If you are a freelancer, most of your clients may pay you using cash. 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. You may assume that it is impossible to file your taxes when you don’t have the 1099 form. You should thus find an online platform that will educate you more on how the 1099 form works. Read more now to see the tips to assist you on how to report cash income without a 1099 form.
The first thing is to know the amounts that you must use the 1099 form, and that is cash earnings above $600. 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. Understand that this form may be lost in the mailing process, and you won’t know if you don’t follow up with the client. 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.
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. Hence, you need to search for tools you can use for tracking your earnings. You can opt to use a spreadsheet or accounting software for recording your earnings. You will aim to have a report that breakdowns all the money you earned during the year. 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.
It is vital you know the last day for reporting your cash income when you are a freelancer. 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. Therefore, even if you don’t have the 1099 form, you are required to send a check to the IRS before April 15. You will therefore estimate your income and submit the payment.
Therefore, to report a cash income without the 1099 form, you should follow the above guidelines. You should also search for the top website where you can create the 1099 form yourself.
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