Medical Transcription Work and 1099 forms
Medical transcriptionists who work as independent contractors receive 1099 forms instead of W-2s, so don’t be surprised when they start arriving in the mail in January. The IRS gets copies, too. A 1099 form reports income paid to you during the year.
Prior to 2011, the only 1099 you needed to know about was the 1099-MISC, but now there are two kinds an independent contractor may receive:
1099-MISC: If a client pays you $600 or more over the year via check, direct deposit, or cash, you should receive a 1099-MISC from the client.
1099-K: If the client pays you through a third party instead of directly, for example via a credit card or a payment system such as PayPal, it doesn’t have to send you a 1099-MISC.
You may instead receive a 1099-K from the payment processor, but only if certain transaction limits are surpassed. At the end of 2011, only payees who received over $20,000 and had over 200 credit/debit transactions were sent a 1099-K.
Sorting out 1099s is a much bigger headache for the people sending the forms than it is for the recipients. On your end, all you need to do is make sure that the numbers on any 1099 forms you receive match up with what you’ve already recorded in your records. There are two questions pretty much everyone who receives these forms asks about them:
Do I have to send 1099s in with my tax form? No. Except in the extremely unusual case that the 1099 lists federal withholding and you’re filing a paper return.
If I don’t receive a 1099 from a client, do I still have to report and pay taxes on the income? Yes! (You didn’t think you’d get out of it because of a little missed paperwork did you?)
Tax information is always subject to change, so be sure to check up on it come tax time.
If you use tax prep software like TurboTax or H&R Block At Home, the software will do a lot of the legwork for you.