Posted by Admin on 15. July 2016 01:05
There are some important steps that you need to follow when submitting form 1099 prior to filing deadlines. Some of these steps have been provided below.
Simple Steps to Filling 1099 form Before Deadlines
Step 1: Gathering the Information Needed
Prior to completing and submitting form 1099, it is necessary for you to have some information handy for independent contractors and the information is as follows:
· Total compensation amount paid to the independent contractor during a particular tax year.
· Legal name of the contractor
· Address of the contractor
· Taxpayer identification number of the contractor. This might be his or her Social Security Number unless Resident Alien or Non-Resident.
There is a standard way of obtaining this information and that is having the contractor fill out form W-9. This a form which collects the taxpayer identification number of the contractor along with tax classification, business name, address and the legal name. the best practice is having a W-9 on file for every independent contractor hired. Having the independent contractors filling out and returning the W-9 to businesses is considered one of the most important administrative jobs that businesses complete post engaging the services of these contractors. Businesses can always check their bookkeeping records for confirming the amount paid to the independent contractors during one whole year.
Step 2: Submitting One Copy to Independent Contractors
Once the businesses have the information that they require, they can use this information for filling out form 1099. Their next step would be mailing section “Copy B” to the independent contractors within 1st February.
Step 3: Submitting One Copy to the Internal Revenue Service
Copy A of the form needs to be submitted to the Internal Revenue Service within 28th February if an individual or a business is filing by mail. If the filing procedure is being carried out electronically then the deadline is 31st march. Depending on the location of the business, business owners might also need to file 1099s with their states. Therefore, it is important for them to check in with their state department of taxation in order to make sure that they are compliant with the local requirements of form 1099 filing.
Deadline Information on Form 1099 Filing for the Independent Contractors
While it is completely the responsibility of an independent contractor’s client to send the contractor a copy of form 1099 within 1st February, independent contractors are required to file their income taxes in the month of April. In case they do no receive the form from their clients within 1st February, they need to request for the form.
Consequences of Missing the Filing Deadline for Form 1099
Missing the filing deadline for form 1099 should not be taken as the end of the world. However, independent contractors will be required to bear certain penalties for late 1099 form. The penalties are as follows:
· $30 for filing within 30 days late
· $60 for filing more than 30 days late but within 1st August
· $100 for filing on or after 1st August
In case, an independent contractor intentionally fails to file form 1099, he or she might be subject to a penalty of minimum $250 per statement without any maximum.
Posted by Admin on 5. July 2016 00:46
If you are the owner of a business in the United States and if you happen to hire the services of independent service providers or contractors, it is necessary for you to issue a certain special type of tax form to these contractors or service providers. This tax form is called the IRS Form 1099. It is important to note in this context that there are different variations of form 1099. To name some forms, there is form 1099-INT for interest income received by individuals from banks. Here, we will have a look at the IRS Form 1099-MISC. This is a form used by small businesses for reporting miscellaneous income paid to other individuals during a particular tax year.
Income Type Reported on Form 1099-MISC
Form 1099-MISC is basically used for reporting the payments made to the independent contractors or service providers and not to employees. Payments provided to employees are reported on Form W-2. Independent service providers or contractors are basically small service organizations or self-employed individuals hired by business organizations. The most prominent examples that fall in this category of service providers include web developers, graphic designers, freelance writers, cleaning services, grass cutting and landscaping services, forum moderators and other self-employed service providers. Here, it is important to be very clear on the point that independent workers are self-employed and they are not employees. The 1099-MISC is also used for reporting the payments made to partnerships, attorneys and unincorporated business service providers.
What is the $600 Threshold?
Business organizations that make a payment of $600 or more to independent contractors are required to complete form 1099-MISC. these organizations need to add up all the payments that they make to a payee during a particular tax year. If this amount exceeds $600 during the year, the organizations need to issue form 1099 for that particular payee. However, if the compensation amount is less than $600 for the tax year, the organization is not required to go through the procedure of issuing form 1099-MISC. here it is important to note that there are some special threshold rules that need to be followed when reporting other varieties of 1099 form payments like fishing boat proceeds, sales of consumer goods for resale and the payments made to the attorneys. It is necessary for individuals to go through the instructions provided on form 1099-MISC in order to get the details on the procedure of reporting such payments.
The Correct Time to Issue Form 1099-MISC
When issuing form 1099-MISC, there are two significant 1099 due dates that need to be kept in mind. which are mailing form to the independent worker and reporting of 1099 forms to IRS.
Posted by Admin on 22. June 2016 23:58
Form 1099 can be taken as a vague IRS term. This is because there are different varieties of IRS 1099 forms. All the different forms have different purposes based on varied activities. Therefore, there are different filing requirements when it comes to IRS form 1099. Any tax-exempted organization that is required to file the IRS 1099 form needs to consider different factors in this procedure. The type of form that the organization is required to file is mainly dictated by the income type that the organization earns during a particular tax period.
Different Types of 1099 Forms
It is necessary for a particular organization to determine the type of form 1099 that it is required to complete prior to understanding the requirements, the annual submission and the proper cancellation of 1099 information form. A brief illustration of the different varieties of forms 1099 within the income type and series associated with each form has been provided below:
· 1099 B - Proceeds from Barter Exchange and Broker Transactions
· 1099 A - Abandonment or Acquisition of Secured Property
· 1099 CAP - Changes in Capital Structure and Corporate Control
· 1099 C – Debt Cancellation
· 1099 H – HCTC or Health Coverage Tax Credit Advance Payments
· 1099 DIV - Dividends and Distributions
· 1099 K - Third-Party Network and Merchant Card Payments
· 1099 MISC- Miscellaneous Income
· 1099 G - Government Payments
· 1099 LTC - Accelerated Death and Long- Term Care Benefits
· 1099 INT - Interest Income
· 1099 PATR - Taxable Distributions From Cooperatives
· 1099 SA - Distributions coming from Medicare Advantage MSA, HAS or Archer MSA
· 1099 OID - Original Issue Discount
· 1099 S - Proceeds from Real Estate Transactions
· 1099 R - Distributions from Annuities, Pensions, IRAs, Retirement or Profit-Sharing Plans and Insurance Contracts.
· 1099 Q - Payments from Qualified Education Programs (Under Sections 529 and 530)
Non-Profit Tips to Keep in Mind When Issuing Form 1099 MISC
There are different varieties of form 1099 in IRS series but here we will have a special focus on form 1099-MISC. this is because form 1099-MISC is one of the most commonly used IRS forms when it comes to providing different services to the non-profits. Apart from this, it is also important to note that form 1099-MISC is specifically for the tax-exempt and miscellaneous income organizations who fail to completely understand the use of this form and other IRS submission requirements. Various non-profit organizations make the use of the services coming from different vendors. They do this an annual basis like the services of independent contractors and consultants who do not work in the form of incorporate entities. In this case, it is important for non-profit organizations to provide the individuals with form 1099-MISC at the completion of one year.
Posted by Admin on 24. April 2016 21:23
Reporting COD or Cancellation of Debt is a procedure involving two varied information documents and they are the IRS Form 1099-C or cancellation of Debt and the IRS Form 1099-A or Abandonment or Acquisition of Secured Property. IRS Form 1099-A is generally provided to both tax payers and tax authorities when lenders repossess, foreclose or have reasons to suspect the abandonment of property. Whether or not an individual receives any of these forms within time remaining, it is important for an individual to report COD or Cancellation or Debt that he or she might have owed on his or her personal income tax. The acts of foreclosure, abandonment or repossession are treated in the form of exchange or sale of property with the rules of loss of gain subsequently being applied. The income arising from cancellation of recourse debt tends to be taxable irrespective of the fact that whether the income is surrendered or returned.
Importance of Information Provided in Box 5 of the Form
IRS Form 1099-A is basically a kind of information form including the property’s fair market value, property description, balance of debt outstanding and whether or not the debt is identified as non-recourse or recourse. In Box5, the Yes or the No checkbox, specifically indicates whether or not the borrower is liable personally for the debt repayment. Information provided in this box is considered very important. This is due to the fact that is there is a No in this box; the debt is identified as non-recourse.
This means that the borrower does not take the liability for the debt personally. However, in case of recourse debt, the purchaser does not take liability but in a scenario where the debt has been cancelled, the borrower might gain which comes in the form of additional taxable income by way of the removal of the burden of tax repayment obligation. In scenarios where recourse loans lead to repossessions or foreclosures, Form 1099-A offers important information in regards to the additional taxes which are owed on debt-generated income.
Using the Services of Experienced Tax Preparers
It is always quite beneficial and even wise to use the services of an experienced and sincere tax preparer when it comes to transferring information from IRS Form 1099-A to the income tax returns properly. It is always expected by individuals to include IRS Form 1040 Schedule D with the tax returns. It is important for the taxpayers not to overlook Cancellation of Debt events when trying to file their income tax returns. It is also quite beneficial to visit the website of the Internal Revenue Service or the IRS in order to get more and complete information in this field.
Posted by Admin on 27. March 2016 21:16
It is quite easy to view the IRS form 1099 as a representation of a huge liability. This is because the form reports income which has not been taxed as a withholding. It can be unpleasant for individuals to receive form 1099. However, it is important for individuals to set aside the right part of their income during the year ion order to make the payments for their taxes by submitting form 1099. It is also to be kept in mind that form 1099 can go a long way in complicating the tax return of an individual. This is because the task of tracking down different varieties of taxable income can be challenging. Forms 1099 are available in varied flavors and these flavors are generally found in the letters coming post the numbers. Therefore, it is always very important for the tax payers to save time by staying organized with their tax payments. There are other necessary and important tips that also need to be kept in mind when submitting form 1099 and they are as follows:
Taking the Advice of Experienced Tax Payers
If you are completely new to filing form 1099, it is always beneficial for you to take the advice of other experienced tax payers. Experienced tax payers can give you the details of the procedure that you need to follow in paying your taxes. They will also help you out with the ways in which you can avoid paying penalties for late payments. If you want to avoid any kind of problem when filing form 1099, take the advice of senior and experienced tax payers. They are sure to help you out with every tax paying situation and they will also help you in determining your taxes in a smart and confident manner.
Decide About the Right Filing Procedure
So, you are completely prepared to file form 1099. This is the time for you to decide on how to file the form. Most taxpayers generally try taking the help of online tax filing service providers for completing and filing their tax returns. It is important for the inexperienced tax filers to get personal help and this would make them feel very comfortable. This personal help can come from franchise tax operations or from accountants. Taxpayers need to be very careful and diligent in making the choice of the right online tax filing service provider or tax preparer. They need to take enough time in checking out the experience and the knowledge of the service providers or the tax preparers.
Taxpayers generally tend to get quite intimated by the entire tax paying and filing procedure. However, this must not slow down their filing procedure. It is also important for the taxpayers to take good time in filing form 1099. They should make sure that there are no mistakes made in the filing procedure.
Posted by Admin on 9. March 2016 23:33
At present, the IRS is found challenging the status of all those workers with the status of Independent Contractors. Between the years, 1988 and 1992, the Internal Revenue Service reclassified over 400,000 Independent Contractors as employees. By doing this, the IRS collected around $52.5 million as taxes. During the year 1992, the IRS conducted nearly 1,700 business audits and reclassified around 90,000 workers as employees. By doing so, the IRS was successful in collecting $19 million as tax through tax assessments. If you happen to be a businessman using the services of Independent Contractors, your business might be in danger.
Rules on Making Tax Payments by Individual Contractors
It is important for business owners who are into hiring Independent Contractors to remain prepared and fully aware of the fact that the IRS has been reclassifying these contractors into employees. Failure to remain aware of this fact could cost the business owners quite a good amount of money, grief and even the chances of losing one’s business. There are many business owners who like to go with the rules when it comes to making tax payments.
So, what are the rules exactly? If a certain worker is classified as independent contractor, the particular business hiring the contractor must file Form 1099 with the Internal Revenue Service in circumstances when gross compensation for the contractor exceeds $600 during the tax year. On the part of the Independent Contractor, payments of the income taxes are compulsory along with the self-employment taxes also known as Social Security taxes. Independent contractors also need to make it a point to pay the worker’s compensation insurance premiums and the unemployment taxes along with the state income taxes. This actually means that in case an Independent Contractor gets a form 1099 issued, he or she is directly responsible for paying the due taxes. It is the responsibility of the independent contractor to make all the tax payments.
What if Individual Contractors Do Not Have the Assets or the Money to Pay the Taxes?
In case an independent contractor does not have the assets or the money to make the tax payments, he or she becomes a good candidate for getting his or her status reclassified. In simple English, it means that some other entity or individual is going to make the tax payments. So, who is the other organization or entity which would be making the tax payments? The IRS will actually go after the business or the person issuing form 1099 to the independent contractor in this scenario. The businesses that use the services or hire subcontractors or self-employed workers need to be very careful regarding using their services. They need to take care of the procedure in which they use the services and even the basis of using the services of such individuals.
Posted by Admin on 21. February 2016 22:14
If you work in the form of an independent contractor, it is quite likely for you to receive the IRS 1099 MISC form. You will receive this form from the businesses that made payments of over $600 for the services that you provided. However, there are a lot of people who do not receive this form. There are even people who completely misunderstand the MISC form. The 1099 MISC is in no way a tax return per se but it is basically information return. IRS uses this form for tracking the amount of revenue that an individual contractor gets from his or her clients. This form can be filed in person or if you want you can even file 1099-misc online.
The Only Thing that Needs to be Done
An individual who pays $600 or something above this amount to an independent contractor should file form 1099 with the Internal Revenue Service. However, there are certain exceptions to the $600 figure. An individual issuing form 1099-misc must send it to the contractor within 31st January. The individual must file this same form with the IRS within the month of February. An individual who receives IRS 1099 MISC form does not need to do anything with the form. The only thing that needs to be done is carrying out a thorough check for ensuring that the payments that have been reported are perfect and accurate. But, what if an individual does not receive this form?
What to do if you do not Receive Form 1099 MISC?
For many people, it goes completely out of mind to file 1099-misc online. Because, this is information return, people are not able to get around it and it simply slips out of their minds. Individuals need to pay a penalty if they are unable to file form 1099-misc with the IRS and the contractors and this penalty is usually under $100. Briefly speaking, this is not much of a penalty for motivating the people. However, it is to be noted that as an individual contractor, if you do not receive form 1099, you still have the obligation of reporting the revenue that you earned from serving in the form of an individual contractor. The fact that the form of was reported to the IRS does not mean that you get the flexibility of not paying your individual taxes. You must bear the responsibility of reporting your revenues whether you received form 1099 misc or not. It is necessary for you to go through your books and identify the amount you were paid from your customers.
An Important Concern
Another important thing that you should keep in mind is that you must not get overwhelmed with the new business that you have in hand and forget to pay your taxes. It is always good for you to get hold of an experienced and professional tax consultant who would be able to calculate the estimated taxes. The rules and the regulations surrounding the payments of taxes for form 1099 MISC is a little complex due to the details involved. Therefore, you must be very careful when filing the tax return form. It is best to file 1099-misc online.
Posted by Admin on 14. February 2016 22:36
Do all the different people who receive 1099 form get the same form from the person, the government unit or the company who made them their payments? No, this is not the case. Each varied type of income mentioned has a completely different form 1099 associated with it. Independent contract workers generally receive form 1099-Misc standing for miscellaneous income. In opposition to various other forms which are more particular for specific income types. The businesses or the individuals receiving interest income from a bank generally get 1099 INT forms from their respective banks. Form 1099 interest can also be filed by individuals paying another interest.
A Clear Definition of Form 1099 Interest
Form 1099 INT is a form which is basically used for reporting interest income from brokerages, banks and other different financial institutions. Such earnings always tend to be reportable and they are usually but not always taxable. Although 1099 INT forms are in no ways needed to be issued for amounts which are less than $10, individuals are still supposed to report interest on their returns. The form breaks down major varieties of related expenses and interest income.
Breaking Down 1099 Form INT
Taxpayers receiving more than $15, 00 of taxable interest are required to list all the payers of part 1 of Schedule B on form 1040 or Part 1 of Schedule 1 on 1040A. The interest paid in the form of cash-basis income is reported on form 1099 interest. However, it is to be noted that the income which is owed but not paid is not reported on form 1099 INT.
Filing Requirements for Form 1099 INT
When an individual files his or her taxes, he or she needs to attach the copies of form 1099 INT received but they are not required to report this information on the form on their tax returns. This is because each and every financial institution, bank or any other entity which pays minimum $10 of total interest in a year should prepare 1099-INT, send the individual a copy of the form within 31st January and then file the form with the IRS. The information provided on the form is used by the IRS for making sure that an individual reports the right interest income amount on his or her tax return.
Taxation of Interest
When an individual receives 1099-INT, he or she needs to understand the content reported by each box in the form. This helps the individual in reporting his or her interest on appropriate lines of tax returns. Box 1 reports taxable interest received by an individual while Box 2 reports the interest penalties charged for withdrawing money from a particular amount prior to the date of maturity.
Posted by Admin on 27. January 2016 22:17
Federal form 1099 is basically a tax form which is used for reporting income received by an individual. This income needs to be reported on an individual’s tax return. A proper 1099 form is sent to the IRS by the payer and the copy of the form to the individual who receives the payment in the form of income. There are different types of 1099 with each type being designated by one or more than one letter like 1099-MISC and 1099-K. Each type of 1099 form is used for reporting different varieties of income received by individuals. There are a lot of people who wonder how to file form 1099 and such people can get an answer to this question below:
What Needs to be Done with Federal 1099 Form?
So, how to file form 1099? When an individual prepares his or her tax returns, he or she needs to report all taxable income received during that particular tax year. The information on income is offered to individuals through different forms like 1099 or a W-2. Different types of income received by different individuals are genuinely reported on 1099 form. If an individual has income reported on form 1099, the individual will have to use form 1040A or 1040 for preparing his or her tax returns. The amounts from the 1099s are entered directly on 1040 or there might be other forms involved.
E-filing Tax Returns with Income from Etax1099
One of the easiest procedures of preparing tax returns with income on 1099 is by using the online option. There are a number of online companies that offer e-filing options to the tax payers. These companies possess e-filing tax software by the use of which, the users do not need to worry about the specific forms that they need to fill out or the numbers that they need to enter from the 1099. The e-filing software available with these companies guides the taxpayers through the entire procedure of entering information, calculating and ensuring that the right tax forms have been filled. Users can create free accounts for getting started with the procedure of preparing tax returns online.
What If an Individual is not Entitled to Get 1099?
It is quite possible that an individual might be paid such a minuscule amount that the payer might have not found it necessary to issue form 1099 to the individual. In this case, regardless of whether the individual received the form or not, reporting taxable income is mandatory. For people who do not receive form 1099 at all, there is the form 4852 that can be used in the form of a substitute. However, in this case, the missing form report should be submitted to the IRS in order to get proper guidance in the proceedings that need to be followed.
Posted by Admin on 17. January 2016 21:55
There are a lot of people for whom filing taxes is a tedious job. Taxes are a little stressful with all the important forms that are required to be filled out and then mailed accordingly. Nevertheless, with the growing trend of carrying out transactions online, more and more people are found engaging themselves into the procedure of e-filing their 1099 forms. With efile 1099, people can easily go through the different steps that need to be followed carefully. They also get the flexibility of filing the taxes without going through a lot of hassle. Although, to file 1099 online is not a very popular idea among many people, e-filing has now changed this conception. By getting the ease of filing their taxes online, people need to go through less stress. Even the IRS is in support of e-filing because e-filing is beneficial for the IRS as well. E-filing helps in the minimization of paperwork.
Programs for E-filing 1099 Online
There are different programs that people can choose to file 1099 online. Due to the fact that the tax codes keep on changing annually, online programs that keep updating on the tax codes, offer major benefits to the users. In the meantime, the IRS offers similar programs and renders its services free for the ones who meet income guidelines. The users in this scenario are in no ways solicited with services and products that they could purchase.
The Benefits of E-Fling
To e-file 1099, the major requirements attached with the conventional tax filing are also put in demand. The information of the filer is assured to remain safe from encryptions which are commonly used by online programs. The users get the flexibility of remitting their return once they are done with the e-filing procedure. The returns are sent out to the Internal Revenue Service or IRS which in turn verifies whether the return is acceptable or not. One of the best things about various online programs is that these programs have the capacity of accepting larger returns and most returns are even accepted at a specified time.
When e-filing 1099 tax forms, there are increased chances of the tax application being processed faster with the users having to wait for a very short span of time for the entire procedure to be carried out successfully. The people who e-file their 1099 tax forms are also offered with the opportunity of checking major discrepancies which might be reflecting in their tax applications. However, it is to be noted that e-filing tax returns requires the services of a professional because it is a little complicated. However, when making the choice of professional companies that offer e-filing services, it is important to take some time and evaluate the quality of the e-filing services provided by the company.