Be Prepared for 1099 Deadlines in January

November 1, 2017

 

Tax deadlines do not have to be stressful. One of our goals as a CPA firm is to not only file your taxes, but to also provide helpful tools and information to minimize the stress often associated with tax deadlines. 1099’s can be confusing, so we have compiled answers to a few frequently asked questions about 1099 reporting:

 

What is a 1099?

The 1099 form is a series of documents the IRS refers to as “information returns.” These returns report various types of income received throughout the year other than salary or wages. There are many types of 1099 forms, but some of the most commonly used forms included 1099-INT (interest income), 1099-DIV (dividend income), 1099-R (retirement plan distributions), and 1099-MISC (see below).

 

Who receives a 1099-MISC?

Any individual or business that receives $600 in cash, check, direct deposit, ACH or wire during the tax-year for the following:

  • Services performed by independent contractors (non-employees);

  • Prizes and awards;

  • Rent;

  • Royalties.

 

As a business owner, how do I know if I need to file or issue a 1099-MISC?  

There are two (2) questions to ask when determining which, if any, vendors require a 1099-MISC:

  1. Did the total amount paid by check, cash, wire or ACH from January 1 through December 31 exceed $600? Note: debit and credit card payments are not included in this calculation.

  2. Is the vendor an individual, partnership or LLC?

If the answer is yes to BOTH questions, you will be required to file and prepare a 1099 on behalf of those vendors. These forms are due January 31, 2018.

 

What Information do I need to report when filing a 1099?

The following information will be required when filing a 1099 for a business or individual:

  • Legal name;

  • EIN/SSN;

  • Address;

  • Total amount paid by check, cash, wire or ACH for calendar year;

  • 1099 Box (MISC, rent, interest, etc.)

A W9 should be kept on file for all 1099-eligible businesses and individuals and can be found by going to the following website: https://www.irs.gov/pub/irs-pdf/fw9.pdf

1099 Deadlines

Form 1099-MISC Box 7: Nonemployee Compensation ($600 or more)

  • Due to IRS:                       January 31, 2018

  • Due to Recipient:             January 31, 2018

 

Form 1098: Mortgage Interest Income ($600 or more); Form 1099-INT: Interest Income ($10 or more)

  • Due to IRS (eFile):            April 2, 2018

  • Due to IRS (paper file):     February 28, 2018

  • Due to Recipient:               January 31, 2018

2017 Planning

Now is the time to start thinking about year-end planning as the year starts to draw to a close. We will have more details in our next newsletter, but in the meantime a few things to consider include the following:

  • Planning income and deductions in light of possible changes to tax laws in 2018;

  • Shareholder wages for S-Corp owners;

  • Stock transactions and gain/loss “harvesting”;

  • Required minimum distributions (RMDs) from retirement accounts;

  • Equipment purchases.

Please contact us to discuss projections to determine your 2017 liabilities and any year-end planning to help you finish out the year strong. 

Tax Reform

  •  As a reminder, Kansas changed their laws earlier this year such that business flow-through income is taxable and rates are higher. The state of Kansas is not charging interest or penalties on any balances due related to these changes if paid by April 2018. If you would like to discuss how these changes impact you, please contact us.

  • Congress continues to negotiate and draft tax reform legislation at the federal level. There are many options being considered and discussed, and we are staying in-tune with any developments. We will discuss any changes and their impact once they become more certain. 

Wrapping Up the Year

It’s not “all work and no play” for us. October 15th marked the end of our extended 2016 tax season, so we celebrated with a staff outing to Chicken & Pickle. We worked on mastering our pickleball skills and enjoyed the company of each other outside of the office. Thank you to our clients for a great year. 

 

 

 

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