[xelemental]

Hi guys,

Not trying to avoid taxes or anything (ok maybe I am) but in 2011 was my first time doing some sidework and thought it was under the table.

I got all of my W2's and I am reporting everything. However the sidework manager called for my Social Security number because he was going to send me a 1099. Im like wtf? It was about 5 grand total.

My question is, will the IRS know if I "forget" to include the sidework even if a 1099 was generated? Or will they only find out if they audit me? My tax returns are nothing complicated. I only have one W2, standard deductions, some credits from student loan interest and thats it.


Just curious. Thanks

best answer gets 12 of my lousy betpoints. sorry thats all i have. lol

[milwaukee mike]

the irs automatically gets a copy of the 1099 just like your w-2

[milwaukee mike]

but on that side business let's say the income is 5k. you do a schedule c showing gross income of 5000, then you take a deduction for supplies and mileage at .5325/mile for last year, and whatever else you can think of.

so irs sees that you reported the 5000 but the bottom line that you pay taxes on might be real close to 0.

[mcbaseball10]

but on that side business let's say the income is 5k. you do a schedule c showing gross income of 5000, then you take a deduction for supplies and mileage at .5325/mile for last year, and whatever else you can think of. so irs sees that you reported the 5000 but the bottom line that you pay taxes on might be real close to 0.

This. Report it and deduct expenses. Don't report and get audited few years down road and pay additional interest to the government.

[SteveRyan]

The IRS audits about 2% of all people who don't file. Your chances of getting audited are pretty slim.

[TheCentaur]

Report it on schedule c because your employer sent it in to the IRS in this case. Manipulate the numbers with expenses to maximize your EIC or additional child tax credit, etc. like everyone else does.

[philswin]

They compare what you report to what they receive, you do not need to get audited for them to detect this. You could get a letter in the mail asking you to explain the differences.

[RawBillyIce]

tailing what Milwalkie Mike said

I was a mtg broker for 8 yrs and am sooo on pt with this kind of shit

[TheCentaur]

The IRS audits about 2% of all people who don't file. Your chances of getting audited are pretty slim.

You're wrong here Steve. Omission of forms is easily caught by IRS computers, but many times it takes a year or so and interest and penalties are tacked on.

[onlooker]

I forgot to file a couple W2-G's a year ago, and they surely let me know about it promptly. Needless to say, I ended up paying them for my mistake, after I deducted some losses off it. I'm sure it would be the same with a 1099.

Do like the above person said, deduct expenses to get the total as close as zero as you can. Keep expense records for 3 years.

[xelemental]

hey guys, I really appriciate all of the insightful advices so far on this question. you guys are awesome! Love SBR because of this. Anyways, I have two follow up questions then:

1. Even though im not a business I can deduct expenses?

2. Are purchases on my statements enough evidence of expenses? Or do I need actual physical receipts?

Thank you all again

[TheCentaur]

hey guys, I really appriciate all of the insightful advices so far on this question. you guys are awesome! Love SBR because of this. Anyways, I have two follow up questions then:

1. Even though im not a business I can deduct expenses?

2. Are purchases on my statements enough evidence of expenses? Or do I need actual physical receipts?

Thank you all again

Receiving a 1099 in this case makes you self-employed, and you must go through the business codes and assign the proper one to the trade the 1099 relates to on the schedule C.

Yes purchases for use in this trade are expenses, whether they be for supplies, cost of goods sold, etc.

Evidence on a statement should be sufficient

[Monitor-Tan]

1. yes
2. you will need receipt if you get audited.

[Hankwins]

i cashed over 20K in checks from sportsbooks and never worried about anything

[Hankwins]

in one year and thhis was 5 years ago, i wouldn't report 100k worth lol

[SBR_John]

They will likely adjust your return and deduct the tax and penalty from your refund/add it to your tax bill.

[xelemental]

Receiving a 1099 in this case makes you self-employed, and you must go through the business codes and assign the proper one to the trade the 1099 relates to on the schedule C.

Yes purchases for use in this trade are expenses, whether they be for supplies, cost of goods sold, etc.

Evidence on a statement should be sufficient

Thanks! I will give you 12 points tomorrow. I gave 12 points to M Milk on this thread earlier for helping me out as well. But I find your information very informative. So I will give you 12 points when I get it tomorrow. I have a bunch of Amazon invoices I can download online

[SteveRyan]

You're wrong here Steve. Omission of forms is easily caught by IRS computers, but many times it takes a year or so and interest and penalties are tacked on.

Well, here's my source.

http://www.slate.com/articles/news_a..._schmaxes.html

"In fact, an estimated 7 million Americans fail to file their taxes every year, and in 2008 the IRS examined only 158,000 such cases. That comes out to a roughly 2 percent chance of getting caught."

[TheCentaur]

Well, here's my source.

http://www.slate.com/articles/news_a..._schmaxes.html

"In fact, an estimated 7 million Americans fail to file their taxes every year, and in 2008 the IRS examined only 158,000 such cases. That comes out to a roughly 2 percent chance of getting caught."

A lot of those cases probably had 0 tax or refunds coming. I'm not kidding. Anyway, the OP is already filing a tax return, he just needs to know if he should include and income form.

[itchypickle]

but on that side business let's say the income is 5k. you do a schedule c showing gross income of 5000, then you take a deduction for supplies and mileage at .5325/mile for last year, and whatever else you can think of.

so irs sees that you reported the 5000 but the bottom line that you pay taxes on might be real close to 0.

Mike has it right

Also the other posts about chances of being caught etc...most depends on the amount of $$ it is...they will not waste their time with manpower and followups outside maybe the strongly worded letter unless it's over a certain amount. So while the IRS may KNOW you didn't account for it...it's basically like turning around and returning to McDonalds 50 miles away and in the snow just because the window licker at the drive through shortchanged you a quarter...is it really worth it?

[milwaukee mike]

Thanks! I will give you 12 points tomorrow. I gave 12 points to M Milk on this thread earlier for helping me out as well. But I find your information very informative. So I will give you 12 points when I get it tomorrow. I have a bunch of Amazon invoices I can download online

thx buddy

keep in mind it is REAL important to get schedule c income close to 0 because of the "double whammy". you not only owe income taxes on 1099-misc income, but self-employment taxes also (both halves of social security/medicare).

so on 5000 if you didn't report any expenses you could easily get up to 2k or so in taxes.

[xelemental]

thanks milk. love your avatar. so lets just assume i will get zero (no refund, and i domt owe ) if i made 5500 on this sidework , consulting , and i deduct 5400 in expenses. i will only owe taxes on $100 correct ?

[EmpireMaker]

Report the income and deduct whatever expenses you had

[EmpireMaker]

you only have to pay taxes on the amount remaining after your deductions

[Salmon Steak]

So I have to start my own corporation to deduct things like "business trips" and "business dinners"? This way my "investments" do not look like income. Correct?

[TheCentaur]

So I have to start my own corporation to deduct things like "business trips" and "business dinners"? This way my "investments" do not look like income. Correct?

Need more info

[dngf]

This item does not require an audit to catch, as pointed out above, when you file your taxes, the IRS electronically compares revenues reported to them from your W-2, 1099 and such, if they do not agree you will get an automatic notice letting you know you have under reported your income. It will affect your refund if you had applied for a refund when you forgot to include the 1099 income.

An audit will come into play, when you have the expenses that offset the 1099 income. If selected for an audit you will have to substantiate the reasonableness and validity of the expenses you incurred.

[Salmon Steak]

Need more info

What kind of info?

[TheCentaur]

what kind of investments

[Fang-Banger]

Congrats. IRS just found out

[Salmon Steak]

I do stocks here and there but I was talking about sport gambling "investments"

[dodger33]

They compare what you report to what they receive, you do not need to get audited for them to detect this. You could WILL get a letter in the mail asking you to explain the differences.

fixed

[TheCentaur]

I do stocks here and there but I was talking about sport gambling "investments"

Good question, I don't know the answer. Is it better to:
1)Report everything in full
2)Report income and call it something else (money laundering)
3)Don't report anything

I don't know

[Salmon Steak]

Good question, I don't know the answer. Is it better to:
1)Report everything in full
2)Report income and call it something else (money laundering)
3)Don't report anything

I don't know

I thought the rich hide behind corporations. I will read books on the legality of forming a corporation. I will try to figure out what you can and can't do.

[floridagolfer]

Trying to scam the IRS is one of the worst things you can do. You only need to caught once to feel the full wrath of the organization.