By Princess Jones

If you’re just starting out with your business, you might be starting to think about what it will take when it comes time to tackle your taxes for the first time. This can be quite a daunting task as there are so many new tax forms to figure out, many of which you’ve never seen before or even heard of.

One of these tax forms is the 1099-MISC. You may have even gotten a few of these tax forms in the mail already and wondered what you’re supposed to do with them. We’ll quickly go over the form, what it’s for, and what to do with the thing before filing it away.

What is the 1099-MISC?

Remember when you had a regular 9-5 job and your employer send you a W-2 during tax time? That form not only had how much money you made through that job but also how much tax was withheld. You entered all this on your 1040 to file your taxes and then went on your merry way.

The 1099-MISC is like the self-employed version of the W-2. The main difference between the two forms is you only get the total of how much you earned through that particular client. If you made $1,000 over the course of a year, the 1099-MISC will show you made $1,000. No tax information is included — because it isn’t your client’s job to deal with your taxes.

Self-employed individuals have the unenviable task of calculating and reporting their own taxes. You pay in to the IRS and state agencies to comply with tax laws, pay quarterly estimated taxes, and then file your own income tax in April.

What do you do with the 1099-MISC?

Before you file, make sure you independently verify that each 1099-MISC is correct. Go over your own records and see if any of your clients goofed. If so, be sure to ask for a correction. If you don’t, and your client reported that they paid you too much income, you’ll be on the hook for paying taxes on that income from the IRS.

From there, be sure to include all income you made on the Schedule C Income from Self-Employment tax form when filing your income taxes in April. Unless you’re lucky enough to live in a state with no income tax, you’ll need your income info for both state and federal taxes.

But don’t pay too much in taxes! Your businesses expenses are tax write-offs that will reduce your tax burden, so keep track of all of your expenses and be sure to take all the tax deductions you deserve when you file.

Finally, hang on to the form. Yes, the IRS also receives a copy of your 1099-MISC forms, but you’ll want to have this information on hand should you receive a “dreaded letter” from the IRS or your state’s taxing authority.