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Ask the Taxgirl: Reporting 1099-MISC Income

by Kelly on January 26th, 2008

Taxpayer asks:

First of all thanks for some very interesting reading and advice on your site.

I came across this article when searching for information on how to declare some Microsoft software that I ‘earned’ through doing some webcasts.

http://www.taxgirl.com/theres-no-such-thing-as-a-free-lunch/

The value of the gifts/items is $798, as this is over the $600 does the amount over the limit get taxed or just the amount over the limit. I am from the UK and wrestling with Turbo Tax and the American tax system so am at a loss as to what to do with this no so free lunch.

Taxgirl says:

Thanks for reading, I am glad that you find it interesting!

In the US, income is income from dollar one even if you won’t actually end up paying tax on the income. The $600 that you’re referring to is just a reporting limit imposed on the company that made the payment - not the taxpayer.

The taxpayer is responsible for reporting all income. If you actually earned $599, and didn’t receive a form 1099, you’d still be responsible for reporting the $599 as income. If the $798 that you receive constituted income, you must report the entire amount.

You might be interested in some additional taxgirl.com reading on this subject:

basic information about 1099-MISC income and related deductions
income earned with affiliates and advertisers
when to make estimated payments due to income with no withholding

I hope that helps! Good luck with figuring out your taxes. If you want to win some free software from TaxAct, enter my contest!

Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.

Have a question? Ask the Taxgirl!

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