Didn't Receive 1099, Possibly Misclassified As Well

[hdot]

My question involves independent contractors in the state of: Texas

I worked for about four months as a "contractor" for a small business locally. I kept track of all of my pay and everything and don't necessarily need to have the 1099, but would like to see a copy of it because to be honest I don't trust the guy I was working for. If he claims he paid me a larger amount than what I file, what happens?

Also, I will be filling out an SS-8 form to determine whether or not I was actually a contractor in the first place (was required to work in his office, received training, required to use his equipment, etc.). If I file this, and it comes back that I should have been classified as an employee the entire time, am I going to be responsible for paying additional taxes? Will the self-employment taxes I will be paying be refunded to me?

I just want to make sure everything is taken care of correctly. I also saw something on IRS.gov regarding a form for social security (8919). Should I fill out the 8919 and the SS-8 now and send them with the rest of my tax documents or wait?

[SChinFChin]

OK, I'll tell you my experience when them. I'm the one issuing 1099's for my "non profit" agency, and I worked as a consultant for a number of years, paid via 1099's some years ago.

First, when I was a consultant, I would say if had six clients, 2 out of the 6 would issue me 1099's, and I don't hear from the other four, even though I'm over the threshold. And of those who issued them, there were errors.

When there are errors, when the IRS computers does a match of the 1099 to your returns, and flags them, I hear from them a few years after I file the returns, in one case 5 years later. In my case, I bill my clients, maintain invoicing records, and I would submit my records to the IRS. I also keep copies of checks that I received, so the documentation is quite complete. I received letters back from the IRS thanking me, saying the matter is closed.

I was also asked the exact same question by the director of my agency that you asked. One of her friends work as a free lance consultant, got paid, was promised 1099's and never received them, for tax year 2008. She asked me what should be done.

I told her in the past, I simply filed my tax returns without the 1099's for clients that didn't issue them, and I never heard from the IRS. I suggested that her friend tally up all payments recieved from this client, and show it to her client anyway.

She said the company that hired her friend kept very poor records, and had no idea how much was paid to her friend. Because I have leftover 1099's and 1096's in my desk for the year 2008, I suggested that I give her friend the forms, have her friend fill out the 1099, and also help complete the 1096 that goes with the 1099 (she'll need the EIN#) , bring it over to the client, and request they send it out. This is if it makes her feel any better. This way, the 1099 will definitely match what she was paid. The deadline for it as I recall was this past week, Feb 2, 2009.

Right now, my wife is bugging me about getting a 1099 from someone who's paying off a note to me. I know this person has no idea what it is, so I'm inclined just to file my returns without bothering this person for it, not making up a 1099, 1096, and showing it to him, as I suggested to the boss. I know you can report rent you paid the landlord on a 1099 also, but I don't know of too many tenants that even bother with this.

Finally, I did recieve a letter from the IRS, to the agency where I work, that a 1099 we issued in 2007 did not match the tax filing for the person. I sent the letter over to my CPA, and he said not to worry and to wait for the followup. He said he rarely hears of any followup for this, and bother him if I get a second request. It's been over six months, and I haven't heard anything yet.

[Security Consultant]

It's the client responsibility to issue a 1099 for any income over $600. For tax year 2008 I had a client, who paid me well over $600, refuse to send me a 1099. I just included a letter to the IRS and state taxing authority with the name and address of the client along with just how much was paid.

[Bubba Jimmy]

Everyone has a responsibility to keep track of their income whether a 1099-MISC is issued or not. Many self-employed people never receive 1099s. A lawn care business, for example, would not receive 1099s from their residential customers. Nevertheless, every business needs to keep books to document their income and expenses. Keeping accurate books will make the receipt of a 1099 immaterial.