Here I am, trying to start on my taxes but wondering why only half of my clients sent me a 1099-MISC this year! It turns out that businesses do not have to send a 1099-MISC to corporations no matter how much money they paid them. My business is an S-Corporation, so instead of having nice printed forms that clearly show how much they paid me in 2006, I get… nothing. I still have my own accounting books, but I have found in the past that my records and my client’s records aren’t always in sync.
For example, I might do a job in November, send the invoice in December, their check is written in late December but I don’t receive and deposit it until early January. Is this income for 2006 or 2007? Since I am on a cash basis, I would usually say 2007. But they may say December. If they give me a 1099 saying it counts for December 2006, I would just put it down for 2006 to avoid any conflicts and potential IRS red flags.
Upon reading up on this is some tax forums, I actually found that many people see this as a good thing for corporations. Because a 1099 isn’t generated, there is less of a paper trail to disprove whatever one decides to put down on their tax returns. Generating a 1099 when one isn’t required is almost akin to tattling. Still, I miss being able to cross-check my records.
Time to file a tax extension!