You generally don’t need to include a 1099-MISC or 1099-NEC with your tax return. So why do people think you need to, and is there anything else to consider?
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This post is provided for general information only. Please confirm the details and circumstances of your unique situation with your tax accountant or other appropriate advisor before taking action.
Why do people think you need to attach your 1099 to your tax return?
There are no instructions from the IRS telling you to attach your 1099-MISC or 1099-NEC to your tax return. People who are used to filing W-2s may be confused, because you do need to attach your W-2. Some tax software also asks you to enter your 1099s.
Why does tax software ask for your 1099s?
Your tax software asks for your 1099s because it makes things easier for many people. If you just have a bunch of 1099s and haven’t added them up yourself, the tax software does it for you.
Where does your 1099 income go on your tax return?
Income from a 1099-MISC or 1099-NEC goes on Schedule C, Line 1 — Gross receipts or sales. That’s the same place any sole proprietor income you need to report that isn’t on 1099 goes. And it’s just one box that asks for the total of everything.
So if you use bookkeeping software and know your numbers, you can just include your total sales here without worrying about your 1099s.
What’s the point of a 1099, then?
The point of a 1099-MISC or 1099-NEC is to make sure you don’t underreport your taxes. Those forms also go to the IRS and get entered into their computers. When you file your tax return, the IRS checks to make sure the income you reported before deductions is equal to or greater than the 1099s the IRS received.
If you report lower receipts or sales than what the IRS computer shows you earned, you’ll get a CP2000 notice for underreporting tax or other notice asking you why. If you got a 1099 after you filed and forgot to include it, you’ll owe additional tax. In some cases, you might get two 1099s for the same income (e.g., both 1099-MISC and 1099-K) and have to show the IRS that one of those 1099s shouldn’t have been issued.
There are many other situations that might apply as well, but having the 1099s and checking them when you file helps both you and the IRS figure out the right numbers more often than not. You just don’t need to attach those 1099s to your tax return.