Last date to send 1099 form to recipient is tomorrow

It is time for businesses who hired services of contractors and freelancers to send 1099 forms to them. 31st January 2012 is the last date for businesses to send 1099 forms to the recipients. Last date to file 1099 form with IRS for paper filers is Feb 28th 2012 and for electronic filers is April 2nd 2012.

If you still have not send form 1099 to your contractor then make sure you do it as soon as possible to avoid possible penalties.

IRS provides penalty relief for 2011 form 1099-k filers

IRS has announced transitional relief from penalties for a section 6050W filer reporting incorrect information on information returns (Form 1099-K) and payee statements filed under section 6050W of the Internal Revenue Code. The relief provided by this notice is available for information returns and payee statements to be filed only in 2012, based on payments made in calendar year 2011, provided that the section 6050W filer makes a good faith effort to accurately file the appropriate information return and the accompanying payee statement.

1099-k form background:

Under section 6050W, added by section 3091 of the Housing Assistance Tax Act of 2008, Div. C of Pub. L. No. 110-289, 122 Stat. 2653 (the Act), a payment settlement entity (“payor”) making payment to a participating payee (“payee”) in settlement of reportable payment transactions must make an information return for each calendar year to be filed with the Internal Revenue Service setting forth the gross amount of such reportable payment transactions, as well as the name, address, and taxpayer identification number (TIN) of the payee. A similar statement must be furnished to the payee setting forth the gross amount of such reportable payment transactions, as well as the name, address and phone number of the information contact of the person required to make such return.

Section 6050W applies to two types of transactions: (1) payment card transactions and (2) third party network transactions. All payments made in settlement of payment card transactions must be reported in the manner described above.

Payments made in settlement of third party network transactions need be reported only if gross payments to a payee exceed $20,000 and the number of such transactions exceeds 200 with respect to the participating payee. The information is to be reported to the IRS on Form 1099-K, Merchant Card and Third Party Network Payments.

Section 6721 imposes penalties on a person for, among other things, failing to include all required information or including incorrect information on an information return. Section 6722 imposes penalties on a person for, among other things, failing to include all required information or including incorrect information on a payee statement. Sections 6721 and 6722 are applicable to section 6050W payers that must file information returns for payments made in settlement of reportable payment transactions.

However, In order to provide additional time to develop appropriate procedures for compliance with these new reporting requirements, the IRS will not impose penalties under sections 6721 and 6722 on payers that must file information returns and payee statements provided that they make good-faith efforts in filing accurate IRS Forms 1099-K and furnishing the accompanying payee statements.

This notice does not apply to a payer who erroneously fails to file information return or payee statement. Additionally, the relief provided by this notice only applies to information returns and payee statements pertaining to reportable payments (form 1099k) made in calendar year 2011.

Form 1099 tax deduction list for 2011-2012

Internal revenue service department says that Income tax filing season is underway and the last date to file your returns is April 17th 2012. Although the filing deadline is 3 months away, still taxpayers should gear themselves up for an early start to make the tax filing season easier for them.

"The first thing you'll want to do is to gather your records and round up any documents you'll need when filing your taxes," said Clay Sanford, an IRS spokesman in Dallas. "Get into the habit of keeping good records every year — saving receipts, canceled checks and other documents that support income or deductions you're claiming on your return."

He said Form W-2s and/or Form 1099s will be needed to file a tax return. He said those who do not receive their Form W-2 or 1099 by Jan. 31, or whose information is incorrect, should contact their employer or payer.

1099 misc forms are filed by businesses or individuals who hired the services of independent contractors for year 2011-2012. In other words, 1099 misc forms are used to report the income ($600 and above) earned by freelancers, independent contractors and any self employed person hired on contract basis. Last date to send 1099 misc forms to recipients is January 30th 2012.

1099 Misc form is necessary for independent contractors as the form is required for the income tax filing purpose. Independent contractors will have to report to IRS any income they earn as freelancers through 1099 misc form. There is no way you can try to escape from reporting the income because your payer will also provide a copy of your 1099 misc form to the IRS. However, independent contractors can get certain tax relief from 1099 tax deductions:

Here is a list of 1099 tax deductions for independent contractors:

• Inventory
• eBay fees
• PayPal fees or shopping cart fees
• Shipping fees and supplies
• Postage
• Office supplies
• Advertising
• Mileage - use your car for business purposes
• Phone - cell phone or second line
• Bank charges - business checking account
• Accounting and legal fees
• Computer and software
• Internet, website and faxing services
• Contract labor - VA, coaches, web designer
• Furniture and office equipment
• Membership fees and dues
• Continuing education
• Home office expenses

Few names have been provided above. To find out the complete list or 1099 tax deductions which you are eligible for; kindly contact your tax professional or IRS.

Moreover, if you hired the services of a contractor and paid him income via PayPal, cash card or any third party payment network, then you do not need to issue him/her a 1099 misc form. The third party payment network will issue him/her form 1099-K (form for credit card and third party payment processors)

All about form 1099-K

From tax year 2011 onwards, credit card merchants and third party payment networks such as e-bay, PayPal, Amazon and etc will have to start sending 1099 K forms to sellers who meet their criteria. If you earn money online by selling products, freelance writers and etc then be ready to receive 1099-K for year 2011-2012.

Although the form has been in the making since a long time, however it will be implemented from tax year 2011 -2012 onwards. The original bill proposed that credit card processors be required to file 1099s for each seller that had at least $10,000 in gross sales and 200 transactions. However, the original proposal has been a little modified where you must have at least $20,000 gross sales and 200 transactions before you are required to receive 1099-K form from third party network companies. Hence, less people are now affected by the 1099-K form filing.

How to file 1099 forms?

There are 2 methods to file 1099 forms. One is paper filing method and other is efile method. Electronic filing method is the most preferred method among tax filers because of its easy and efficiency. You can either file 1099 forms through IRS website or avail expertise support of an IRS authorized efile service provider. Although there are many service providers who claim to be leaders and provide the best services, however one such service provider who has never let down its clients is 1099online.com. You can efile 1099 forms on their website easily, swiftly and efficiently for as low as $0.55 per filing. They offer the lowest pricing in industry with top class and secure services.

Due date to issue a 2011 form 1099 misc to independent contractor is fast approaching.

It’s been 2 weeks since the start of year 2012. Since the beginning of New Year, we have been advising businesses and individuals to start preparing documents for reporting their informational returns. You have 2 more weeks left to issue a 1099 misc form to your contract workers.

1099 misc form generally titled as ‘miscellaneous Income’ is the official form which businesses have to issue to their contract workers (non employees of the firm) for services provided by them and in return the contract workers were paid $600 and more.

1099 misc forms are issued to contract workers or non employees of the firm, because they would need the 1099 misc during their income tax filing. The information provided on Form 1099-MISC includes non-employee compensation, federal and state income taxes withheld, and medical and health care payments.

January 31^st 2012 is the last date to issue a 1099 misc form to your contractor. You must also file a 1099 misc form with the IRS. If you are paper filing a 1099 form, then the due date is Feb 28^th 2012 and if you are efiling 1099 misc form, then the due date is April 2^nd 2012.

E filing is the most appropriate option when you are filing for 1099 forms. This is because of many reasons:

• Efiling is quick and easy process
• Efiling is safe and secure
• Efiling saves paper
• Efiling provides IRS confirmation much earlier than paper filing
• Efiling is cost effective.

There are many service providers offering efiling service for 1099 forms, but personally, I prefer 1099online.com. Their services are wonderful and offer an easy navigation for 1099 misc efile. If you want to get your 1099 forms filed in a quick and easy manner along with protecting your wallet, then definitely opt for 1099online.com

FORM 1099 MISC COMPLETE GUIDE – 1099 misc forms, form 1099 misc filing requirements, 1099 misc form due dates and penalties.

Now and then, we see someone asking a query on yahoo answers, ask.com and other websites about 1099 misc form. When a person received 1099 misc form, they are surprised and immediately post ‘Why did I receive a 1099 misc form’? Not only that but the search engines and filled with questions regarding 1099 misc forms, 1099 filing requirements, best way to file a 1099 misc form, due dates and penalties for 1099 filing and more. The list of questions is endless.

So here I am today, ready to answer all your doubts and questions about 1099 misc forms.

WHAT IS FORM 1099 MISC?

1099 misc form is used to report certain types of payments made in the course of a trade or business. If you're a small business owner who has hired the services of an independent contractor or freelancer, you may need to file and submit the 1099 misc form to both the Internal Revenue Service and the person or business that you paid. Normally, a 1099 misc form has to be reported if at least $600 has been paid to the recipient.

Personal payments are not reportable. You are engaged in a trade or business if you operate for gain or profit. However, nonprofit organizations are considered to be engaged in a trade or business and are subject to these reporting requirements. Other organizations subject to these reporting requirements include trusts of qualified pension or profit-sharing plans of employers, certain organizations exempt from tax under section 501(c) or (d), farmers' cooperatives that are exempt from tax under section 521, and widely held fixed investment trusts. Payments by federal, state, or local government agencies are also reportable.

IS FORM 1099 MISC VALID FOR EMPLOYEES OF A FIRM?
No, if you are employed by a firm or a registered corporation, then you are not suppose to file form 1099 misc. If you are providing services to a company as an employee and receive 1099 misc form, then it is a mistake on the part of your employer and you must correct it. As an employer, you are supposed to receive form W2 for your income tax purpose.

WHAT DO I DO WITH 1099 MISC FORM AFTER RECEIVING IT?
Because you are an independent business person, working for yourself and are not registered as acorporation, partnership or multi-owner limited liability company and you were professionally hired by a company on a contract basis; you are legible to receive form 1099 misc by January 31st2012. You would need that 1099 misc form to report your income to the IRS for your tax filing purposes.

Now when you get a 1099 misc form, take a look at Box 7, “Nonemployee compensation.” This is where your annual income from the company that hired you will be reported. And this is the income that you must be sure to include on your Schedule C, because not only did the company send you a 1099 misc form but also filed it with IRS. Hence, the 1099-MISC serves the same function for the self-employed as a W-2 does for the employee. It tells you and the IRS how much income you made from one company.

WHAT DO I DO IF THE AMOUNT ON THE 1099 MISC FORM IS INCORRECT?

In such case, you should contact the business who issued the 1099 to resolve the discrepancy. If they made a mistake, they must issue a corrected 1099 to both you and the IRS. To be safe, you should wait until you receive the corrected 1099 before filing your tax return. You need to be sure that the 1099 income amount agrees with your Schedule C income amount. If there is a difference between the total income on your 1099 misc form and the amount of income on your Schedule C, the IRS will eventually catch it and send you a letter demanding an explanation

I FILED MY TAX RETURN BUT AM YET TO RECEIVE MY 1099 MISC FORM?
There is no problem if you filed your tax return and received 1099 misc form after that as long as you reported your income on schedule C. But in, case you did not report your 1099 income, make sure you file an amended tax return. This will surely increase the amount of tax due and probably late payment penalties if you fail to pay your tax dues on time.

WHAT ARE THE PENALTIES FOR 1099 MISC FORM FILING?
The amount of the penalty is based on when you file the correct information return. The penalty is:

1) $30 per information return if you correctly file within 30 days (by March 30 if the due date is February 28); maximum penalty $250,000 per year ($75,000 for small businesses, defined below).

2) $60 per information return if you correctly file more than 30 days after the due date but by August 1; maximum penalty $500,000 per year ($200,000 for small businesses).

3) $100 per information return if you file after August 1 or you do not file required information returns; maximum penalty $1,500,000 per year ($500,000 for small businesses).

BY WHEN AM I SUPPOSED TO FILE AND REPORT 1099 MISC WITH THE IRS?
31st January 2012 – send misc 1099 form to the recipient
28th February 2012 – file form 1099 misc with IRS on paper
2nd April 2012 – File form 1099 misc with IRS electronically

IF I WANT TO EFILE MY 1099 MISC FORM, HOW DO I SELECT THE SERVICE PROVIDER?

There are many service providers wanting to attract customers to file 1099s on their websites but there are certain requisites to look out for when filing form 1099 misc or any other 1099 forms. Below is the list provided:

1. Efile service provider should be IRS authorized and certified -look for IRS logo on the site
2. They should be safe and secure - look for security certificate on their website
3. offer user friendly navigation process to simplify your 1099 filing
4. offer reasonable and cost effective pricing. 
5. have customer support service - phone, email, etc. 

Now, we would recommend 1099online.com, as an efile service provider whom you should opt for to file your 1099 forms online. Not because we are 1099online.com, but because 1099online.com fulfills all the above and many more requisites that you should look out for when opting a 1099 filing service provider. Visit 1099online.com and find out yourself. 1099online.com supports efile for 12 different 1099s

This is a copyrighted© article written by ‘tax master’ who is associates with www.1099online.com. No permission is granted for commercial use. You may reproduce this article with written consent from the TRS Holdings, Inc, parent company of 1099online.com by emailing to wecare@1099online.com or by calling at 800-578-2290

2011 form 1099-K report credit transaction

Starting 2012, any income that is received through credit and debit card transactions will have to be reported to the IRS by filing form 1099-K (Merchant Card and Third-Party Network Payments).

Financial institutions and merchant card service providers will have to report the annual gross payments which have been processed either through debit or credit card using form 1099-K to IRS and to the merchants. The 1099-K form format is unlikely to be similar to the 1099misc form which is used to report miscellaneous incomes earned by non employees/independent contractors/freelancers.

As the new development has already taken off considering that January 2012 has begun, it would be advisable that payment processors and business owners get ready, prepare the information they need and file form 1099-K and send a copy to the IRS and the recipients as early as possible.
Details of Credit Card and Merchant Payment Reporting

Banks and other payment settlement services will need to report gross annual receipts for each merchant. The income reporting will apply to "any transaction in which a payment card is accepted as payment". Thus, banks and other financial service providers will be reporting the total, gross amount of credit card and debit card payments for the year for each merchant.
Exception for De Minimis Payments

Reporting 1099-K form is not required if

• A merchant's total payment transactions for the year does not exceed $20,000, and 
• The total number of transactions does not exceed 200. 
• A withdrawal of funds at an automated teller machine (ATM) via payment card, or a cash advance or loan against the cardholder's account 
• A check issued in connection with a payment card that is accepted by a merchant or other payee. 
• Any transaction in which a payment card is accepted as payment by a merchant or other payee who is related to the issuer of the payment card.
  

How to prepare for credit card and third party payment reporting (FORM 1099-K)

Small businesses will want to review their bookkeeping and accounting practices. Once card payment reporting begins, business owners will need to reconcile the information reports submitted by the banks to their own books. Any discrepancies in reporting will need to be addressed so that accurate tax returns can be filed with the IRS.

One bookkeeping issue is clear; the new law requires banks to report gross receipts. However, merchants often have chargeback, issue refunds, or have debit card transactions where the customer receives cash back. Under the proposed regulations, banks and other payment transaction services will be reporting only gross monthly and annual payments. Fees, chargeback, refunds and other items will not be netted against these gross amounts for IRS reporting purposes. Accordingly, businesses should have thorough accounting procedures to keep track of these items separately. In other words, if you are accustomed to recording only a net deposit from a merchant account, it would be advisable to separate those net amounts into gross receipts and the associated fees and refunds. That way your internal financial reports can be more easily reconciled to the new Form 1099-K. 

Form 1099-K requires merchants to provide their full information

Since financial institutions will need to report credit and debit card receipts to the IRS, merchants will need to provide their payment processor with the full legal name of the business, their address, and taxpayer identification number. For most businesses, this will be their Employer Identification Number (EIN). As such, payment processors will likely request businesses to provide them with a Form W-9 to obtain this information. 

Possible Backup Withholding Issues

Merchants who fail to provide their taxpayer identification number could become subject to backup withholding at a rate of 28% on their payments. To prevent backup withholding, merchants should provide their card payment services provider with the name, address, and EIN for the business.

Another concern is that credit card transactions could become subject to backup withholding if a business commits fraud on their tax payments. Under the proposed regulations, the IRS made it clear that backup withholding would occur on gross card payments. This could leave a business in severe financial difficulties. Business owners who are struggling with tax debts should work with their tax professional to develop a repayment strategy that prevents any withholding on their card payments.

Tax form 1099 reporting requirements for year 2011-2012 have been repealed.

Earlier it was said that from 2011 onwards there would be huge changes in the reporting requirements for form 1099. However, fortunately two of those 1099 filing rules which would have created disturbance and chaos among business owners, brokers, agents and other intermediaries have been revoked by the congress.

On a brief background check, a 1099 form is an informational reporting form required to be filed with the IRS by business owners or any individual who hires the services of an independent contractor/freelancer and pays him at least $600 in remuneration for his services. The reason why Congress started informational return reporting was to reduce the tax gap that had risen out of no reporting of income earned by freelancers.

When the new legislation was passes for the new 1099 reporting requirement for year 2012, it was a great deal of concern for the business owners as the new 1099 requirements would have resulted in huge filing and administrative costs. The new 1099 filing regulation would have surely lead to thousands of additional and unnecessary 1099 form filing.

The new 1099 filing rule required that 1099 forms should be issued to all business owners both under service and property for $600 and above. Moreover, even corporations were no longer exempt from filing form 1099. Hence, business had to issue large number of 1099s and they had to obtain a TIN from the vendor in order to avoid the required backup withholding of federal income tax.

Another rule under the new legislation was to include rental property owners, which means that if you are a house owner and you rented your house and paid an individual around $1000 to paint your house, you would then have to issue form 1099. Property owners would have been required to file 1099s as early as 2011 and would have been required to comply with the all the other troublesome 2012 form 1099 changes

However, businesses need not worry about the new 1099 reporting regulations and the new rules have been repealed by the government. 1099 reporting remains the same as it was earlier. Businesses can continue filing 1099 forms without any hindrance and troubles.

Pointers on current 1099 rules

• Businesses should issue a Form 1099-MISC to appropriate vendors (non-corporate) to whom they paid more than $600 for services during a calendar year. The Form should be provided to the vendor by January 31st and should be mailed to the IRS (along with Form 1096) by February 28th 2012. If you are electronically filing form 1099, then last date to submit form to IRS is April 2nd 2012
  
• A non-corporate entity includes individual sole proprietorship, partnership or limited liability company (LLC). Additionally a Form 1099-MISC is required for services paid to attorneys regardless of their entity type.
  
• Examples of payments that might require a 1099-MISC would be rents, attorney fees, contract labor, director fees, commissions, royalties (when payments exceed $10) and any compensation not included on W-2.

A business should use form 1099-misc to report any payments they have made in the course of their business. A 1099 misc form is issued by businesses to individuals/ independent contractors to whom they have paid $600 and more. If you are unsure weather you are legible to file form 1099 misc or which 1099 form should you file, contact 1099online.com an IRS certified efile provider to efile your 1099 forms and answer your queries on 1099 form filing.