Wednesday, April 14, 2010

Incoming

There was a discussion going on this week among a group of independent/freelance types I belong to. It seems one of the guys had a little issue in which a client reported paying him at the end of one year but he received the money at the beginning of the next one. Eerily similar to what I went through last year.

Luckily for him, he caught it before filing. Prior to then it never on earth occurred to me to compare the 1099s clients send me with my own records. That can be a mistake, especially with those payments that straddle the calendar like that.

So this year I was more vigilant about it and I actually found of the nine companies who sent me 1099s, five had errors in their reporting. Some were small, and easily accounted for, but several were pretty big, inexplicable errors.

In fact, one of these just recently contacted me about a check I supposedly never deposited. Now I've never been one to not cash checks. It turns out they had mysteriously issued a duplicate check or something, because I was able to show the actual check stub that matched the invoice in question. So there's the error with that one.

The others I didn't bother correcting. It turns out that as long as you report more income than your 1099s report, the IRS won't have a problem with that. (Since you're clearly not underpaying taxes.) And between those errors and the companies who don't even bother sending 1099s at all, I was in good shape this time around.

Anyway, I'm glad I keep good records. According to an article I saw, some people calculate their income solely based on the 1099s they receive. That's nuts. And dangerous.

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