jillmyles said:
What Ann said. If you get a 1099 from Amazon, you need to file it. Here's how it works:
Amazon: Cuts 1099s to all employees and sends a copy to the gov't. They say "Here's the people we paid and here's how much we paid them."
Employee: Files 1099 on personal taxes. Here's how much I was paid by these employers.
IRS: Matches what Amazon says they paid to people with what was claimed by people. If there are discrepancies, they go after the missing items and force you to amend/pay penalties, etc.
So basically, if you get a form, you need to file it because they're reporting it.
Well, not exactly. If you're getting a 1099, you're not an employee. If you're an employee you get a W2.
BUT, the matching does happen. If you've reported more than your forms add up to, there's no problem. If you report less, you WILL be contacted. And it probably won't be for several months or more.
Amanda Brice said:
Go ahead and start the process of filling out the 1040 and figuring out how much you owe or are owed. But understand that this is just preliminary and you'll really need to wait until you get the 1099 to verify that everything is accurate.
And you can't file anyway until Jan 30 because of the delay in passing the legislation. If you have to wait to file until Jan 30 anyway, you might as well wait until you actually have the 1099 in hand. They have until Jan 31 to prepare the 1099, which means you should get it shortly after that. Another few days isn't going to make a difference, and could actually go a long way in helping to avoid an audit.
(Which aren't fun, btw. I was audited two years ago...I won, but it was a major pain in the behind.)
Agreed. . .it's certainly smart to start getting yourself organized now, but unless you're
dead sure of your numbers, I wouldn't file until you have the reporting documents from wherever. It's way more trouble to fix it after the fact than it is to wait a bit and do it right the first time.
And, as Amanda says, the IRS is not accepting anything before Jan 30 so, really, there's no hurry. And no point in sending it in sooner. Nothing will happen to it until the 30th. If you're e-filing via software, the software vendor won't send it to the IRS until the 30th either.
folly said:
so amazon will send us the 1099, correct?
Assuming Amazon reports your income as 'royalties' which is what I understand they do, they will send you a 1099MISC as long as they've paid you at least $10. If they (or some other vendor) report as 'non-employee compensation', they will send the document if they've paid you at least $600.
Whether you get a document or not, and whether reported as royalties or non-employee compensation, all the income you earned as a working author is reportable on Sch C which will be attached to your 1040 -- unless you've incorporated yourself, in which case you have a whole different set of issues.

(Note, just being an LLC does NOT mean you've incorporated, necessarily.)
And, again, I am an Enrolled Agent and employed by H&R Block. Any tax advice contained in this message is not intended or written to be used, and cannot be used, by any member here, to avoid any federal tax penalty that may be imposed on the taxpayer.