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Received a 1099-NEC form... that underreports income. By A LOT. Is this a problem for me?
Thread poster: Adieu
Adieu
Adieu  Identity Verified
Ukrainian to English
+ ...
Jan 26, 2022

I recently received a 1099-NEC from a major client that is very, very low for some reason. Like $30k lower than the actual compensation already received and safely sitting in my bank account.

Do I just pay taxes on real income received and ignore this or will this cause problems for me? Do I need to hound them to report real compensation to IRS and triple-check that they eventually get it right to avoid the IRS causing me grief?

PS could be that these geniuses are repor... See more
I recently received a 1099-NEC from a major client that is very, very low for some reason. Like $30k lower than the actual compensation already received and safely sitting in my bank account.

Do I just pay taxes on real income received and ignore this or will this cause problems for me? Do I need to hound them to report real compensation to IRS and triple-check that they eventually get it right to avoid the IRS causing me grief?

PS could be that these geniuses are reporting quarters or something separately or separate projects on separate forms? But so far I've just gotten this one with the surprisingly low number (although come to think of it, it is still a bit high to be a single project)

[Edited at 2022-01-26 10:00 GMT] ▲ Collapse
 
Kevin Fulton
Kevin Fulton  Identity Verified
United States
Local time: 13:00
German to English
Contact the client Jan 26, 2022

If the client is understating what they paid you, then they are under reporting their expenses. At some juncture – maybe even after you file your 1040 and Schedule C (or whatever you use to report your income) – they may issue a correction, at which juncture you will have to amend your filing. Better to get it straightened out now.

Yolanda Broad
 
Arabic & More
Arabic & More  Identity Verified
Jordan
Arabic to English
+ ...
Contact the client Jan 26, 2022

It would be better to contact the client to inform them of the discrepancy so that they can send you an amended form. If they don't, you still have to report the correct amount to the IRS.

But also make certain that the entire amount was from the year 2021 in case you are also inadvertently counting income earned in 2020 or 2022...or maybe there is another explanation that your client will explain to you.

[Edited at 2022-01-26 14:58 GMT]
 


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Received a 1099-NEC form... that underreports income. By A LOT. Is this a problem for me?







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