The world is an ever-changing place, and the world of tax filing requirements is no exception. The IRS has once again extended its oversight authority requiring additional informational disclosures and reporting for Form 1099 Miscellaneous Income.
On the 2012 tax filings for businesses, including Schedule C, Schedule F, partnerships, corporations, and s-corporations, taxpayers are required to answer the following questions:
• Did you make any payments in 2012 that would require you to file Form(s) 1099?
• If “yes,” did you or will you file all required Form(s) 1099?
In order for Saville to comply with the IRS disclosure requirements, we need to know whether or not you have filed all of your 1099s.
Please see completed Form W-9 that will provide you with all of the necessary information to issue a Form 1099-MISC for our services.
Issuing guidelines for Form 1099-MISC:
1. Must issue for payments made on behalf of trade or business for:
- At least $600 in rents, services, and other income payments
- Services include accountants (like Saville), attorneys, other professional service providers, repairs and maintenance work, and all contract laborers
• At least $10 in royalties
2. General exceptions:
• You are not required to issue a 1099 to a corporation, unless amounts are for medical and health care payments or payments to attorneys.
• You are not required to issue a 1099 if you paid electronically, such as through a credit card, debit card, PayPal, or gift card.
These payments will be reported by the card vendor on Form 1099-K. (See additional information below in section titled New Form 1099-K.)
There are multiple options for preparing and filing your 1099’s if you do not have your own software to do so.
• If you prefer to file your 1099’s by hand and on paper, forms are generally available at office supply vendors. You can also call the IRS to order official forms (1-800-TAX-FORM; 1-800-829-3676) or order online.
• To paper file, you must have official IRS forms with a scannable red copy A for filing with the IRS.
• You can also electronically file your 1099’s easily online. The IRS has provided a list of e-file providers for information returns, like the 1099-MISC.
• We use 1099 Pro, Inc. to electronically file 1099’s. The cost is minimal and you only need internet access to use their service. The maximum cost is $3.49 per 1099 filed – included in their price is electronic filing of the required reports with the IRS as well as printing and mailing the appropriate forms to the recipients. You also have the option of importing your data from an Excel spreadsheet if the information can be easily put into that format.
When are Forms 1099 due?
Form 1099-MISC must be provided to the recipients by January 31, 2013. Paper filed forms must also be filed with the IRS by February 28, 2013 while electronically filed returns are due to the IRS by April 1, 2013.
The penalties for failing to file Forms 1099 can be significant. There is a penalty for failing to timely file a complete and accurate form with the IRS and an additional penalty can be assessed for failing to provide the statements to the recipients of the payments. The penalties begin accruing immediately after the deadline has passed, and start at $30 per form not filed. These fees continue to increase up to a maximum penalty of $1.5 million. As you can see, the IRS is taking 1099 filing compliance very seriously.
New Form 1099-K
Starting with 2012 tax returns, taxpayers will be required to separately disclose credit card revenue and other income received through payment card transactions to the IRS on their tax forms.
Be aware that you may receive Forms 1099-K (Payment Card and Third Party Network Transactions) from payment settlement entities that process your payment card transactions
In addition to Form 1099-MISC payments, you may also have 1099 filing requirements for items like interest and dividend payments, mortgage interest income, or pension distributions.
• 1099-INT – Interest Income – The payer is responsible for reporting interest income to recipients.
• 1099-DIV – Dividends and Distributions – The payer is responsible for reporting dividends or liquidation distributions to recipients.
• 1098 – Mortgage Interest Statement – The recipient/lender is responsible for reporting mortgage interest received from the payer/borrower.
• 1099-R – Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans – The payer is responsible for reporting distributions to the recipient.
If you have any questions, please contact our office for further information.