Every year, the IRS collects more than $2 trillion in tax revenue. In spite of this massive sum of money, the IRS will at eventually notice if you do not report your own income to the government. It may be even more enticing to avoid reporting your earnings if you are self-employed. However, before you decide not to claim your income, you should know why it is essential that you self report and file a return every year. Self-Employment and Self-Reporting People working as employees debatably have an easier time reporting their income each year. Their employers withhold taxes for them and ease them of the responsibility of informing the IRS about their earnings. People who are self-employed, however, must take care of withholding taxes and reporting their incomes on their own. Individuals who need to self-report include:

• Valets
• Waitresses and servers who receive cash tips or commissions
• Small business owners like restaurateurs and clothing shop owners
• Car dealerships
• People who work from home like freelance writers, bloggers, and cosmetic sales professionals

If they make incomes over $600 a year, they will characteristically receive a 1099 from the company or individuals for whom they contract. They should utilize this form to report their monies and file a return. Filing a return gives self-employed individuals a chance to pay into obligatory funds like:

• Medicare
• Social Security
• Sales tax
• State tax

Paying into Social Security and Medicare can be important for people who plan to draw on those funds at some point in the future. Failure to pay these taxes could exclude them from receiving these benefits when they get older. People who work as independent contractors or those who receive cash payments can report their money by filling out a Schedule C and submitting it with their return. People who are already partners in multi-ownership LLC should file IRS Form 1065. If the LLC is a corporation, owners should file IRS Form 1120.  Failure to Self-Report Self-employed individuals may be tempted to suppose that the IRS will not detect if they fail to report their incomes. After all, what difference could a few thousand dollars make to IRS tax revenue of more than $2 trillion? It is true that the IRS may not notice immediately that you failed to report your income. However, it receives the same tax forms as you, meaning that if you receive a 1099 from your clients the IRS similarly receives that same form on your behalf. Agents will come across this information at some point and request an explanation. Further, failure to self-report and pay the taxes that you owe could result in serious financial and legal consequences such as:

• A tax audit
• Monetary fines
• Wage garnishments
• Bank and asset levies
• Jail time

Once these punishments are in progress, it can be nearly impossible to escape or minimize them. If you have failed to self-report and pay taxes that you owe the IRS, it is essential that you know what steps to take to amend this serious situation. You should rely on a tax professional that knows the U.S. tax codes and can act as an advocate for you as you come in contact with the IRS. Your tax professional can assist you by:

• Filing past due returns
• Guiding you in paying owed taxes
• Help you defray penalties like fines
• Negotiate so that IRS does not garnish your income or levy your assets

You stand a great chance of getting the IRS to listen to and deal with you fairly when you have a reliable tax professional with you.  People who are self-employed or receive cash payments as income are bound to report their earnings and pay their taxes each year. You can benefit by understanding why it is important for you to report all of your income to the IRS. What You Should Know About Form 1099 IRS Form 1099 is used to report certain types of non-employment income, and there are several types on this form. Here are some facts you should know about Form 1099:

• Who Should Receive a 1099 Form?

Form 1099 is used to report certain types of non-employment income to the IRS such as dividends from a stock or pay you received working as an independent contractor. Generally, businesses must issue the forms to any payee (other than a corporation) who receives at least $600 during the year. And that’s just the basic starting rule. There are several exceptions. That’s why you likely get a 1099 form for every bank account you have, even if you earned only $10 of interest income.

• What If You Don’t Get All Your 1099s?

The most important thing to keep in mind is that you are accountable for every tax you owe even if you don’t get the form, so following up with the business might be a good thought. If the company files a 1099 form to the IRS, but for some reason you don’t receive it, the IRS will send you a letter⁠, actually, a bill ⁠saying that you owe taxes on the income. That letter could come as long as years later. If the business didn’t file the 1099 form for you on the income, you should report it as a diverse income. It might be worth asking a tax professional for other options. Taxpayers don’t add Form 1099 with their tax returns when they submit them to the IRS, but it’s a good idea to keep the forms with other tax records in case of an audit.

• Stay on Top of a New Address

Whether the payer has your correct address or not, the information will be reported to the IRS based on your Social security number. That implies you have an interest in making sure payers have your actual address. Update your address directly with payers, as well as putting a forwarding order in with the U.S. Post Office. You’ll want to receive any forms the IRS receives.

• Don’t Overlook a 1099 Form

No one likes a tax audit, and there are countless tales about what will incite one. But this much is clear: If you fail to remember to report the $500 of interest you earned on a bank account, the IRS will send you a computer-generated letter billing you for the tax on that interest. If it’s right, just pay it.