Since you're asking about
"retained earnings" vs paid earnings, so far I have found nothing about self-employeds or contract labor.
The IRS allows for accumulated (or retained) earnings in business [to a limit] in order for those businesses to grow and prosper (using it for expansion, etc.). They call it "bona fide business purposes. For service businesses, it's approx. $150,000, for regular business, it's $250,000.
I have researched a lot this evening, and til now, find nothing regarding self-employed or contract labor reporting/not reporting
"accumulated" earnings. Only earnings paid out. I'm still looking, though.
If it goes on our little part of the world as it does in most businesses: Banks only report to the IRS X amount on 1099's, therefore, they do not send us the forms, and typically we as individuals, do not report. Businesses "usually" do not report on less than $400, do not send us the forms, therefore, we do not report. But IF you read the entire publication on contract labor workers and the self-employed, the IRS actually expects you to report all earnings. They expect you to report on side businesses (lawn mowing, babysitting, shopping for the shut-ins, etc.), prizes, gambling proceeds, and just about everything else.
Again, it's a good idea to consult either a professional, or the IRS help line. The help line does not ask personally identifiable information, they will ask a few questions in order to deliver the best answer. And as I said before, they're spot on, helpful, professional, and usually get you answered quickly.
And it looks as if the U.S. Government isn't going to do anything but make it harder for its citizens, I'd really recommend a phone call. It's only going to get nastier as time goes on.
Ok, I've finished researching for the night, however, everything I am reading goes back to the main fact that
income earned is the reporting factor. We cannot report on "future earnings" as that is intangible, however anything we have in our accounts "per year" paid or otherwise is "present earnings" and I don't see any main differentiations on if it's in your hand or in the work account.
So it's up to the individual, call those who know...or not. I'd rather not take any chances.