Guess what, your employer just snitched on you to the IRS. Freelancers also got snitched on. Let me explain:
When hiring an employee or freelancer, the IRS requires the employer to receive a signed W-4 or W-9 form, which confirms the person's tax ID number in order for the IRS snitching program to work properly - under penalty of perjury.
The IRS calls this system "reporting", but laymen can understand this better by substituting "reporting" with "snitching".
The employer is required to issue W-2s, 1099s etc. as a part of the mandatory snitching program. Which means that they write up how much you got paid, file it with the IRS, and send you a copy, which you use to put together your tax return.
For most W-2 employees, the proper income tax has already been withheld. Many receive a refund for excess tax withheld. For these employees, failure to file isn't subject to penalties, though illegal if income is over $12,950 for single filers, or $25,900 for joint filers.
However, some end up owing tax, which is paid before April 15th of the following year. If you don't file, the IRS will issue an notice to you, along with penalties.
For freelancers who get paid via a 1099-NEC being reported, it's the same thing. It's very possible that you owe tax to the IRS.
Forms 1099-B from brokerages, 1099-INT and DIV for interest and dividends, K-1 from certain investments, trusts and estates, etc. all follow this system.
The IRS snitching mechanism is very efficient, once they have received notices from your employer, it all runs in an automated fashion.
So if you thought you'll get away with not reporting it...…..know that you've already been snitched on.
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