With tax season in full swing, Americans are busy getting their forms in order. If you’ve received income from a side job or as a contractor, you’ll likely be filling out a 1099 MISC to report it. It’s crucial that you don’t succumb to common business accounting pitfalls with this form. It could delay your tax return, make you miss potential deductions, or accidentally land you in hot water with the IRS.

Issues to Avoid on Your 1099 MISC Tax Form

1. Forgetting Business Expenses

Self-employed contractors have several tax advantages, and writing off business expenses is one. It’s a great way to lower your self-employment tax, and you’ll want to list all of these on your 1099 MISC form.

Consider travel expenses, tools, high-value purchases that will depreciate, and office supplies. So long as you have receipts and can prove to the IRS that these purchases were used for business, you’ll be in great shape.

2. Not Filing 1099 MISC

If you don’t’ receive a 1099 from a contract employer, that doesn’t mean you don’t have to file. If the IRS decides to audit, they’re going to ask where the money came from. Trying to hide under-the-table pay is considered tax evasion, and you may end up paying a penalty.

If a client doesn’t provide a 1099, check your financial records so you can accurately add up the money you received from them. Having this information available is why bookkeeping throughout the year is so important.

3. Forgetting to File With the State

You’ll need to file your 1099 MISC form with your state as well since they collect taxes. Forgetting to do this could lead to penalties or a delayed return.

If you’re having trouble making sense of everything or don’t know where to file, you can easily hand your financials over to business accounting professionals for assistance.

4. Writing Off Personal Expenses

The IRS pays close attention to 1099 MISC forms, so don’t try to sneak personal expenses by as a business expense. A new computer, for example, has to be dedicated to business use, not personal.

If you’re having trouble determining what qualifies or the percentage of business vs. personal use to determine, it’s always best to discuss the topic with business accounting professionals.

For over 25 years, residents of St. Charles, MO, have turned to Grayson Accounting for their business accounting needs. These enrolled professionals specialize in QuickBooks® setup and management and will carefully assess your accounting needs. You can explore all their business consulting and accounting services on their website, or schedule a consultation by calling (636) 233-7875 today. Connect on Facebook to receive news and updates.