Independent contractors shouldn't wait for 1099s to figure taxes. Track all payments yourself and keep records of expenses. The IRS flags returns where reported income is less than your 1099 total, triggering an audit.
Do I need to worry about a 1099? No. And yes. So we're less worried. You should be less worried about 1099 and more worried about making sure you're tracking the income you make. We will have clients. I've seen this over the many years I've been doing this, decades even. It's like, hey, we're ready to file your tax return. And the response is, I need to wait till I get my 1099 because I don't know how much money I made. That is a level of irresponsibility that you don't want to have. You don't want to rely on the 1099 to know how much money you make. So keep track of payments, income received. Honestly, we call it in our space a profit and loss statement. If you want to think about it as keeping track of all the income that came in, and then all the cash flow and expenses that went out, that's fine, but that is effectively a profit and loss statement. If you're audited, the first thing the IRS is going to request is a copy of your bank statements. So, they are going to go on what you have deposited into your bank account, which likely would match whatever you've been paid as an independent contractor. So yeah, you should worry about it in the sense that you want to have on your tax return at least the same amount of income that your 1099s show. Because if you're less than that, let's say you get $10,000 worth of 1099s and you only claimed $8,000 of income, they have a computer system that will pick that up. 100% of the time. No human has to be involved in it, but they will send you a letter that says you underreported your income, and now you're likely going to have to prove income expenses and get into a full-fledged audit. So on that level, you want to worry about your 1099s because your income needs to be at least as much as your 1099s. But other than that, if you are keeping track of the income that you make, Then it doesn't matter. Like, we keep track of our books, we do bookkeeping. And so I don't wait on 1099s to file my taxes because I know my bookkeeping system is going to reflect the income that we made. So should you worry about 1099s? Yes and no. There you go. And remember, the IRS, they don't care. They want their pound of flesh.
