FORMS 1099-MISC. James Driver Federal, State, and Local Government Specialist

Transcription

1 FORMS 1099-MISC James Driver Federal, State, and Local Government Specialist

2 What is a 1099-MISC information return? Form required to report payments for: Services or, A combination of services and products 2

3 What payments must be reported? Payments of $600 or more for the year Paid in the course of your trade or business Certain payments to corporations Deceased employee s wages paid to estate or beneficiary (box 3) 3

4 Examples of Payments Non-employee compensation Commissions Fees All forms of remuneration for services rendered Prizes & Awards Royalties ($10 or more) Rents Medical and health care payments 1099 instructions, page MISC-5 4

5 Report Non-employee Compensation in Box 7 Reportable Payments of $600 or more to: individuals partnerships some corporations Paid for services of a person who is not your employee Payments made in the course of your trade or business Reportable payments include: commissions, fees for services (may include parts or materials in some instances), fee splits between professionals, referral fees, director fees, etc. 5

6 PAYEE S NAME CORPORATION Corporations are a separate entity from the owner(s) Payments made to John Brown (individual) require a 1099 Payments made to John Brown Inc. do not require a 1099 (with certain exceptions) Verify corporate status using form W-9 6

7 LLC s and Reportable payments Payments MAY be reportable to an LLC An LLC may be taxed as either a sole proprietorship, partnership, or corporation Report payments to sole proprietors, partnerships and possible corporations Obtain a W-9 to determine their status 7

8 Payments to Attorneys Section 1031 of the House Bill and Proposed Regulation codify the requirement to report payments to attorneys (individuals and corporations) gross proceeds, and payments for services of attorneys Effective 1998 and later years 8

9 Reporting Gross Proceeds If you can determine the amount of attorney fees included in the gross proceeds: report the fee in Box 7 report nothing in Box 14 Otherwise, report total gross proceeds in box 14 9

10 Medical and Healthcare Payments Report payments of $600 or more in Box 6 Report payments to all individuals, partnerships, and corporations Medical payments include doctor fees, drug testing, lab fees, physical therapy, etc. * Do not report payments to pharmacies or tax exempt hospitals 10

11 Payments that should not be reported on Form 1099-MISC payments to employees; such as fringe benefits or travel reimbursements (note: if not paid as part of an accountable plan, travel reimbursements and auto expenses should be included in wages and reported on W-2) generally, payments to corporations 11

12 General Exemptions to Filing Form 1099-MISC Payments for only merchandise Examples: Office Supplies Cleaning Supplies 12

13 General Exemptions to Filing Form 1099-MISC Payments to a corporation Exceptions: Payments to medical and health care providers Payments to Attorneys for legal services 13

14 Form 1099 Check Sheet Yes / No 1. Are the payments $600 or more to any one party for the calendar year? [ ] [ ] 2. Did you make the payments in the course of your trade or business? [ ] [ ]

15 Form 1099 Check Sheet 3. Is the recipient any one of the following: medical corporation, health care provider, legal services corporation, individual, sole proprietorship, partnership, profit or non-profit organization, or joint venture? [ ] [ ] NO to any of the above 3 indicates a MISC is not required. 15

16 Form 1099 Check Sheet REMINDER: The following DO NOT require a 1099-MISC: Payments for merchandise only Business travel allowances paid to employees (unaccountable allowance report on form W-2) 16

17 When to file Forms 1099-MISC Report payments on calendar year basis Provide copy of Form 1099 MISC to recipient by Jan. 31 of the following year File with IRS by March 1, if filing by paper or magnetic media or by March 31, if filing electronically Use Form 1096 transmittal form 17

18 Filing on Magnetic Media Required for 250 or more information returns 250 requirement applies separately to each type of form (i.e., 1099-MISC, 1098, etc) May file electronically instead Magnetic Media or Electronic filing permitted with less than 250 returns 11/19/2010 form 1099 instructions, pg. GEN-5 18

19 Common Errors that prevent issuance of correct" or required information returns Duplicate filing by paper and Magnetic Media/Electronically Failure to aggregate payments from all expense categories (use vendor files) Assuming payee is a corporation: because name is Company or Associates because an EIN is furnished 19

20 Common Errors (continued) Remember - some corporate payments require 1099 s (medical & attorney) Where materials and services are provided, ensure proper allocation or inclusion of materials - see Treasury Regulation A-1(a)(2) 20

21 IRC Section 6721 Penalty Failure to File by Due Date Penalty cause by Failure to: Correctly file by March 30 $15/return Correctly file after March 30 but before August 1 $30/return Correctly file August 1 or later $50/return 21

22 IRC Section 6722 Penalty Failure to Furnish to Payee $50 per Information Return No matter when the correct statement is furnished after January 31 22

23 COMMON QUESTIONS Can I file an extension to file Forms 1099? Yes! 30 day extension Send Form 8809 by the due date of the return An additional 30 day extension may be granted with written explanation What if I file the information returns late? Unless reasonable cause applies, be prepared to pay the 6721 and 6722 penalties. 23

24 COMMON QUESTIONS How long do I keep copies of information returns? Three years from the due date, unless backup withholding applies (4 years) What if I can t get a Form W-9 or the Form W-9 information from the recipient? Backup withholding applies 24

25 NO W-9 INFORMATION If no TIN provided: Backup Withhold 28% File Form 945 Don t issue the check Get the W-9 information before job is awarded 25

26 Are you required to do Backup Withholding (BUW)? If you make reportable payments to persons (or corporations) who have not furnished their valid TIN BUW applies to many payments reported on Form 1099-MISC examples: box 7 = NEC box 14 = gross proceeds paid to an attorney 1099 instructions, page GEN-3 and 4 26

27 How to report Backup Withholding Box 4 of Form 1099-MISC Form 945 This is an annual return, due January 31 ordinary deposit rules apply make Form 945 deposits separate from Form 941 deposits 27

28 TIN Matching Program - Description Online TIN Matching allows authorized designees to submit TIN/Name combination to match against IRS records Matching completed prior to filing information returns 28

29 Registration/Application The application includes mandatory online Terms of Agreement that restricts use of match information and must be accepted to participate Every user must register to use e-services Get PIN and password Register at 29

30 Questions?? John Darr (419) Wendy Speelman (419) Trudee Billo (419)

31 John Darr (419) Ashland Athens Belmont Carroll Columbiana Coshocton Fairfield Franklin Gallia Guernsey Harrison Hocking Holmes Jefferson Knox Lawrence Licking Mahoning Meigs Monroe Morgan Muskingum Noble Perry Portage Stark Summit Tuscarawas Washington Wayne 31

32 Wendy Speelman (419) Allen Ashtabula Auglaize Crawford Cuyahoga Darke Defiance Erie Fulton Geauga Hancock Hardin Henry Huron Lake Lorain Lucas Medina Mercer Ottawa Paulding Putnam Sandusky Seneca Trumbull Van Wert Williams Wood Wyandot 32

33 Trudee Billo (419) Adams Brown Butler Champaign Clark Clermont Clinton Delaware Fayette Greene Hamilton Highland Jackson Logan Madison Marion Miami Montgomery Morrow Pickaway Pike Preble Richland Ross Scioto Shelby Union Vinton Warren 33

34 List of Resources The semi-annual Federal, State and Local Governments Newsletter is available on the IRS Web site at Also on web site is The Taxable Fringe Benefit Guide which provides basic information for determining the taxability, withholding, and reporting requirements regarding employee fringe benefits. 34

35 List of Resources e-help Desk Toll Free Number Supports e-file, Electronic Federal Tax Payments System, and future e-services customers. Operational hours of the e-help Desk can be found at Social Security Administration electronic filing of wage reports (Forms W-2/W-3) through SSA s Online Wage Reporting Service (OWRS). Register for Internet filing at then click on Employer Services Online. You will receive a PIN assigned by SSA. Within two weeks of your registration, you will receive in the mail from SSA, a Password. 35

36 List of Resources IRS e-news for tax Professionals - Ohio To subscribe to this mailing list, please send a blank to mailto: ohio-subscribe@lists.qai.irs.gov to subscribe. e-services, including TIN Matching link to Tax Professionals; scroll to bottom of page and link to e-services-new Products. Must register to access products. 36

37 List of Resources Questions relating to information returns (forms 1099) contact Martinsburg Computing Center or call Fire System or Reporting Program Customer Service at or at Electronic submission of information returns (forms 1099) use FIRE system (Filing Information Returns Electronically) IRS Government Call Site EFTPS 37