What Happens When You Don't File a 1099? (2024)

Written by a TurboTax Expert • Reviewed by a TurboTax CPAUpdated for Tax Year 2023 • April 11, 2024 5:11 PM

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OVERVIEW

Learn about what happens if you forget to file a 1099. See how to fix mistakes, amend your return, and avoid potential issues with the IRS.

What Happens When You Don't File a 1099? (5)

Key Takeaways

  • Businesses that send you a Form 1099 are also required to send the same information to the IRS. So, if you don't include reportable income on your tax return, the system that matches tax returns to the information in the IRS systems will likely flag your tax return for further evaluation.
  • When the IRS believes that you have left off reportable income from your tax return, they will typically send you a notice asking you to respond about the missing information. Often, the IRS will recalculate your tax return by including the missing income and determining the amount of tax they think that you owe. This can include penalties and interest.
  • If you realize that you didn't include some income on your tax return, you can file an amended return that includes the missing information. It is usually better if you catch the mistake and file an amended return than waiting for the IRS to find the error.
  • The IRS can impose penalties and interest for any taxes that are not paid by the original due date of the tax return.

Filing with Form 1099

Form 1099 is an informational form that reports payments a business or financial institution makes. You'll get a 1099 if you received reportable payments during the year, and the IRS gets a copy, too. Examples of businesses that might send you a 1099 form include:

  • Companies that paid you non-employee compensation
  • A bank where you received interest income during the year
  • Brokerage firms where you received dividends or had stock transactions
  • Investment firms that send distributions from a retirement account.

There are many different kinds of 1099 forms. Some examples include:

  • 1099-DIV - reports dividends
  • 1099-C - reports the cancellation of debt which is sometimes taxable
  • 1099-R - reports distributions from retirement plans
  • 1099-NEC - reports payments of non-employee compensation to independent contractors.

Dozens of situations could call for a Form 1099. They all typically cover payments you receive that need to be reported on your tax return.

If you are a business owner, you may need to send 1099 forms to people that you made business-related payments to.

Will the IRS catch a missing 1099?

The IRS knows about any income that gets reported on a 1099, even if you forgot to include it on your tax return. This is because a business that sends you a Form 1099 also reports the information to the IRS.

The IRS cross-references tax returns with other income records that businesses submitted. This can help reveal discrepancies or unreported income.

If you don't include taxable income on your return, it can lead to penalties and interest. The IRS may charge penalties and interest beginning from the date they think you owe the tax.

There are times when leaving a 1099 off of your tax return doesn't change it. And sometimes including a missing 1099 can actually reduce the tax that you owe. More on that later.

Do I need to report income if I didn't receive a 1099?

You should report all taxable income - regardless of whether it is documented on a 1099 or not. The IRS requires you to report all of your earnings, whether they come from traditional employment or other sources.

For example, imagine you're a freelancer and did work for a business. But the client, for some reason, didn't send you a 1099. Whether it's an oversight, or a lack of knowledge on their part, the obligation to report that income falls on you. So, it’s important to keep a record of any income you earn throughout the year.

You should even report income from sources that may seem trivial, like income from side projects, cash tips from a service job, or income from a small-scale business.

What Happens if I lost my 1099?

Losing a 1099 happens more often than you think, and it’s a fairly simple process to get a replacement form.

First, you'll need to contact the business that issued your 1099 and ask for a replacement. They'll likely request some personal information to verify your identity. This could include your Social Security number, your full name, and possibly your address or phone number.

Be sure to keep all your tax documents, including your replacement 1099, in a safe place where you can find them when you file your taxes.

Amending your tax return

If you catch missing information on your tax return before the IRS does, then you should file an amended tax return. You'll use Form 1040-X, Amended U.S. Individual Tax Return. You should provide a clear explanation for the reason that you are amending your return. Send a copy of any 1099s that weren't included with your original tax filing.

When you amend your tax return, you may have to file additional forms. For example, if your missing income was from self-employment, you may need to file Schedule C. You should also include any qualified business expenses that you had. These expenses can lower your total self-employment income. They could even make your income negative if your expenses are more than your gross self-employment earnings. This could reduce your total taxable income and the total tax you owe.

If your amended return shows that you owe more tax, then you should pay as soon as you can. This helps reduce interest charges and possible penalties. You can mail a check with your amended return if you are filing on paper. If you file online, you can make a payment with a Form 1040-V voucher. You can also make payments online at the IRS website.

If the IRS finds the error before you do, they will usually send a notice. The notice usually proposes an adjustment to your tax return. It also states any additional tax, and perhaps penalty, that they believe is due. If you agree with the IRS notice, you can sign their form and pay the amount that they ask for. If you do that, you won't need to file an amended tax return.

TurboTax Tip:

If your missing 1099 is for self-employment income, you should file Schedule SE, with your amended tax return.

Updating self-employment tax forms

If the missing 1099 is for self-employment earnings, and your net self-employment income is at least $400 for the year, you should file a Schedule SE with your amended return. The IRS uses this form to calculate your self-employment tax. This includes Social Security and Medicare taxes.

Penalty for not reporting taxable income on your tax return

There are several penalties the IRS can levy for not reporting all of your taxable income. The largest is typically the penalty for significant understatement of your tax liability. This is an accuracy-related penalty. In most cases, this applies when taxpayers understate their tax by the greater of 10% of the correct amount or $5,000. In these cases, the penalty is 20% of the understated tax. The IRS can also charge interest on any tax that has not been paid as well as on any assessed penalties.

Will I get audited if forgot a 1099?

Remember that an audit is not a certainty just because of a missing 1099. The IRS receives a lot of information and only audits a small percentage of tax returns each year. However, it's still important to correct your tax filing.

Forgetting to include income from a 1099 form can be costly but, in some cases, can actually lower your tax. What is important is to be as accurate as possible when completing your tax return. This helps you avoid owing additional tax and penalties. It can also keep you from missing out on deductions that could lower your tax and possibly increase your refund.

Let a local tax expert matched to your unique situation get your taxes done 100% right with TurboTax Live Full Service. Your expert will uncover industry-specific deductions for more tax breaks and file your taxes for you. Backed by our Full Service Guarantee.

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What Happens When You Don't File a 1099? (2024)

FAQs

What Happens When You Don't File a 1099? ›

Often, the IRS will recalculate your tax return by including the missing income and determining the amount of tax they think that you owe. This can include penalties and interest. If you realize that you didn't include some income on your tax return, you can file an amended return that includes the missing information.

What happens if you didn't make enough to get a 1099? ›

If I didn't get a 1099-NEC or 1099-MISC, do I still need to report the income if it's less than $600? Yes. The IRS requires that you report all of your income, even if it's less than $600 and you didn't get a tax form for it. Follow these steps to enter your income.

What is the consequence of not filing 1099? ›

If your business fails to issue a Form 1099-NEC or Form 1099-MISC by the deadline, the penalty varies from $60 to $310 per form (tax year 2023), depending on how long past the deadline the business issues the form.

Will the IRS catch a missing 1099-INT? ›

The IRS employs various methods to detect discrepancies in tax reporting, including the absence of 1099 forms. While the IRS does not catch every missing 1099 immediately, their sophisticated systems and data-matching capabilities make it likely that discrepancies will be identified over time.

What happens if you don't file 1099-INT? ›

If you receive a Form 1099-INT and do not report the interest on your tax return, the IRS will likely send you a CP2000, Underreported Income notice. This IRS notice will propose additional tax, penalties and interest on your interest payments and any other unreported income.

What happens if I don't report a small 1099? ›

If you don't include taxable income on your return, it can lead to penalties and interest. The IRS may charge penalties and interest beginning from the date they think you owe the tax. There are times when leaving a 1099 off of your tax return doesn't change it.

What happens if you fail to report 1099? ›

The penalties for missing the filing deadline for 1099 NEC and 1099 MISC forms can vary. The IRS may impose penalties based on the number of forms not filed and the duration past the deadline. The penalties range from $60 – $310 per form (tax year 2023), depending on lateness.

Will I get audited if I forgot a 1099? ›

Unfortunately, the IRS is most likely going to notice. When payors issue 1099 forms, they also send a copy to the IRS. As a result, the agency is aware of your income, even if you did not declare it on your return. However, you can avoid unnecessary penalties and taxes by taking immediate action.

What triggers the IRS underpayment penalty? ›

If you didn't pay enough tax throughout the year, either through withholding or by making estimated tax payments, you may have to pay a penalty for underpayment of estimated tax.

Can you file a 1099 a year later? ›

In most cases the 1099 statute of limitations is three years. Those three years begin on the due date of the return or the date on which it was filed – whichever is later.

Does the IRS check every 1099? ›

The IRS gets copies of all the 1099s and W-2s you receive, so be sure you report all required income on your return. IRS computers are pretty good at cross-checking the forms with the income shown on your return.

Should I amend my tax return if I forgot a 1099? ›

Taxpayers may need to file an amended return if they filed with missing or incorrect info. If they receive the missing or corrected Form W-2 or Form 1099-R after filing their return and the information differs from their previous estimate, they must file Form 1040-X, Amended U.S. Individual Income Tax Return.

What happens if the IRS finds unreported income? ›

If a discrepancy exists, a Notice CP2000 is issued. The CP2000 isn't a bill, it's a proposal to adjust your income, payments, credits, and/or deductions. The adjustment may result in additional tax owed or a refund of taxes paid.

Is there a penalty for not filing a 1099? ›

The maximum penalty per year is $630,500 ($220,500 for small businesses). $120 per 1099 if you correctly file more than 30 days after the due date but by August 1. The maximum penalty per year is $1,891,500 ($630,500 for small businesses). $310 per 1099 if you file after August 1, or you do not file the required 1099.

What happens if you don't file your taxes but don't owe anything? ›

There's no penalty for failure to file if you're due a refund. However, you risk losing a refund altogether if you file a return or otherwise claim a refund after the statute of limitations has expired.

What happens if you accidentally underpay taxes? ›

You will receive an IRS notice if you underpaid estimated taxes. They determine the tax underpayment penalty by calculating the amount based on the taxes accrued (total tax minus tax credits) on your original tax return or a more recent one you filed.

Is there a minimum income for 1099? ›

You should receive a Form 1099-NEC if you earned $600 or more in nonemployee compensation from a person or business who isn't typically your employer. You should receive Form 1099-MISC if you earned $600 or more in rent or royalty payments.

Will I get a 1099 if I made less than $100? ›

The 1099 form is used to report non-employment income to the Internal Revenue Service (IRS). Businesses are typically required to issue a 1099 form to a taxpayer (other than a corporation) who has received at least $600 or more in non-employment income during the tax year.

How do you report income if you don't get a 1099? ›

If the taxpayer doesn't receive the missing form in time to file their income tax return by the filing due date, they may complete Form 4852 or Form 1099-R to estimate their wages and earnings.

What if my 1099 is less than I made? ›

You'll address the discrepancy on your tax return on line 21, or on a Schedule C. You will need to show the client reported an erroneous amount on your 1099 and attach a statement to explain the difference. In your statement, include the amount reported, the difference, and the correct amount.

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