1099 Forms Explained!
November 28, 2016 – Tax Form 1099 season is upon us. Whether you are a self-employed contractor, vendor, or business owner, chances are you are not fond of these mysterious 1099 forms. However, the IRS takes these forms very serious because they allow the agency’s computers to keep tabs on taxpayers as they match nearly all 1099s and W-2s (those are the wage report forms from your employer) against your 1040 and social security number. These forms are due to tax payers by January 31, 2017.
If you are expecting to receive a form in the mail, or as a business owner issue one, here are a few tips to help you avoid potential penalties:
1. Business Owners:Those who own a business, must issue a Form 1099-MISC to each person to whom you have paid at least $600 in rents, services (including parts and materials), prizes and awards, or other income payments.
2. Tax Payers: 1099 forms are used to report income that is potentially taxable to you. There are at least seventeen 1099 forms. You will receive a 1099 form in the mail if you received certain types of income during the year. Generally, you must report the income that is potentially taxable to you.
3. Deadlines: The normal deadline for issuing Forms 1099 is January 31 for mailing them to taxpayers. Then, the payer has until the end of February to send copies to the IRS. If you are expecting one, but did not receive one when this date passes, still report your earnings to the IRS. If you earned less than $600 as an independent contractor, the payer does not have to send you a 1099-MISC, but you still need to report the amount as self-employed income.
4. Exceptions: The list is lengthy, but there are some common reasons why you don’t need to send a 1099. Speak with Jeanine Hemingway for more information.
5. Dividend and interest income: If you hold dividend stocks in your portfolio and received dividend payments during the year, be on the lookout for a 1099 form, which should list your dividend income. If you have money in a savings account or CD, you can expect your bank to send out a 1099 form listing the amount of interest income you received during the tax year in question. 6. Withdrawal from Retirement account: Whenever you take money out of a retirement account, you’ll receive a 1099 tax form showing your total withdrawals for the year. You can use this information to not only file an accurate return, but keep track of how much you’re withdrawing from savings. There are many varieties on 1099 Forms. Don’t ignore reporting the income earned or sending a 1099 Form if you own a business. </P
Meet with Jeanine Hemingway, CPA and make sure to finish up the process before the looming deadline. This could save you major penalties if you get caught not filing the Forms.
Our experts can provide this service affordably and efficiently. Call today! Need assistance with, filing a tax return, preparing a tax return with a 1099 Form, or issuing a Form 1099, schedule a discussion today.