You report the income from your own records, no matter how weak those records are and even if they consist of nothing more than your memory. If you plan to claim refundable credits (earned Income Credit, Additional Child Tax Credit), based on this earned income, you can expect some kickback from the IRS. The self employed are expected to keep records. Getting paid by check is best. Depositing cash payments in a bank account are common ways of creating a paper trail.
The IRS considers
undocumented cash income (no W-2 or 1099-MISC), for work performed, to be self
employment income. Enter at "Business Income & Expenses" and
TurboTax (TT) will complete Schedule C or C-EZ for you and allow you to deduct
any expenses associated with this income. You'll also have to pay self
employment tax (social security & medicare tax) on any profits greater than
$400.
You may have to upgrade to the Self
Employment version of TT. If you have no expenses to deduct, There's
a chance you may be able to use TT Deluxe or Premier. Enter your income at the
1099-Misc screen (even if you didn't get a 1099-misc). You do not need the
payer's ("employer's") Employer ID Number (EIN).
In TurboTax (TT), enter at:
- Federal Taxes tab
- Wages & Income
Scroll down to:
-
Other Common Income
-Income from Form 1099-Misc
When asked why you got the 1099-Misc, select “Freelancer or
Independent contractor”
