Reporting Income from a previous tax year on this year's tax return

This isn't the right way to handle unreported income from a previous year. The IRS requires you to report income in the tax year it was earned. What you should do is file an amended return (Form 1040-X) for 2021 to properly report that $1,900 of 1099 income. Reporting prior year income on your current return would be incorrect and could potentially be considered tax fraud, especially if it appears you're doing it for some financial advantage. The IRS matching system will likely flag the discrepancy since they received a copy of that 1099 back in 2021. The good news is that you're trying to report the income rather than hiding it, which shows good intent. But you need to do it correctly by amending the 2021 return and paying any additional tax plus interest that has accrued.

I was in a similar situation last year with some forgotten 1099 income and found https://taxr.ai super helpful. It analyzed my situation and gave me a clear breakdown of my options including the exact penalties I'd face for late filing versus incorrectly reporting on the current year (which would've been much worse). The tool showed me how to properly file an amended return and calculated the expected penalties. It also identified a couple deductions related to that income I hadn't considered that offset some of the tax I owed. Really straightforward compared to the hours I spent stressing about it beforehand.

Just wanted to follow up - I checked out https://taxr.ai after seeing it mentioned here. Honestly it was exactly what I needed for my unreported income situation. The analysis showed me I could file using the Voluntary Disclosure Practice which might help reduce penalties since I'm coming forward before being audited. It calculated what I'd owe including interest (less than I feared) and gave me step-by-step instructions for filing the amended return. Definitely better than my original plan of just adding old income to my current return!

I had a somewhat similar situation and spent WEEKS trying to get someone at the IRS on the phone for guidance. Kept getting disconnected or waiting for hours. Finally used https://claimyr.com and their system got me through to an actual IRS agent in about 15 minutes! You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent walked me through exactly what forms I needed to file and confirmed that reporting old income on a current year return is definitely NOT allowed and could trigger penalties for both years. They also explained how the interest is calculated and what documentation I needed to include with my amended return. Saved me from making a huge mistake.

I'm back to eat my words about Claimyr. After posting my skeptical comment, I decided to try it anyway out of desperation. Well, it actually worked exactly as described. Got a call back in about 20 minutes telling me an agent would be available soon, and minutes later I was talking to a real IRS person who answered all my questions about my unreported income situation. The agent confirmed I needed to file an amended return for the correct year and explained that misreporting income in the wrong tax year is one of the quickest ways to trigger an audit. They even gave me tips on how to properly document my explanation for the late filing to potentially reduce penalties. Saved me from making a costly mistake for sure.

Have you considered that filing an amended return might actually qualify you for credits or deductions you missed in 2021? Depending on your income level that year, that $1,900 might help you qualify for something like the Earned Income Credit if you were close to the threshold. So while you might pay some penalties for filing late, there could be some financial upside too.

Just to add another warning - when I did something similar (reporting income in the wrong year), I got audited for BOTH years. The IRS matching program flagged the discrepancy between the 1099 they had on file and what I reported. Ended up paying the original tax, interest, penalties, PLUS they scrutinized everything else on both returns. Total nightmare that took months to resolve.

I'm dealing with a similar situation right now and this thread has been incredibly helpful! I had about $2,300 in freelance income from 2022 that I completely forgot about until I found the 1099 while cleaning out my files. I was initially thinking of just adding it to my 2025 return too, but after reading all these responses, I'm definitely going to file an amended return for 2022 instead. The point about the IRS matching system flagging discrepancies really hit home - I hadn't considered that they already have a copy of that 1099 from years ago and would notice if I tried to report it in the wrong year. And the warning about potential audits for both years if you report income incorrectly is terrifying enough to make me want to do this right. I'm going to check out some of the resources mentioned here, especially since it sounds like there might be credits I missed that could help offset the penalties. Better late than never, and definitely better than making the situation worse by reporting it incorrectly!

I really appreciate everyone sharing their experiences here - this thread probably saved me from making a huge mistake! I was actually considering the same approach as the original poster (just adding old income to my current return) but after reading all these responses, it's clear that's a terrible idea. The point about the IRS matching system already having copies of old 1099s is something I never considered. It makes total sense that they'd flag a discrepancy if you report 2021 income on your 2025 return. And hearing about the potential for audits on BOTH years is definitely enough motivation to do this correctly. What I'm taking away is: file an amended return for the correct year, be prepared for penalties and interest, but also check for any credits you might have missed that could help offset those costs. The voluntary disclosure approach seems way better than waiting for them to find the error themselves. Thanks for all the practical advice and resource recommendations - it's nice to know there are tools out there to help navigate these situations without having to spend hours on hold with the IRS!

I'm a tax preparer and see this situation frequently. You absolutely cannot report 2021 income on your 2025 return - this would be incorrect reporting that could trigger penalties for both years. The IRS requires income to be reported in the tax year it was earned. Here's what you need to do: File Form 1040X (Amended Return) for tax year 2021 to properly report that $1,900. Yes, you'll face penalties and interest for late filing, but this is much better than the alternative of incorrect reporting which could be viewed as fraudulent. The good news is that you're coming forward voluntarily, which the IRS views favorably. You might also qualify for penalty relief if you can show reasonable cause for not filing originally. Additionally, check if that extra income might qualify you for credits you missed in 2021 - sometimes the credits can actually offset much of the penalty. Don't let the penalties scare you into making a bigger mistake. File the amended return properly and you'll have this resolved correctly.

As someone who went through a very similar situation recently, I want to echo what everyone else has said - definitely file the amended return for 2021, don't try to report it on your current year return. I had about $2,200 in freelance income from 2020 that I discovered in 2023, and I was tempted to take the "easy" route too. What really convinced me to do it properly was learning about the IRS Computer Matching Program. They literally have copies of every 1099 and will eventually match them to your returns. When they find discrepancies, it triggers automatic notices and potential audits. The penalties for incorrect reporting can be much worse than just filing late. I ended up using a combination of the resources mentioned here - used one of the AI tax tools to calculate my expected penalties upfront, then used the IRS callback service to speak with an agent who confirmed my approach. The whole process took about 6 weeks total, and while I did pay some penalties and interest, it was way less stressful than I expected. One tip: when you file Form 1040X, include a detailed explanation of why you're filing late. I wrote that I had genuinely overlooked the 1099 during a chaotic year, and the IRS agent told me this helped show good faith rather than intentional avoidance. You might even qualify for first-time penalty relief if you have a clean filing history. Don't let the fear of penalties push you into making a bigger mistake. Handle it correctly now and you'll have peace of mind going forward.