correct. You also need to track your freelancer expenses or business. This is extremely important and much easier with Bonsai’s 1099 expense tracking software.

Who Should be Sent a 1099?

In order to understand who doesn't get a 1099, you first need to know who does. This form is required to report specific kinds of non-employment income to the Internal Revenue Service. This includes income earned as an independent contractor and from stock dividends.

Whether you have a large or small business, you must send forms to all payees with the exception of corporations and any payee earning under 600 for the year. In other words, all the self-employed independent contractors you paid over $600 in rents, services, awards, or other payments need you to send them a tax form.

Here are the common reasons to send a 1099 form.

Earnings are Over 600

If your income for the tax year is over 600, your employer or client is required to send you a form 1099. You must still report your freelancer taxes for your personal tax return on Schedule C.

When I help a client complete Schedule C, I walk them through the process. I have found the ideal option to track your income for the year is by using a spreadsheet or accounting software.

This ensures your income tax is correct. You also need to track your freelancer expenses or business deductions. This is extremely important and much easier with 1099 expense tracking software.

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Your Employer or Client Forgot to Send Your Form

Clients and employers are simply people and I realize that everyone can be forgetful at times. That being said, you are not responsible for reminding your employer or client when you are a freelancer.

The responsibility lies with the employer or client- so you will not receive penalties if you are not issued a 1099. You can use your own records to report your income when you file your taxes (try our free 1099 excel spreadsheet).

If you have recently moved, you may be required to do your due diligence. There is a chance your 1099 may have been prepared for you and your employer or client filed with the IRS.

In this scenario, your 1099 may have been sent to the wrong address or lost in the mail. Since this is possible, you should consider following up with your client or employer to ensure they have the correct contact information and new address. Remember, even if your form was sent to the wrong address, the information will still be reported to the IRS.

If your Form 1099 was received by the IRS but the income you reported was less than on the form, you may receive notification from the IRS that more taxes are owed. In some instances, the IRS may flag you for a tax audit.

You Were Paid More than $20K Through a Third Party

Payments made to any person or business via a third-party payment processor like Venmo and PayPal, gig work platforms like Upwork, and payment cards that get loaded with funds, will typically be issued a 1099-K.

Payment card processors and third-party merchants process debit and credit cards, and these entities issue the 1099-K form as opposed to the 1099 MISC for reporting your income. Both the 1099-K and 1099-MISC have the exact same purpose. This is reporting all of the payments you have received during the tax year.

It is your responsibility to report your payments as income. Third parties have a much higher threshold than the $600 required for individual employers and clients. A good example is Upwork and PayPal. You will only receive a 1099 K from them if your deposits total more than $20,000 for the tax year.

What If I Didn’t Receive a 1099?

Even if you believe your records are perfect, I recommend contacting the issuer to determine why you did not receive your 1099. This is because both entities and companies are required to file this form with the IRS.

If your copy is missing or lost and the IRS received a copy, your records must match the amount listed. I have seen too many people flagged for a tax audit because the amounts did not match.

It is important to understand if the amount you listed is higher than your lost 1099, there is no issue. If the amount is lower, there is a problem. This is because the IRS has no issue with charging you taxes for a higher income.

What About 1099 Forms That Go Missing?

Some people believe if your 1099 is missing and you are certain about how much you earned, you should not take any action rather than have a potentially incorrect form issued. Even if you do not receive one, you are still required to report that income on your tax return. Filing your taxes without a 1099 isn't a problem because you can rely on your own records of your earnings.

I believe you should try to contact the issuer so the amount can be confirmed. It is also a good idea to have an official record stating the exact amount. The purpose of a 1099 is to report specific kinds of non-employment income to the Internal Revenue Service.

Your tax return is matched by the IRS to your 1099s. Since the business issuing a 1099 is reporting payment to you as a business expense, if you do not report a 1099 you may be pursued by the IRS for the taxes owed.

The bottom line...

Even if you do not receive a paper 1099, you are responsible for paying the self-employed taxes owed. You are required to report the income on your tax return throughout the year. If the 1099 you receive is incorrect and the issuer sent it to the IRS, you need to ask for a corrected form to be sent.

What to Do If You Did Not Get 1099:

If you do not receive a 1099 and do not file, the Internal Revenue Service will know. The exception is if you earned less than $600 for the tax year. If you did not get a 1099, there are steps I recommend taking.

Remain Calm

Do not be too concerned if your payment processor or employer did not send you either a 1099-K, 1099-NEC, or a 1099-MISC form. They are responsible for sending you this form. Now that you are aware of this, you should be able to relax instead of wondering, “who do I have to contact if I did not receive a 1099?”

Take a deep breath, then report your earnings. You should be tracking your income over the course of the year using a profit and loss statement or an accounting system. If you lost your 1099, there are steps you can take and easily recover it.

Reporting Your Income Anyway

If you did not receive Form 1099, report the income anyway because you are required to report all of your income. If you are thinking about the $600 threshold, you need to know this is only applicable if Form 1099-MISC/1099-NEC is being prepared by your clients or employers. Your reporting income does not have an applicable threshold. All of your freelancing income must be reported on your personal tax return on Schedule C.

Remaining Proactive

I recommend being proactive during the tax year to help ensure you receive FORM 1099-MISC from your clients and employers in the future. One of the easiest proactive measures is to file form W-9 on behalf of a freelancing business or yourself. This form can then be sent to all of your employers or clients. The W-9 form is easy to fill out because the purpose is strictly informational. You are not required to submit this form to the IRS.

Completing Your W-9

The main purpose of a W-9 is to inform your clients how your 1099 should be completed. This includes using the correct tax ID and address. To complete your W-9 form, all of the following information is required.

• The name of your business or your name

• Your address

• Your Federal Tax Classification such as Partnership, LLC, Individual and Sole Proprietor, etc.

• The date and your signature

• Your Tax ID (EIN or Social Security Number)

What Happens If A RideShare App Does Not Send Me a 1099?

If you do not receive a form from any ride-share service like an Uber 1099 and Lyft driver, it is probably because your earned income during the year was too low. Both Uber and Lyft only need to issue a 1099 to drivers earning more than $20,000 or those receiving over $600 from other payments or driver referrals.

Even if you did not reach this threshold, your income still needs to be reported on a tax return. The simplest way of calculating your total income is by logging into your driving platform. You can then access all of your transactions for the tax year so you can report the income. This is accomplished by running a report or manually adding everything up to see the subtotal.

The Final Word For 1099s

If you are still concerned because you did not receive a 1099, you can relax. All you have to do is remain calm and report your income regardless of whether you received a 1099 or not.

I recommend being proactive in the future by sending your employers or clients a W-9 form. This will ensure they know where your 1099 should be sent when tax season arrives.

As long as you file your taxes, you have fulfilled your responsibilities.

Disclaimer: Tax rules frequently change and are highly specific to your situation. Please consult a qualified tax professional for tax advice.

Saira Shabbir, CPA, MAcc
Saira Shabbir is a Certified Public Accountant (CPA) with over 12 years of accounting experience working with multiple companies. She works with small businesses as their outsourced accountant/controller providing month-end accounting services, Accounts Payable/Accounts Receivable Management, Financial Reporting, etc. She helps businesses optimize their accounting processes and reporting functions at SSY Accounting Solutions.

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