Posted by Admin on 23. September 2016 05:21
No one likes to hand over their hard-earned money in taxes. The following tips will help you in saving money if you are self-employed or work on a freelance basis.
What is Self-Employment?
If you have a business of your own, then you will fall in the category of self-employed people. Maintaining a business is not easy as you need to keep a watchful eye on different kinds of paperwork. But when it comes to tax deductions, you have far more avenues to cream the opportunity. To get the most out of the tax benefits and deductions, you need to know about the self-employment taxes and the ways in which you can keep the money in your own pockets.
What is Freelance Employment?
For those people who fall into the category of freelance workers, life is magical, to say the least. They are their bosses and can work when they feel like. There is no restriction on them. But even they are subjected to some taxation. They too fall under the IRS self employment tax category, as they are earning something.
Useful Tips to Reducing the Taxes for Self-Employed People
If you are looking to know how to reduce self-employment taxes, then this is the article you need to refer to. If you know, the ways you can benefit a lot from the tax deductions for self employed people. The following are some tips, which will help you in saving on the taxes:
• Medical Insurance Concessions
You can deduct medical coverage premiums for yourself, your life partner, and your wards as conformity to wage. This incorporates premiums for long haul care protection. The arrangement does not should be in the business name – it's deductible regardless of the fact that it's in your name.
• Keeping it Simple
Unless you have to shape an organization or an enterprise for reasons unknown, stay with a Schedule C, Sole Proprietorship. It's the least complex approach to record, and there's nothing you need to disband that you precede towards something else. In case you're searching for legitimate assurance, get the protection of the law.
• Automated Recordkeeping
Little business record keeping doesn't need to be as hard as it used to be. Shoeboxes, brimming with folded receipts ought to be a relic of days gone by. Use individual fund programming that is synchronized to your ledgers. Programmed record keeping spares you time, as well as it's less inclined to failures.
• Itemized and business deductions
By taking trade reasoning rather than an organized concession, you diminish your balanced gross salary and your independent work charge. At whatever point conceivable, deduct a cost or a bit of a cost as an operational expense. This will help you in getting real self employed tax return benefits.
There are many other ways, which will ensure that your money stays in your pocket. Paying taxes in time is the duty of every honest citizen. One must not shy away from paying taxes but keeping a close watch at increasing savings is also important.
Posted by Admin on 10. September 2016 03:17
Businesses outsourcing their functions to independent contractors need to make the use of specific forms to file taxes. The Internal Revenue Service uses the term Independent Contractor for designating the type of workers who contract their services to different businesses. First of all, businesses need to make sure that there make use of the right tax forms when filing the taxes for their actual employees.
Tax Forms for Independent Contractors
Once the status of an individual receiving payment in the form of an independent contractor is determined, the organisations first step is requesting the contractor to fill form 1099-MISC. this is one of the most primary forms that need to be filed by the independent contractors for coming up with accurate payment of taxes. The threshold for taxable compensation reporting is $600 to the independent contractors for the services that they provide during a tax year. 28th February is the deadline within which form 1099-MISC needs to be filed with the IRS. However, the deadline for filing the form electronically is 31st march. Additionally, employers are required to offer a copy of the form to the independent contractors within 31st January of the year following the payment. Independent contractors have the obligation of paying their income taxes along with their self-employment taxes to the IRS. Nevertheless, it is important for businesses to remain aware about the fact that if the independent contractors do not pay their federal or state taxes, the IRS gets the flexibility of mandating the employers to make payments of the withholding taxes along with interest.
W-2 Forms for Actual Employees
W-2 forms serve in the form of earned income statements including the total income of the employees. These forms also include the details of specific amount of state, social and federal security taxes which are withheld from the paycheck of the employee. It is important for employees to receive the W-2 form from their employers within 31st January of the particular tax year. However, it is to be noted that the employers have time till 28th February to file the W-2 forms with the Internal Revenue Service. There are major penalties that can be incurred in case the employer does not meet the deadlines mentioned above.
State Requirements for the Independent Contractors
It is also significant for tax payers to remain aware of the different state requirements when it comes to making payments to the independent contractors. The state government can easily be contacted in order to get detailed information about the state requirements on paying taxes by the independent contractors. There can be absolutely no doubt in the fact that independent contractors are a good and valuable resource for the small businesses and this goes special for special assignments and time-limited projects. Therefore, it is necessary for businesses to ensure that they maintain correct record and make right payments while complying with the regulations and the requirements of the IRS.
Posted by Admin on 25. August 2016 04:28
The IRS 1099-MISC form reports certain type of payments during the fiscal year to the IRS. It includes rents, royalties, prizes and awards etc. ETAX1099 is an IRS certified tax e-filing service partner, with user-friendly matched software, it deals with the taxes payable on your miscellaneous income apart from salaries, wages and especially in case of independent contractors, say employers/payers and small business owners.
Here is a graphical representation for e-filing your 1099 MISC form online with ETAX1099. By following these simple and easy steps you can file your 1099-Misc tax online. If you have any queries when you are e-filing 1099 taxes you can get in touch with our customer support team. They will help you 24/7 regarding any queries related to 1099 taxes. Head over to ETAX1099.com and e-file your form 1099 before the deadline to avoid any penalties.
Posted by Admin on 25. August 2016 03:48
Filing tax form 1099 can be a challenging task and this goes common even for the ones who are most experienced in the taxpaying procedure. Thus, what are the methods that taxpayers need to use in order to cope up with this daunting task? The very first thing that tax payers need to do is that they should not take stress and start panicking. Although taxes can turn out to be overwhelming, there are always some steps that can be taken to make it successfully through the filing season. Some of the best tips on saving a good amount of time when filing form 1099 are as follows:
Using a Dependable Filing Service
There are a lot of people who like to skip the DIY procedure and save time when filing their tax forms 1099. These people can always move ahead and take the services of the online 1099 tax efiling service providers offering filing services and submitting the 1099s on behalf of the actual tax payers. There are many options that can be considered by the tax payers. It is always best to go with dependable and cost-effective service providers that have a good repute in the market. Go for providers with support systems for employee payments and independent contractors. You must also choose one where you would not have to bear any extra cost of generating form 1099 at the end of the tax year. There are tax filing service providers that automatically create and even send the form electronically to the contractors. These providers even e-file copies of the form with the tax documents of the contractors.
Taking the Services of a Tax Accountant or a CPA
Certain tax accountants or CPAs do the task of collecting necessary information on behalf of the tax payers and make sure that the 1099s are filed within the deadline. However, it is important for you to keep in mind that these tax accountants or CPAs will charge extra for these services.
Always keep in mind that the Internal Revenue Service is about documentation and nothing else. It is necessary for the tax payers to receive their forms within late January or early February. The form will detail the compensation amount of the tax payer along with the amount of state or federal income taxes. It will also cover the Medicare payroll and the Social security taxes. There are many taxpayers who are completely unsure about the procedure and the steps that they need to follow in paying or filing their tax forms. There are others who do not have any information about the right filing documents that they need to carry or have handy when filing tax form 1099. It is highly recommended that tax payers need to be organized when trying to pay their taxes. They need to make a folder where they can always store their tax related important documents.
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Posted by Admin on 28. July 2016 23:13
There can be absolutely no doubt in the fact that there are several critical things to remain aware of when preparing to issue form 1099-MISC. This actually means that organizations really need to think properly about this form. They need to have a clear understanding of the entire procedure and the purpose of this form. The IRS form 1099-MISC is a form with which the IRS gets the flexibility of tracking and even receiving all the money that is due to the IRS. Some examples of tracking down the payment thresholds and the vendor disbursements for issuing form 1099-MISC can help people get a complete understanding of the entire 1099 procedure. Some examples that can help you in eliminating confusions in regards to form 1099 tracking and issuance are as follows:
Example of Compensation Threshold
For example a certain contractor takes classes at some non-profit organization and is compensated with an amount of $500. The contractor is not paid any other compensation as he or she did not deliver any other services during the tax year. The annual total of the contractor is $500 and therefore he or she will not be issued form 1099. Another example where a certain contractor takes classes at a non-profit organization and receives a compensation of $600, form 1099 is issued with threshold breached as it was single payment. There is another example where a certain contractor takes a single class at a non-profit organization and receives a compensation of $250. The contractor takes two more classes and is paid $250 as compensation each time. The contractor teaches on three occasions in an entire tax year and therefore paid a total compensation of $750. The 1099 form gets issued with the threshold breaches with multiple payments.
Threshold Exceptions for Form 1099
It is worth noting that as per the IRS, there are certain incidents for the form 1099 issuance defying the threshold rule:
· Of an individual has paid a minimum of $10 in the form of royalties to any organization or individual.
· If an individual is made certain Broker payments in place of dividends.
· If an individual has paid over $600 in the form of gross payment to an attorney.
· If an individual has made certain direct sales amounting to $5000 for consumer products.
· Individuals must make it a point to use form 1099-K if they made payments using a debit or a credit card for including network transaction through third party.
In all the above situations, it is always very important to consult an accountant. Apart from this, the website of the IRS can also be visited in order to get detailed information on understanding the entire procedure.
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.