No 1099? Here's How To Avoid Tax Return Mishaps

Earning extra money through an online work from home job definitely helps improve finances. Be mindful, however, tax liabilities come with the added income. Domestic employers file a 1099-Misc, a form that reports both to you and the IRS any "miscellaneous" earned income. If the employer is based overseas, however, no 1099 is likely to be filed and you are still required to report and pay taxes. To avoid audits, fines, and penalties, follow a few extra steps to avoid oversights and ensure all income is reported.

Check the Deposits on Your Bank Account

Keep a notebook logging all the payments issued by the employer. Just before tax time, double check all bank deposits to correctly assess proper accounting for each and every payment. 

Remember, even if an employer does not file a 1099-Misc, the bank is going to file a 1099-INT. A 1099-INT reports interest accrued on your account and, if the amount of interest seems high for the income you reported on a tax return, the IRS could take a closer look via an audit. Reporting the proper amount of income each and every year reduces the chances of this occurring.

Request Orderly Deposits

Depending upon how the employer issues payment, you might be able to withdraw funds with great flexibility. Money could be requested anywhere from the minute a job is completed to once a week to once a month. This flexibility is definitely appreciated, but it could come with accounting hassles.

Requesting withdrawals "here and there" makes it a lot harder to keep accurate track of total income. A better plan would be to stick with requesting withdrawals on a set time schedule such as the 1st and 15th of the month. This way, when tax time comes, you do not have to fish around looking over pages and pages of figures for the withdrawal/deposit numbers.

Strategically Use a Credit Card

What can you do if you have bills or expenses and need cash? Rather than start withdrawing money outside of the aforementioned deposit schedule you set, use a credit card instead. Purchase with credit and/or use the card to take cash advances. Afterwards, immediately set up online payments to occur on the day (or days) following the online deposit(s). This way, you do not end up paying a lot of interest on the card or accruing a ton of debt.

Present the Forms to a Tax Preparation Service

Maintaining accurate, easy-to-understand logs ensures a tax preparation professional like one from Jack Landis And Company is better able to prepare a return. He/she can compare the income on your bank statements to the received 1099s and compile an accurate return. As long as the income tax forms reflect accurate figures, you avoid a host of troubles.