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Guidelines for Reporting Cash Income Without a 1099 Form
Most clients will pay you in cash when you are a freelancer. 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. You should thus find an online platform that will educate you more on how the 1099 form works. Continue to read this blog to learn the guidelines for reporting cash income without a 1099 form.
With cash income that is more than $600, you are required to use the 1099 form. Thus, if you receive a cash payment below this amount, you don’t need to fill the 1099 form. The earnings that exceed $600, you should ask the client for the 1099 form. The reason is that some companies take too long to send this form, and some may wait until the deadline. Thus, even if you don’t have the 1099 form, it is wise you have a record of the request when filing your income tax.
Know that you are required to pay income for the miscellaneous earning that are less than $600 even if you don’t need a 1099 form. The IRS expects you to report all your incomes for the period irrespective of the amount. It is therefore wise you find reliable tools for recording all your incomes. 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. You can therefore present this record to IRS during auditing to show you pay all your taxes. 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. It is, however, wise to know the extension is on submitting the returns and not the tax payment. Thus, as you wait to get the 1099 form, you will send in the tax check to the IRS before April 15. Hence, you need to have a record that will help you calculate the taxes to pay.
Thus, you can pay your taxes on time for the cash income even if you don’t have the 1099 form by the deadline. Some situations may require you to find the best tools for developing the 1099 form yourself.