1099 Miscellaneous Income Information Sheet



1099 Miscellaneous Income Information Sheet

What are 1099’s:

They are the tax forms used for all contracted – non- employee- work for a tax year. 1099’s are only to be filed for business to business transactions with the exception of personal rentals. This can include professionals such as accountants, bookkeepers, attorneys and general labor for which there were no payroll taxes withheld or employee status granted. In addition to service providers and laborers on personal rentals, landlords also must receive a 1099 for all rents paid over $600.

Who gets 1099’s:

1099’s are filed for all service related work which exceeds $600. If you own a business or a rental property and an individual or business was paid $600 or more a 1099 must be filed.

Where are they sent:

1099’s include copies for the payer, the recipient, the state and the IRS. These copies are also referred to as Copy A ( Red for the IRS), Copy B ( gray/recipient), C ( gray/payer), Copy D or 4 for the state. There is also a 1096 ( a summary page which must be included with your Copy A for the IRS). Typically, the IRS will receive Copy A with the 1096 by January 31st. All other copies, with the exception of the state copy, should be sent to the respective parties by February 28th. The state does not get a copy rather it should be included with the information provided to your accountant or CPA.

What are W-9’s:

W-9’s should be collected for all service providers. This form gathers Name, SS#, company name, EIN (if there is one), and most current mailing address. All of this information is required to complete the 1099’s. If no W-9’s were collected it is the responsibility of the payer to collect this information from all of the various service providers needing 1099’s for the s tax year. Although a 1099 can be produced with an official W-9, it is in the payer’s best interest to obtain completed W-9’s upon initiating a business relationship to ensure all parties are aware of the terms of the relationship.

How much money needs to have been paid to require a 1099?:

The dollar amount required for a 1099 is a minimum of $600.00.

Why should I file a 1099 or expect that I receive one from another company?:

Contract labor is an expense for a company. When a service provider or contractor has been paid more than $600, which would be line itemed in a tax return, a tax preparer or the IRS will be looking for a 1099. A 1099 creates a paper trail and it intended to hold the recipient accountable for their earnings. If there is no 1099 there is a potential over a period of time the business owner or payer could be held accountable for those taxes. It is also within the authority of the IRS and State Employment Department to audit your accounts and asses whether they feel the people you have hired are actual contractors or employees. If any service provider is defined as an employee by the IRS or state the payer will be held responsible for paying payroll withholdings. Because of this it is important to be attentive of the following:

• Make sure the service provider fits the state and federal definition or an “independent contractor”

• Once they meet the requirements, they must fill out a w-9.

• Make them aware they will be 1099ed and responsible for paying their own taxes.

• Create a written contract with them to ensure there is an understanding you, the payer, will not be paying their taxes and in the event work was no longer available to them they are NOT eligible to receive unemployment benefits.

In addition, for those who are contractors, it benefits you to receive 1099’s because this is the only means to demonstrate legitimate income on a tax return for the purpose of creating an income profile and credit. This is of assistance when going after home loans or financial assistance with any small business.

1099 Service: This process begins in early Januar.y The first deadline is January 31st. Charge: $45/1099.

My 1099 service provides you “the company” with all of the needed copies of 1099’s which need to be sent out and filed. All I require is W-9’s for all service providers or other entities or the information listed below:

▪ Service provider name

▪ Company Name ( if one available)

▪ Social Security Number

▪ EIN ( if available)

▪ Current Mailing address for individual or business

▪ Total monies paid to this service provider

Please note: only amounts larger than $600 for service providers require this information or a W-9.

................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download