Report All Your Income

It might seem like obvious advice, but there are people that still make mistakes about reporting income.

If you get a form telling you how much you earned, the IRS also gets a copy of that form. It doesn't matter if it is for wages, interest, capital gains, rent, or something else - the IRS also gets a copy. That means if you don't report at least 100% of the amount shown on the forms you receive the IRS will know you underreported.

But if there is a mistake and the form is wrong, you don't have to report it, right? No. If you don't report it, the IRS will presume you left it off. It won't matter if it was on purpose or an oversight, if you don't report it all, you will receive a matching notice, saying what you reported does not match IRS records. If there is a mistake the best thing to do is to report everything. There are ways to make corrections to the amounts, but you have to report it first.

What if the amount isn't yours? The next step to take here is to contact the provider of the form and get it corrected immediately. Call them to get the process started, but follow up in writing. Keep notes and all correspondence about getting the form corrected. Depending on the time frame of the correction compared to your filing date you might or might not want to report the amount. There is a judgment call here.

Finally, you might receive income that is not reported on a form. Income for services rendered might not be reported on Form 1099-MISC if the amount paid was under $600. Interest income under $10 is not required to be reported on Form 1099-INT. Other income (e.g., babysitting, blood donation payments) might not be reported at all. These are still income, and if the IRS found out about them you would be assessed penalties for failing to report income.

If you have any questions about reporting income, give us a call. We will be happy to walk through the rules with you and make sure you are safe.