Some techs on a 1099 never file and never pay. Nothing happens at first. No letter, no call. That’s what makes it dangerous.
How the IRS knows
Every company that pays you $2,000 or more in a year sends the IRS a copy of your 1099. The IRS already knows what you were paid. It just takes time to catch up, often a few years.
What happens when it does
The IRS writes up a return for you. It’s not a friendly one:
- It counts every dollar on your 1099s.
- It gives you no credit for tools, miles, phone or anything else you can’t prove.
- Then it adds penalties and interest.
What gets added on
| Charge | How much |
|---|---|
| Not filing and not paying | Up to about half the tax |
| Interest | About 7% a year, and it keeps growing |
| Fraud (if the IRS says you hid it on purpose) | Up to 75% of the tax |
What it adds up to
Rough federal numbers for a tech who skips six years:
| Paid by companies each year | Tax for 6 years | With penalties and interest |
|---|---|---|
| $72,000 | about $89,000 | about $155,000 |
| $100,000 | about $134,000 | about $234,000 |
Add state tax on top. If the IRS calls it fraud, the higher-paid tech is past $300,000.
How the IRS collects
- Takes money straight out of your bank account
- Takes a cut of what the companies pay you, before you see it
- Puts a lien on your truck or house
- Keeps any refunds you would have gotten
There’s no time limit. If you never filed for a year, the IRS can come after it any time.
Willfully not filing can also be a crime, up to a year in jail for each year. Hiding income on purpose is worse.
If you’re already behind
It’s fixable, even living check to check, and it’s much cheaper to fix before the IRS finds you. Behind on taxes? Step by step to get caught up.
The easiest fix is never getting there: set aside about a third of every check and pay four times a year. How much to set aside.
This is general information about U.S. federal taxes, not advice for your situation. If something here doesn't match your paperwork, ask a tax preparer.