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Struggling to Know How to Report a Cash Income Without a 1099 Form? Here is How to Do It
You may be getting cash payments when you are an independent contractor. It may therefore be challenging to know how to file the taxes when you receive most of your income in cash. Your client is legally required to submit a 1099 form to you when paying you. The employer is required by the law to send you the 1099 form that you will use to report the cash income. The problem is when you don’t get this form, and you don’t know how to go about reporting the cash income. It is, therefore, smart you seek online resources on how to handle this hardship. Here is how to report a cash income when you don’t have the 1099 form.
You should know that the 1099 form is only issued for payments that exceed $600. Hence, for earnings that are below $600, you don’t need the 1099 form. It may be necessary to request the client for the 1099 form if you receive a payment that is greater than $600. The reason is that some companies take too long to send this form, and some may wait until the deadline. Hence, it is wise you have a written request for the 1099 form when filing your tax returns to avoid problems with IRS.
The next thing is to learn how to deal with the small payments amounts that are less than $600. You need to know that you are still expected to pay taxes on these small payments. It is therefore wise you search for ways you can record all the cash payments you receive. To ease your work, you should opt to use a spreadsheet or accounting software to record all the cash incomes you get. The goal is to have a comprehensive record that shows all your earnings for the period. Therefore, this record will play a vital role when submitting your taxes and when you are audited by the IRS. Thus, if you are a freelancer, you need to keep track of all the cash incomes for the period.
You also need to know the deadline for reporting the cash income. The IRS has set a deadline of April 15, but you can request an extension. Even if you get an extension, you must send the tax check to IRS; the extension gives you more time to file the relevant documents like form 1099. You, therefore, pay your taxes on time without having to send the 1099 form on the April 15 deadline. Hence, you need to have a record that will help you calculate the taxes to pay.
Therefore, to report a cash income without the 1099 form, you should follow the above guidelines. In some instances, you can consider creating the 1099 form yourself.