What to do with 1099, you knew you were going to get one, or maybe not. But now you have one and do not know what to do with it, or maybe you do. Claim it on your taxes, right. A 1099 is the gross income you made as a sub-contractor, or in sales. Which ever or what ever it is the IRS wants to tax you on it. Most everyone has expenses that go along with that 1099 the expenses you paid to make that money.
Example: If you sell a handmade quilt for $150.00 you have to buy the material, thread, and all that other stuff that you need to make a quilt, then you have your advertising cost (ebay listing) and shipping.
These are deductible expenses that go along with that 1099, or in other words the cost of doing business. Quilting hobby or not.
Non deductible expenses is the time you spent on making the quilt, unless you paid a seamstress to sew it for you (not your mom)
All of your expenses that go with your 1099 go on a Schedule C. Which is the self employment form, that goes with your 1040. Sounds greek to you, you just give all your papers to the tax man, if you do not include a list of your expenses you could owe the IRS, and if you give the tax man a box of receipts you could owe him a lot more than the year before.
How to avoid owing a lot, keep your expenses organized, you do not have to run out and spend $200.00 on a program, Just a notebook with a different page for each expense, or if you have a lot by the month with categories for each expense.
Keep the receipts just because you wrote them down and added them all up does not mean throw them away. Have a receipt for everything you deduct on your schedule C or any where on you tax return, and keep them for SEVEN YEARS. I suggest a box for each year, with a copy of the return in it. The box can be a shoe box or one of those fancy boxes they sell that you put together and write on. Cancelled checks count as receipts too.
So all those trips to the post office or the fabric shop. If the thing you purchased went into the thing you sold. KEEP THE RECEIPT