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Customer Question: Missing Form 1099-MISC

By TaxAct

*Customer question found on FacebookTwitter, and TaxAct’s Blog.

Question:

In 2015, I worked for a start-up and was paid as an independent contractor. In 2016, I worked for the same company. They eventually went bankrupt and never paid me the final 1.5 months of owed wages. They most likely will not send a Form 1099-MISC either, which means I’ll have a missing form come tax season. During January and February I was paid $4,000, but March through April I went unpaid. I’m owed $4,200.

Since then, I moved states for a new job. From August through December of 2016, I worked at a new company and received Form W-2. When I enter my W-2 information, it says I should receive about $2,800 back as a federal refund and $600 from my state. However, when I add the $4,000 of income earned through my previous job into Schedule C, it says I’m getting $1,600 from federal and $350 from state.

Does it matter if I don’t receive my Form 1099-MISC for the income I earned? Is there any way to count the unpaid wages of $4,200 as a loss and get more money back?

Answer:

If you are a cash method taxpayer (most individuals are), include the wages you actually received during 2016 as income.

The unpaid wages aren’t included as income, therefore you can’t deduct them.

Generally, you can’t take a deduction for an amount owed to you that you never included as income.

When it comes to a missing form, you can do a few things. If you don’t receive Form 1099-MISC by mid-February, contact the employer (payer).

Otherwise, you can also call the IRS at 800-829-1040.

But, regardless of whether you receive Form 1099-MISC, you must report all income received on your tax return.

As an independent contractor or self-employed individual, your income is reported on Schedule C, Profit or Loss from Business. This form goes along with your Form 1040.

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