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I work for somebody as an independent so I'm 1099.  I have had an issue with the person not paying me in the past.  She started paying after a lot of complaining and seemed to be catching up.  Giving her the benefit of the doubt, I still continued to work for her.  I am now in the same situation and have not been paid in almost two months.

Has anybody been in this situation?  I have told her I will not be working for her anymore as I cannot continue to work for tips only.   From my understanding, I cannot write off the $1500 in missed income as a loss for 2013 taxes since we are in a service industry.  My husband suggested I go through a collection agency.  Any ideas or experiences would be helpful. Thanks!

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Depending on the limit in your state, small claims court may be your best solution. You cannot deduct a loss in your taxes that has not tangibly occurred. In this case you lost your time and didn't get paid for it. This is not a deduction. But if your 1099 shows you made X but you really made less than that, contact the IRS and get guidance. They are helpful. Here is a book that may help you best:

Small claims court is probably your nest option. If you're working for another medical professional, like a PT, or DC, or DO, send a copy of your demand for payment letter to their state board, and any professional organization they are members of. It should help move things along. A collection agency will pay you pennies on the dollar. Definitely not worth it.

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