In 2013, I worked for a startup and was paid as a contractor. In 2014, I worked for the same company. They ended up bankrupt and never paid me the final 1.5 months of owed wages. They most likely will not be sending a 1099-MISC. January through February I was paid $4,000 while March through April I was unpaid, but am due to be paid $4,200. Since then I moved states for new job. August through December of 2014 I worked at a new company and got a W-2. When I enter my W-2 information, it says I’m getting about $2,800 back from Federal and $600 from State. I added the $4,000 of income into Schedule C and now it says I’m getting $1,600 from Federal and $350 from State.
Is there any way to count the unpaid wages of $4,200 as a loss and get more money back?
If you are a cash method taxpayer (most individuals are), you include the wages you actually received during 2014 as income.
The unpaid wages aren’t included as income, and you cannot deduct them either.
You generally cannot take a deduction for an amount owed to you that you never included as income.
If you don’t receive a Form 1099-MISC by mid-February and you believe you should be issued one, contact the employer (payer).
You may also call the IRS at 800-829-1040.
Regardless of whether you receive a Form 1099-MISC, you must report the appropriate amount of income on your tax return.
As an independent contractor or self-employed individual, your income will be reported on IRS Schedule C – Profit or Loss from Business (along with your Form 1040).
To enter or review information for your business in TaxACT:
- Click on the Federal Q&A tab in TaxACT
- Click “Business Income” to expand the category and then click “Business income or loss from a sole proprietorship”
- Click “Add” to create a new copy of the form or Review to review a form already created, then follow the step-by-step instructions