3

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.

  1. 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?


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

5

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.

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.