If you received a W-2 or a 1099 in the mail, the government got one too, so you’re not fooling anyone if you don't acknowledge it at tax time. Companies are required to send statements to anyone they paid more than $600 in the year — if you earned that much from a job but haven’t received one, reach out to them. If someone paid you less than $600, and didn’t give you a 1099, you’re still responsible for reporting all your income. Yes, cash and all.
In the eyes of the IRS, not declaring income because it's 'under the table' is a form of tax evasion. If you don’t report 25% or more of your income then you’re committing tax evasion. That’s right, a felony. Not cool.
“Under the table” sounds cute and friendly, but “tax evasion” does not sound like something you want to be associated with. These are just two ways of saying the same thing.
Wondering what to do if you didn't get a 1099-MISC or 1099-NEC from someone you should have gotten one from, and they aren't replying to your emails? Just report the income for the year you got it.
Basic Formula for Calculating Your Freelance Income
Start by adding up all the 1099-MISC and 1099-NEC income you received for your services/goods (don't include any unemployment/1099-G or investment income here), then add any of the following that apply for you:
- Cash payments
- Venmo, Cashapp, Paypal, etc, payments
- Credit card or Square payments
- Fair market value of any trades you did with others
When in doubt, count it, and then bring up any questions you have in your appointment.
If you received things like cryptocurrency, or have bought/sold NFTs as part of your freelance work, we'll discuss that in our appointment, too.
If you operate a rental property, such as AirBnb, we'll ask about that under the "Rental" Tab, so keep that money separate.
If you get royalties, we'll discuss that, too.