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reporting private income

Posted by behaviorkelton (My Page) on
Mon, Feb 9, 09 at 19:32

I work with a friend in a private business.

I know exactly how much I have made... to the penny.

When I begin my taxes using TaxCut or whatever, can I just report it truthfully and get on with it?.... or do I *have* to have some sort of documentation from my friend (who handles the pay). This is our first year in our little business.

I'm operating on the assumption that the documentation may not arrive in a timely manner, so I'm hoping to be able to simply complete my taxes with or without it.

I do have all the W-2 type stuff from my regular employer.

So, can I just honestly report my private income according to my own records?

B


Follow-Up Postings:

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RE: reporting private income

I'm operating on the assumption that the documentation may not arrive in a timely manner
Have you considered filing for an extension then instead, in the event that documentation does not arrive in time?

Sue


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RE: reporting private income

if you worked as independent contractor, not an employee, and made more than $ 600.00 last year in your friend's business, he/she should have sent you a 1099-misc showing the amount you made and also has to send this form to IRS by end of February.
If you did not get 1099 from your friend but did make more than $ 600, call him/her up and remind him/her that this is required by law.
If you are partners in this venture, then you will get K-1 and I believe there is more time until you have to get it, I think it is March 15th. So plenty of time to finish your personal income tax forms.


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RE: reporting private income

These forms can be easily picked up at an IRS office or mailed to your friend directly and he can fill them out.

My old boss - lol used to handwrite all the info on my 1099 as opposed to typing it in and it didn't look terribly professional but it was better to have one in hand when filing then not have one.


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RE: reporting private income

does this matter at all if you efile?


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RE: reporting private income

I'm acting as an employee. I called him to remind him.

I just figured that as long as the IRS gets their money, then I (or he) won't be in any trouble for being late on the forms.

Anyway, filing electronically, I won't be sending 1099's... so I will the IRS know it isn't in hand?

B


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RE: reporting private income

generally employees get w-2s and get their ss taxes withheld every paycheck and submitted to IRS. W-2 are sent to IRS even if you e-file. 1099 is sent to you if you are independent contractor. You never have to submit 1099 to IRS with personal filing. IRS does get it from the company that sent you the 1099.


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RE: reporting private income

OK... that is what I'm thinking. So is there any good reason to wait for the 1099? I know what I made, and my pal has the exact same figure on his end.

I'm a private contracter, so nothing at all is deducted. This is my first time with that kind of pay, so it will be interesting to see how badly I'm getting slammed w/ taxes and withholding!

B


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RE: reporting private income

Has he reported your income yet to the IRS? If not, I would wait. I'd think it would really mess them (IRS) up if you reported income and it did not match up with anything that had been reported yet.

I guess you 'could' figure your taxes without actually e-filing them, couldn't you and then just hold off on the actual filing? I'm not familiar with that e-filing stuff.

Sue


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RE: reporting private income

I would:
File for an extension to ensure I filed on the same data that the business will file.and
Using personal records, make sure I sent in enough estimated tax so that on final filing I did not owe anything (the extension gets you a grace period on filing, not on paying the tax.)
BTW, a correction to something that was said above:
You do need to send in a copy of any 1099s that show taxes as being withheld, which you may consider to be easier than filing estimated taxes on that income.


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RE: reporting private income

Correction - we were talking about 1099-misc, copy of this needs to be filed only with state income tax form, if required, never federal tax form.
Only 1099-R copy has to be included with the 1040 form if tax was withheld - we are talking about 1099 here.


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RE: reporting private income

OK... so we have no state taxes here... only federal.

No taxes were withheld.

So, I'm good.

Thanks a lot to you folks for responding in such rapid fashion!

B


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RE: reporting private income

I'm not quite sure you're in the best possible position just yet. I'm a freelancer, and this is the way things work for me:

All of my clients have a W9 form on file for me. The clients use the W9 when they're generating the 1099 form they send to me. If I were you, my first question to my friend would be: do you have paperwork on file for me, like a W9? They should have some sort of paperwork for you, even if you're not a regular sort of employee.

I would not fill out my taxes without a 1099 in hand, because I've had clients make mistakes. I even once had a company that had misplaced my W9 and didn't send me a 1099 in January at all. I realized I didn't have their paperwork and was able to get it in time for the April 15th filing. Waiting for the 1099 enables you be confident that you're checking your records against what they're reporting and that you're both on the same page.

Third is that as a freelancer who does not have taxes withheld throughout the year, I have to pay estimated quarterly taxes myself. The Federal due dates are April 15, June 15, September 15, and January 15. If you need to pay quarterly taxes and haven't been doing so all along, you're likely going to have to pay a penalty.

Your situation may differ from mine, but I think in your shoes, I would want the tax situation straightened out. It sounds a little muddled right now.


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RE: reporting private income

You might be right... and it is a bit muddy at the moment.

The government pays my buddy for the work i do, and he sends me a cut. He owns the business, and I'm his employee.

It's not quite like freelance. I don't have different clients sending me money from different directions, but I guess I'll soon find out if I should have been paying taxes by the quarter!

I'll see what the tax software says as I prepare my taxes.

B


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RE: reporting private income

behaviorkelton, if you are an employee, your buddy is in trouble, as he/she had to withhold employment taxes through out the year. If you can be classified as independent contractor, then 1099 is due to you. As long as you paid taxes for 2008 that equals or is larger than 100% of your 2007 tax liability, you are fine even if your taxes are more and you owe something come April 15th. For 2009, again makes sure that your employer withholds enough so that by end of 2009 you have at least paid as much as your 2008 tax liability was, then again you do not have to make estimated tax payments.


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