Why this matters
TurboTax can only tax what you tell it, and the IRS already knows about the 1099s issued under your SSN or EIN. Underreport what's on file and you invite a matching notice. Miss income no form covers and your return may be inaccurate, require correction, or trigger penalties. An hour of gathering beats an amended return.
What "done" looks like
- Every 1099-NEC, 1099-K, and 1099-MISC you received is in one folder
- Platform reports (payment processors, marketplaces, storefronts) are downloaded
- Total business bank deposits reconcile against your reported income figure
- Income with no form attached, cash, checks, small clients, is included anyway
How to do it
- Collect the forms. Eligible payers generally issue 1099-NECs for qualifying nonemployee compensation paid by cash, check, or similar methods; payment platforms may have issued 1099-Ks.
- Download annual summaries from every platform you sell through, even ones that sent no form.
- Export business bank statements for the year and total the deposits.
- Reconcile: forms plus no-form income should explain your deposits; investigate gaps before filing.
- Exclude non-income deposits. Owner contributions, transfers, and loans aren't revenue; label them now.
Common mistakes
- Reporting only income that arrived with a 1099. All business income is taxable, form or no form
- Double-counting when the same payment appears on both a 1099-K and your invoices
- Treating transfers between your own accounts as revenue and overpaying
Real-world examples
- The One Big Beautiful Bill Act, signed July 4, 2025, returned the federal 1099-K threshold to $20,000 and 200 transactions. Many small sellers won't get the form at all, but the income is still reportable.
- IRS underreporter matching (CP2000 notices) automatically compares filed returns against the 1099s on file. Mismatches generate mail you don't want.
From a founder's point of view
The forms are the floor, not the ceiling. Reconciling deposits to reported income is the same check a diligence team runs in an audit or a sale, a habit worth building in year one.
Rule of thumb
If your reported income can't explain your bank deposits, you're not ready to file.
