Today TaxMama hears from Brian in Wisconsin who got a surprise. “Two weeks ago I filed my taxes and everything went fine. Well. I just a form 1099-misc from a website where I made some money last year ($800). what can I do now?”
Those elusive, extra 1099s.
You do realize that the money you earn on the Internet, in the form of affiliate commissions, eBay sales, etc. are taxable, right?
And you DO realize that you’re responsible for doing your own bookkeeping? 1099s are not meant to do it for you. They are designed to be a way for IRS to kind of spy on you. For 2009, please start keeping records of the Internet income you receive. It will save you from surprises like this in the future.
For now? Well, you’ve already filed your tax return. So there’s no immediate rush to file an amended return. Why do I say not to rush? You may just have some other ‘surprises’ coming. Wait until after April 15th.
Meanwhile, go through your deposits, into your normal bank accounts, as well as your PayPal and other online accounts, to see if there is any other income you need to report.
Then, go ahead and file an amended return, Form 1040X, to report the additional income. When you do, remember to file a similar return with your state.
What’s if you just do nothing? No problem. In about 6 to 12 months, IRS will send you a notice proposing additional taxes on this income. All you have to do is agree and pay the taxes due. Generally, at this level of correspondence, you won’t be assessed penalties, just interest. And you can save yourself the trouble of preparing the amended return.
When you get this letter, it’s time to file the amended return with your state. Some states charge you a penalty if you don’t file an amendment within 6 months of getting an additional assessment from IRS.
And remember, you can find answers to all kinds of questions about extra income and other tax issues, free. Where? Where else? At TaxMama.com[Note: If you were subscribed to the e-mailed TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the subscribe link and join us.]
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- IRS Form 1040X :: Amended U.S. Individual Income Tax Return