Sunday, January 17, 2010

What if You Don't Get a 1099 for Work You've Done?

Q I am negotiating with an overseas company to do consulting services for them. They don’t have a federal tax ID, they don’t bank in the US, and they won’t be sending me a 1099. How do I report this income?

A You are responsible for correctly reporting your income despite not receiving a 1099 from the foreign contractor. You have no responsibility as the service provider in the 1099 process; but you are required to report the income with or without a 1099.

The same thing happens frequently with domestic companies or individuals who fail to issue 1099s to contractors. The IRS will not have a copy of the 1099 to compare your reported income to, but that does not change the fact that you are expected to report all income that you receive.

I recommend that you keep good records of the income received with any pertinent documentation, such as contracts, letters of agreement, and bank deposit receipts.