Tax Problem Solution

This document is intended to tell the reader how to avoid a tax problem of the type that I had and/or how to win in an arbitration hearing, if it comes to that.
I work as a consultant, an author and a stock/bond/option investor. As a result, I get Form 1099s from those that I deal with. If you work at a regular job, you get a Form W-2 from your employer.
A Form W-2, Wage and Tax Statement, is used to report wages paid to employees, the taxes withheld from the employees wages and also the FICA taxes withheld for Social Securoty. Employers are required to complete a Form W-2 for each employee to whom they pay a salary, wage, or other compensation, as part of the employment relationship. An employer is required to mail out the Form W-2 to employees on or before January 31 of the next year. The Form W-2, along with Form W-3, generally is required to be filed, by the employer, with the Social Security Administration by the end of February. Relevant amounts on Form W-2 are reported by the Social Security Administration to the Internal Revenue Service.
I'm not an employee, thus I receive Form 1099s from places where I earn money. A Form 1099 lists the amount of money paid to feeelancers/contractors. The income received by the freelancer will be noted, but there won't be any deductions for federal and.or state income taxes, nor will any deferred compensation, social security, or medical deductions be taken. Since the Form 1099 recipient is not an employee of a business, a business is obligated only to tender the income to the contractor sans any deductions. Form 1099 income is also reported to the Internal Revenue Service, so that the IRS has the opportunity to track income from freelance workers. The freelancer will be obligated to make his or her own tax calculations and forward any required payments to the IRS.
For several years, I had been using a well known tax preparation service to do my taxes. I would provide the person assigned to prepare my taxes with the necessary data and the tax preparer would begin preparation of my tax return. If there were questions from the tax preparer, I would provide more data, as best I could. Things worked fairly well for some eight tax years. The ninth tax year seemed like more of the same thing. However, there was a major problem with my ninth tax year tax return. I managed to solve the problem and the process that I used may well help others.