Does receiving a 1099-MISC require one to file a tax return even if he normally would not be required to file?

Question

Suppose a person is self-employed and earning below the minimum income at which he is required to file. According to the Form 1040 Instructions Chart C, one of these requirements is:

You must file a return if any of the five conditions below apply for 2015.

3. You had net earnings from self-employment of at least $400.

The term "net earnings" implies that this would be profit from self-employment after business expenses are deducted.

Now, let's suppose that this person has received a 1099-MISC for some amount greater than $400, but with business expenses, he has "net earnings" for the year less than $400.

Does he need to file a tax return in this situation? Will the IRS be concerned that he did not file even if he received a 1099?

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This hypothetical question was inspired by How to pay taxes on YouTube if I'm a dependent? and JoeTaxpayer's comment.

Answer 1

Does he need to file a tax return in this situation? Will the IRS be concerned that he did not file even if he received a 1099?

No.

However, if you don't file the IRS may come back asking why, or "make up" a return for you assuming that the whole amount on the 1099-MISC is your net earnings.

So in the end, I suspect you'll end up filing even though you don't have to, just to prove that you don't have to. Bottom line - if you have 1099 income (or any other income reported to the IRS that brings you over the filing threshold), file a return.