A Form 1099 tells the IRS how much money was paid to you, but it doesn’t always tell the IRS how much of that money is actually taxable.

Here are a few common examples:

* You may have spent money to earn that income.
If you run a business or are self-employed, you’re generally taxed on what’s left after your ordinary business expenses—not simply the amount shown on the Form 1099.
* You may have sold something for less than you paid.
If you sold personal items online, you could receive a Form 1099-K even though you actually lost money on the sale. For example, if you bought a bicycle for $900 and later sold it for $400, you may still receive a Form 1099-K showing the $400 payment. Because the form was issued, be sure the transaction is properly reported on your tax return (as a personal item sold at a loss) so it isn’t treated as taxable income.
* What matters is how much you actually made.
If you sold stocks, business property, or certain other investments, make sure what you originally paid is taken into account when preparing your tax return—even if it doesn’t appear on the Form 1099. In many cases, what matters isn’t simply how much you received—it’s the difference between what you received and what you originally paid.

Bottom Line:
A Form 1099 tells the IRS how much money was paid to you—not necessarily how much of that money is taxable. Before assuming the entire amount is taxable, make sure your tax return reflects the complete picture.