Author Topic: How to handle a 1099-MISC received after filing  (Read 343 times)

jdhansen

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How to handle a 1099-MISC received after filing
« on: February 08, 2018, 12:57:01 PM »
So this has never happened before, because up until this last year my DW was a SAHM.  However last year she started working at our Church providing child care for $50 a month.

While putting all our documents together to file, we didn't even think she would get any forms as she wasn't required to fill out any W-4, plus I had read that income $600 or less didn't have to be claimed.  Our forms are simple, W-2 for me and a couple of 1099-INT from our savings accounts.   Taxes were filed, accepted and now we are just waiting for the refund to hit our bank account.

Of course 3 days after I have efiled and gotten notification that the IRS has accepted my return, a 1099-MISC shows up in the mail.  Apparently she ended up making a total of $700 not the $600 we expected,  she picked up a bonus $100 when she helped out around the holidays.

So, based on my research we have to file an amended tax return.  As the extra $700 lowers the refund we were supposed to get, do we send a check in with the amended form for the difference?

My DW biggest worry is that we are now going to get hit with penalties and fees for making the mistake.  I told her that shouldn't be the case, especially if we fix it, but confirmation of that would be fantastic.

Are we making a mountain out of a mole hill? Do I have the right plan of action? 

terran

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Re: How to handle a 1099-MISC received after filing
« Reply #1 on: February 08, 2018, 01:37:14 PM »
Sounds like you'll have to file an amended return.

For future reference, I'm pretty sure you're supposed to claim any amount of income regardless of whether or not you receive a 1099.

The $600 limit you're referring to is that the employer/client is required to issue at 1099 for any payment to a single contractor of $600 or more in a year, but they can issue a 1099 for amounts below that.

Edit: This is going to require filing schedule C or C-EZ, and probably Schedule SE (self employment taxes) unless she has expenses she can claim to get the net income below $400.
« Last Edit: February 08, 2018, 01:39:19 PM by terran »

Curmudgeon

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Re: How to handle a 1099-MISC received after filing
« Reply #2 on: February 08, 2018, 01:54:29 PM »
You're talking about 2017 taxes?  Relax, they're not due until April, so you're not going to get hit with a fee or penalty or even interest, as long as you correct the mistake (by April 15).  In general, you almost never get hit with fees or penalties (providing the return was filed in good faith, and not intentionally fraudulent - which seems to be the case here). However, you will probably be required to pay interest on any amount that you owed, but did not pay by April 15.  So if you correct this by then, you won't even owe interest.

Also, for future reference, if you're required to fill out a tax form, then ALL income needs to be reported, regardless of how much or how little,  whether you got a 1099/W2 for it, etc.

Disclaimer: I'm not a tax lawyer, so don't take tax advice from me!

seattlecyclone

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Re: How to handle a 1099-MISC received after filing
« Reply #3 on: February 08, 2018, 03:23:48 PM »
Yep, the $600 limit is what triggers the obligation for the payer to file a 1099. You are supposed to report and pay taxes on all income received whether it passes the $600 threshold or not. File the amended return and pay your tax.
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secondcor521

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Re: How to handle a 1099-MISC received after filing
« Reply #4 on: February 08, 2018, 03:53:28 PM »
You won't get hit with penalties because it sounds like you paid via withholding more than 100% of your 2017 tax obligation.  That is one of the safe harbors.

You should file an amended return.  Check with the IRS and/or your tax program to see if you should wait for the refund from your first return or if you can go ahead and file with it in flight.  My guess would be that they'll have you cash the original refund check, you'll send a small check in to cover the difference in taxes on the additional $700 with your amended return.  But again, check the IRS site to be sure.
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jpdx

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Re: How to handle a 1099-MISC received after filing
« Reply #5 on: February 08, 2018, 08:05:03 PM »
For the future, I would recommend creating a ledger book (can be fancy software or just a spreadsheet) to keep track of all your contractor income and expenses. That way you can verify the accuracy of any 1099s you receive, and you can pay the correct amount of tax on all money earned, regardless of whether you receive a 1099 at all.

jdhansen

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Re: How to handle a 1099-MISC received after filing
« Reply #6 on: February 09, 2018, 12:10:51 PM »
Thanks everyone for all the advice and tips.  My DW having a job has been a new experience and we never really thought about the extra $50 a month she was getting.

Now we know.