[sammykay]

this is if you are also claiming wages from an employer.... i really dont wanna wait till I get the 1099 form from amazon, since my husband and I want to do our taxes since im out on maternity leave and hes out of a job.  we both received our w2's from our work.  now, as anyone filed their taxes without the amazon 1099 and just went by the amount that they were paid by from the  previous year?  just wondering if this is possible.  I know what I was paid, but i'm hoping I can do it without the amazon 1099.

just taking opinions. i'm not doing anything yet

 

[J.R. Thomson]

I'm not an accountant, but I wouldn't recommend doing it.  It may cause headaches for you down the road.

Better to do it right the first time so you won't have to amend a return later.... but... that being said I would
ask an accountant.

 

[Jan Strnad]

I am also not an accountant, but I'd wait.

Best wishes!

 

[Ann in Arlington]

this is if you are also claiming wages from an employer.... i really dont wanna wait till I get the 1099 form from amazon, since my husband and I want to do our taxes since im out on maternity leave and hes out of a job. we both received our w2's from our work. now, as anyone filed their taxes without the amazon 1099 and just went by the amount that they were paid by from the previous year? just wondering if this is possible. I know what I was paid, but i'm hoping I can do it without the amazon 1099.

just taking opinions. i'm not doing anything yet

If you know how much you received for 2012, (which, if you were paying attention all year, you should) you do not have to wait to receive the 1099. If you don't know the amount, then I suggest you do, because the numbers will eventually be matched up at the IRS. Or not -- in which case you'll get a letter. It's much more of a pain to deal with these things after the fact.

Now, even if you do have good records, it's possible the 1099 will differ, but if the difference is small enough, it will be a whole lot easier to deal with. Either way, you could file 'now' and amend later with the correct figure. Some say this draws attention to your return and makes you more liable for an examination. I don't know that that's true, but I don't advise filing unless you're reasonably sure you have all the information.

After all, YOU have to sign the return and basically say it's accurate to the best of your knowledge. If you know you have put estimated numbers, that's, arguably, tax fraud. Further, while you may be able to do your initial return on your own, many people have problems when it comes to amending. It's not quite as straight-forward a process (she says as though a 1040 is straight-forward ).

And, anyway, because of the late legislation, NO one can file until January 30. You could send it in electronically or mail it, but it won't be processed until the IRS has verified the programming on their computers. Further, if your return contains depreciation, or any of a number of other less common but not particularly rare forms, it might not be able to be filed before the middle of February.

I applaud your desire to get it DONE! But suggest you be sure you have all your paperwork first.

Disclaimer: 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.

 

[yomamma]

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.

 

[Amanda Brice]

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.)

 

[folly]

so amazon will send us the 1099, correct?

 

[Ann in Arlington]

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.

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.

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.

 

[folly]

Ann,

thanks for the answer. another question if you don't mind, please. do you know if the 1099 includes december sales even though we won't receive the payment until february?  thanks!

 

[fletcherbest]

As others have said, it is better to wait for the 1099 to be on the safe side and you can't file until January 30 anyway (or at least the IRS won't process it until then), but if you are confident in your records, you can file without it.  I assume you are in a hurry so you can get your refund sooner under your current financial circumstances, and if you simply can't wait, I'd say go ahead and file on the 30th.  The worst case scenario is that if there is a discrepancy you'd need to file an amended return and perhaps pay a penalty if your refund was too high based on the incorrect numbers.  But even if you did have to pay a penalty, it would not be a big deal.  

People get all freaked out when they hear about tax interest and penalties, but the IRS is really pretty reasonable on those things (a lot more reasonable than most credit card companies if you are late paying them).  I'm not sure how it would work on a refund amount, but my guess is it would be the same as for a late payment of taxes, which is currently one half of one percent of the tax due per month past the due date to a maximum of 25% of the tax due.  So for example using that penalty figure, if you  were way, way, way off on your numbers and you got a refund of $1000 more than you should have, you'd have to repay the $1000 and your penalty would be $5 per month you held on to the money.  Yes, the penalties would cost you almost as much as a cup of Starbucks every month!  Brutal!    

 

[Amanda Brice]

thanks for the answer. another question if you don't mind, please. do you know if the 1099 includes december sales even though we won't receive the payment until february?

I'm not Ann, but I can answer from all my 1099s from last year (Amazon, Createspace, Barnes & Noble, Smashwords). And the answer is no. The 1099 will only report what was paid to you in 2012, not what was paid to you in 2013, even if it was earned in 2012.

I started publishing in 2011. My 1099s for 2012 (which I'll be filing in mid-April -- no need to rush in sending the federal gov't a check) will state the money paid to me in 2012, which means that it will include money from November and December 2011 and run through October 2012 (since we were paid the October sales in December).

 

[Ann in Arlington]

Ann,

thanks for the answer. another question if you don't mind, please. do you know if the 1099 includes december sales even though we won't receive the payment until february? thanks!

The 1099 should include amounts actually paid to you in 2012.

As others have said, it is better to wait for the 1099 to be on the safe side and you can't file until January 30 anyway (or at least the IRS won't process it until then), but if you are confident in your records, you can file without it. I assume you are in a hurry so you can get your refund sooner under your current financial circumstances, and if you simply can't wait, I'd say go ahead and file on the 30th. The worst case scenario is that if there is a discrepancy you'd need to file an amended return and perhaps pay a penalty if your refund was too high based on the incorrect numbers. But even if you did have to pay a penalty, it would not be a big deal.

People get all freaked out when they hear about tax interest and penalties, but the IRS is really pretty reasonable on those things (a lot more reasonable than most credit card companies if you are late paying them). I'm not sure how it would work on a refund amount, but my guess is it would be the same as for a late payment of taxes, which is currently one half of one percent of the tax due per month past the due date to a maximum of 25% of the tax due. So for example using that penalty figure, if you were way, way, way off on your numbers and you got a refund of $1000 more than you should have, you'd have to repay the $1000 and your penalty would be $5 per month you held on to the money. Yes, the penalties would cost you almost as much as a cup of Starbucks every month! Brutal!

In fact, penalties are based on the amount due. So if you're wrong and get an additional refund, they don't charge you penalty. If you're wrong and you owe them money back -- whether you paid or got a refund in the first place -- they will charge interest and may charge a penalty depending on whether they think there was willful disregard of the filing rules. And, even if not willful, if you're too far off, they may charge an additional penalty for 'substantial understatement'. It can really add up and, really, it's better to avoid them if possible.

That said, as long as you pay up by the 15th of April -- unless there is underpayment for the whole year -- there probably would not be any penalties. For example, if you do the return now and it says you get a refund of $1000. Then you get your paperwork, realize the number was higher than you used, and the recalculation shows you were only due a refund of $600. As long as you pay back the $400 by April 15 you should be fine.

I still don't recommend this: when you sign a return you're signing that it's accurate to the best of your knowledge; I wouldn't sign if I knew the numbers used were potentially wrong.

 

[fletcherbest]

A couple of quick points of clarification for those who are new to having self-employment income.

First, you do not file the 1099 with your return.  You take the amount on the 1099 and enter it onto Schedule C, line 1 and then fill in any other appropriate numbers (for example, if you went to a seminar that taught you how to publish on Kindle, you can claim the cost of the seminar and your travel expenses on Schedule C).  When you get your total profit or loss, that number goes on Schedule SE, which you use to figure your Self Employment tax (this is like the taxes that an employer would take out of your paycheck), which is part of the total tax for your 1040 return.   

Second, with regards to Folly's question, your 1099 will reflect the amounts paid to you by Amazon during the year, not the amount of sales you had. 

 

[fletcherbest]

And, even if not willful, if you're too far off, they may charge an additional penalty for 'substantial understatement'. It can really add up and, really, it's better to avoid them if possible.

Again, just FYI for people who are scared to death of IRS penalties, "substantial understatement" is defined by IRS as being the greater of 10% of the tax due or $5000 or more. Unless you are making a huge amount of money, you'd really have to screw up your numbers or intentionally underreport your income to hit those levels. Certainly nobody wants to pay any penalty unnecessarily, but you don't need to be terrified of making a mistake.

 

[sammykay]

thanks everyone. i've kept track of what has been paid to me during 2012 with amazon, createspace and b&n. So, I shouldn't have a problem.  I already did my taxes, just didn't submit it. Probably won't till the 29th, hopefully we get the 1099's before then lol just to make sure. but i'm sure its fine.