Explaining the 1099 form

On Behalf of | Jul 13, 2018 | Firm News, Tax Evasion

You might think that those charged with tax evasion are people who try to avoid paying taxes altogether. That assumption is shared by in Irvine, as evidenced by the surprise demonstrated by those who come seeking help from us here at Ron Cordova Attorney at Law after having been accused of it. The truth is that many tax evasion charges arise from simple cases of underreporting income. Such issues ca often be traced back to a misunderstanding if a tax form that you might be likely be familiar with (yet not fully comprehend its significance): a 1099. 

Almost everyone knows what a W-2 form is, yet many seem to be confused over the purpose of a 1099. This form is meant to report any income that you received outside of your normal salary. According to TurboTax, there are actually several different types of 1099 forms, including: 

  • 1099-MISC: Income earned as an independent contractor
  • 1099-DIV: Income earned from interest and distributions from investments
  • 1099-G: Income earned from federal or state assistance programs (such as unemployment compensation)
  • 1099-R: Income earned from retirement account distributions 
  • 1099-C: Income retained due to debt cancellations

Oftentimes, taxes are not withheld from alternative forms of income, which is why you are required to include this information on your return, as it helps to determine your total tax liability. 

What you and many might not know is that if you receive a 1099 form from a party that paid you during the previous year, that same party also sends a copy to the Internal Revenue Service. Thus, the IRS expects to see that information in your return. If it does not, then you may be subject to penalties if you do not file amended return. More information on the different types of tax evasion can be found here on our site. 

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