Reporting freelance/contractor income - do I need to track dates, hours, and cash payments?

Wait so even if I don't get a 1099, I still have to report everything? What if the person paying me doesn't report it to the IRS? Also, what's the difference between being a freelancer and a contractor? Do they get taxed differently?

Yes, you must report all income regardless of whether you receive a 1099 or not. The IRS requires you to report all income from any source. Whether your client reports it or not doesn't change your obligation to report it yourself. Freelancer and contractor are often used interchangeably for tax purposes. Both are considered self-employed and taxed the same way. The main distinction is sometimes contractual - contractors may have more formal agreements while freelancers might work on more varied, short-term projects. But the IRS treats the income the same way on your tax return regardless of what you call yourself.

Does it work if you have both W-2 income and freelance stuff? My main job gives me a W-2 but I do side gigs for cash. And can it help figure out what expenses I can deduct from my freelance work?

Sounds like an ad. Does this actually work for people who get paid mostly in cash? My clients don't give me any paperwork at all, just hand me money when I finish a job.

Yes, it absolutely works with mixed income sources! It's actually really helpful for people who have W-2 jobs plus side gigs since it breaks down how to handle both income types. It specifically helps identify which expenses belong to your freelance work. It's definitely not just for people with formal documentation. The system is designed to help with cash payments too. It walks you through creating your own income tracking system when clients don't provide paperwork. It essentially builds you a simple system for maintaining legally sufficient records even when everything is cash-based.

How does this actually work? Do they just call the IRS for you? I've tried calling so many times and always get the "we're experiencing high call volume" message.

Yeah right. Nobody gets through to the IRS, especially during tax season. I've literally tried calling 20+ times and never got through. I find it hard to believe this service actually works.

It doesn't call for you - it navigates the IRS phone tree and holds your place in line, then alerts you when an agent is about to pick up so you talk directly with them. It's basically like having someone wait on hold for you so you don't have to waste hours with your phone stuck on speaker. I was super skeptical too! I had tried calling at least 15 times before using this service. The difference is they have some system that knows the best times to call and how to navigate the constantly changing phone menus. I got through in 15 minutes when I had previously wasted 3+ hours getting nowhere. Trust me, I wouldn't have believed it either if I hadn't experienced it myself.

Taking photos of cash payments is smart! Never thought of that. How do you handle clients who don't want records of paying you? I have a few who specifically pay cash to avoid paperwork.

I still record everything in my spreadsheet whether the client wants records or not. It's about protecting myself, not them. I explain that I need records for my own tax purposes and most people understand. For clients who are very concerned about privacy, I use initials instead of full names in my tracking system, but I still document every payment. Remember, the IRS is more concerned with YOU accurately reporting your income than going after your clients. Your tax obligation exists regardless of what your clients prefer in terms of documentation.

I've used both. Honestly, for simple cash freelancing, a good spreadsheet template works fine. QuickBooks is overkill if you just have a few clients and basic expenses. But if you have lots of expenses, mileage tracking, and multiple income streams, QBSE does make tax time way easier since it calculates quarterly estimates too.

That's a smart routine! What type of info do you record for each payment? Just date and amount or do you get more detailed than that? Also, do you have a system for storing receipts for expenses?

I record date, client name, brief description of work, hours (approximate is fine), and payment amount. I also note whether it was cash, check, or electronic payment. For receipts, I take pictures of them with my phone and save them in a folder organized by month. For bigger expenses (like tools over $100), I also keep the physical receipt in an accordion folder. The key is consistency - doing it weekly means I don't forget details or lose receipts. The IRS mainly wants to see that your record-keeping is systematic and reasonable, not necessarily perfect down to the penny.

You should record each individual payment separately, even if it's the same client paying you weekly. The IRS wants to see a clear paper trail that shows when income was actually received. Recording "$200 - yard work for Client A - January" could raise red flags because it looks like you're estimating or grouping payments together, which might not reflect the actual dates you received the money. Individual entries also protect you if there's ever a discrepancy - like if the client claims they paid you less than you reported, or if you need to prove when specific income was earned for quarterly tax purposes. It only takes a few extra seconds to write "1/7 - $50 yard work Client A, 1/14 - $50 yard work Client A" etc. The detailed records show the IRS (and yourself) that you're keeping accurate, real-time documentation rather than trying to reconstruct things later.