Monthly Archives: December 2018

Common Misconceptions About 1099s

When it comes to filing 1099s, there are a lot of key things to keep in mind. You need to have all of your information in order to ensure that you don’t miss a single one. For some companies, this means filing a handful of 1099s. For other businesses, you could be looking at hundreds upon hundreds of 1099s. Whatever the case, it is important that you have a clear understanding of what is expected of you by the IRS. Failing to file things correctly could lead to fines and penalties for your company.

At OnlineFileTaxes.com, we make the process of filing 1099s simple. We work hard to ensure that customers who utilize our online platform have a clear and realistic understanding of what is expected of them. Before you get to work putting together the list of 1099s you need to file, check out the following myths about 1099s and be sure you don’t fall for any of them during the upcoming tax season.

#1: I need to file 1099s for corporations

When it comes to filing a 1099, it is reserved for specific cases. Generally speaking, a 1099 is used to report income that was paid to an independent contractor over the amount of $600 in a given tax year. There are other scenarios in which a 1099 must be filed, but the bulk of 1099s revolve around the use of contracted labor. The goal of a 1099 is to report to the IRS money that was made by a contractor who is not your full-time employee. This person will then use the 1099 you send them to file their own taxes. They will be required to pay taxes on this income as an independent contractor. A good example of this would be if you hired a freelance writer for a project this past year. The money you paid them if it totals over $600, will need to be reported to the IRS.

However, if you paid money out to a corporation that you hired for a job, things are different. Corporations do not require 1099s unless you hired the help of an attorney. When in doubt about whether or not the labor you hired was from an independent contractor or a corporation, simply ask. It is better to be certain than to guess.

#2: If I don’t issue a 1099, it won’t really matter

Another misconception surrounding 1099s is the idea that it really won’t matter if you skip these forms. It is never a good idea to neglect to report information to the IRS. If you think there is a possibility that you should be filing 1099s, then odds are good you should. Err on the side of caution rather than skipping this task.

You might enjoy filing 1099s, but if the IRS finds out you were hiring contractors and not declaring this income that they earned, you could wind up paying out a lot in fines and fees.

#3: I only need to send the form to the recipient

Another myth around 1099s is the idea that once you send a 1099 to the appropriate recipient, you are done. While this is a vital step and the deadline for doing so falls earlier than the date for filing taxes with the IRS, this isn’t the only thing you must do. You also need to file the 1099 with the IRS.

The reason why you have to both send a 1099 to the appropriate recipient, as well as file with the IRS, is because they want to have a detailed report of what contractors should be paying them taxes. They use this information to ensure that the person you sent the 1099 to is actually following through with filing their own taxes.

#4: If I miss the deadlines, it doesn’t hurt

There are a slew of deadlines you need to meet when it comes to filing your business’ taxes. 1099s all come with their own set of deadlines as well. There are deadlines for the date by which you need to have mailed the 1099 out to the appropriate recipient and there are also deadlines for filing the 1099s with the IRS. It is a common misconception that missing these deadlines isn’t a big deal.

Many businesses falsely assume that they won’t suffer a penalty for missing the deadline of mailing out their 1099s to recipients. The reality is that the IRS will penalize you with fines if you miss either deadline. Be sure you start early on filing your 1099s to prevent a costly mistake.

#5: I have to file 1099s manually

Once upon a time, the only way to file 1099s was to purchase lengthy forms, fill them out by hand, mail them by hand, and file with the IRS via snail mail as well. Today, things are different. Gone are the days of tedious handwritten forms.

You can now file 1099s through an online platform, saving time and money. Not only can you handle filling the forms out online, but you can then automatically send the recipient their 1099 via email and mail. From here, you can then submit your 1099s to the IRS through e-filing.

Save time and sign up for OnlineFileTaxes.com today to e-file your 1099s with ease.

How to File Form 1099-MISC With the IRS

Longtime business owners and independent contractors should be familiar with Form 1099-MISC. As a refresher, this documentation is used to report payments made to contractors by business entities. For the sake of this post, let’s say you’re completing Form 1099-MISC for the first time.

Here are some step-by-step instructions that will hopefully keep you from pulling your hair out:

Box 1 – Rents

Per the IRS, enter amounts of $600 or more for all types of rents, including the following:

Real estate rentals paid for office space unless these payments went to an agent or property manager
Machine rentals (i.e. renting a bulldozer to level your parking lot)
Pasture rentals, such as a farmer paying for the use of grazing land

Box 2 – Royalties

This is where you will enter gross royalty payments of $10 or more. As referenced from the aforementioned IRS documentation, “Report royalties from oil, gas, or other mineral properties before reduction for severance and other taxes that may have been withheld and paid.” Both oil/gas payments for a working interest and timber royalties made under a pay-as-cut contract should be reported elsewhere.

Box 2 should also be used to report payments from intangible property such as copyrights, patents, trade names, and trademarks. Report the gross royalties paid by a publisher directly to an agent, unless the agent is a corporation.

Box 3 – Other Income

The IRS needs to know if you were the recipient of prizes and/or awards during the year. First, note the fair market value of any merchandise won on game shows. You must also include amounts paid to a winner of sweepstakes not involving a wager.

Here are some other common items required to be reported in Box 3:

Payments outlined under Deceased employee’s wages
Payments outlined under Indian gaming profits, payments to tribal members
Payments made to individuals for participating in a medical research study or studies
Termination payments to former self-employed insurance salespeople (such payments are not subject to self-employment tax)
Compensatory damages for sickness or non-physical injuries such as employment discrimination or defamation

Box 4 – Federal Income Tax Withheld

This box revolves around backup withholding. Those who have not furnished their TINs are subject to withholding on payments required to be reported in several other boxes. Box 4 is also the place to enter any income tax withheld from payments to members of Indian tribes from the net revenues of class II or III gaming activities licensed by tries.

Box 5 – Fishing Boat Proceeds

Enter your share of proceeds from the sale of a catch to each crew member of fishing boats with fewer than 10 members. You must also report cash payments of up to $100 per trip that are paid solely for additional duties (such as cook, engineer, etc.). As you complete Box 5, do not report any wages reportable on your W-2.

Box 6 – Medical and Health Care Payments

Enter payments of $600 or more made in the course of your business to each provider of health care services. You should include payments made by medical insurers under health, accident, and sickness insurance programs. The IRS does not require you to report payments to pharmacies for prescription drugs.

Box 7 – Nonemployee Compensation

This box is where you will enter nonemployee compensation of $600 or more. The IRS requires you to report a payment as nonemployee compensation if the following four conditions are met:

You made the payment to someone who is not your employee.
You made the payment for services in your agency or organization.
You made the payment to an individual, partnership, or corporation.
You made payments to the payee of at least $600 during the year.

The Easy Way to File 1099 Forms

As you can see, 1099s can be fairly complex to understand, let alone complete without consulting an accountant. That’s why so many businesses, CPAs, and individuals are using OnlineFileTaxes. An IRS-approved e-file provider, OnlineFileTaxes.com allows you to process any number of forms, from one to hundreds, in a way that’s simple and stress-free.

This tax season, do away with the expensive software and outrageous costs of 1099 processing. We invite you to turn to the experts at OnlineFileTaxes.com instead. Sign up for free today or contact us with any questions.

How To Survive Filing All Your 1099s And Retain Your Sanity

Tax season is a dreaded time of year for most. If you are a business owner, tax season is even more of a nightmare. During this hectic season, it is easy to feel like you are losing your grip on sanity as forms stack up on your desk and your todo list lengthens beyond belief. The key to successfully filing all your taxes on time and avoiding any major penalties is to streamline and stick to organization.

One major bane to any business owner’s existence are 1099s. These little forms can creep up on you and before you know, you have dozens, if not hundreds, of 1099s to file. Before you lose your mind, check out the following tips on how you can survive filing all your 1099s and, remember, we make it simple to file 1099s through our online platform.

#1: Kick Procrastination Out The Door

A surefire way to make the upcoming tax season a stressful disaster is to procrastinate the work that needs to be done. Different tax forms have different deadlines and if you don’t get to work now, you will fall far behind and you might miss out on important dates.

A few key dates to remember in regards to your 1099s include the following:

Form: 1099-MISC
Mailing To Recipients Deadline: January 31, 2019
E-Filing to IRS Deadline: January 31, 2019

Form: 1099-DIV, 1099-INT, 1099-R
Mailing to Recipients Deadline: January 31, 2019
E-Filing to IRS: April 01, 2019

You can also utilize the government’s online tax calendar to ensure you don’t miss any important deadlines. Spend some time going over each deadline, highlighting ones that are pertinent to you and creating reminders for yourself that will alert you before the deadline arrives.

#2: Become Best Friends With Organization

On a scale of 1 to 10, how highly would you rate your organizational skills? If you are lacking in the area of keeping things organized, tax season will quickly spiral out of control. You will need to keep track of an array of information. From receipts to invoices to 1099 forms to a wide variety of vital documents, everything needs to be carefully organized to keep the process simple and to ensure you don’t make any mistakes.

If you struggle with organization, consider hiring a seasonal employee to help out. Find an administrative assistant who can work with you on the project and keep things in perfect order. The better organized you are, the faster the process will go and the fewer obstacles you will encounter.

#3: Spend Some Time Studying

How familiar are you with local and federal tax laws? Do you know when you need to file a 1099 and when you don’t? If you aren’t 100 percent clear on these important tax regulations, it is time to do some studying. Be sure that you fully understand what is required of your business before you begin. Nothing is worse than realizing down the road that you failed to file your taxes properly and you are now facing massive fines or penalties.

If you feel overwhelmed by tax laws and you aren’t quite certain what specifically you need to file, reach out to an accountant for help. The more educated you are about how taxation for your business works the greater chance there is that you won’t miss anything.

#4: Utilize E-Filing To Simplify The Process

The good news is that the days of filling out paperwork manually and mailing every form in by hand are gone. Utilize e-filing to save yourself time. This is particularly helpful in the case of filing your 1099s. Switching to an online platform allows you to cut down on administration costs and makes the entire process more efficient.

As you utilize e-filing, you can start to convert a lot of your tax documents over to electronic forms. You can even scan important receipts and documents into your computer for safe keeping. Gravitating towards organizing all your files electronically can help cut down on the copious amounts of paperwork you find yourself buried in. Electronic organization also makes it far easier to find something you need when you need it.

Make The Switch: File 1099s Online

Here at OnlineFileTaxes.com, we are an IRS approved e-file provider. Our easy-to-use platform allows you to process any number of 1099 forms quickly and economically. You will no longer need to purchase and fill out lengthy forms by hand, nor will you need to invest in costly software. Instead, you can quickly file 1099s, ensuring that recipients receive their copies on time. Not only that, but you can file with the IRS through our online platform as well.

If you are interested in learning more about how our platform works, we invite you to reach out today. We will be happy to assist you in getting started. Choose the easy and fast method for filing your 1099s.

When Are You Required to Issue a 1099?

With tax season just around the corner, you’re probably figuring out which forms you need to file. According to the IRS, “If you made or received a payment during the calendar year as a small business or self-employed (individual), you are most likely required to file an information return to the IRS.” Keep reading to see if you do, in fact, need to file Form 1099 for the 2018 tax year.

We will discuss the following three scenarios and how it relates to filing/reporting:

You made a payment
You received a payment
You are not required to file information returns

You made a payment

Payments in the course of your trade or business warrant the filing of 1099-MISC. In short, this form is used to report payments made to contractors by business entities. Keep in mind that rent, royalty, prizes, and monetary awards must be reported on 1099-MISC forms.

Businesses are required to file such forms for each person to whom they have paid during the year. Not only should a business provide a statement to the recipient to whom the payment is made, but they must file the form with the IRS as well. One final note regarding Form 1099-MISC is that medical/healthcare payments and attorneys’ fees must be reported.

While 1099-MISC might be the most commonly known form for those who made a payment, there are certainly others worth knowing about. Take 1099-INT, for example. If you paid interest on a business debt to someone (excluding interest on an obligation issued by an individual), then you will need to complete this tax form.

Form 1099-DIV, meanwhile, accounts for dividends or other distributions to a company shareholder. Then there’s Form 1099-R, which entails the distribution from a retirement or profit plan or from an insurance contract or an IRA. The last piece of documentation worth mentioning in this section is Form 1099-K, which involves payments to merchants or other entities in the settlement of reportable payment transactions or third party network transactions.

You received a payment

You will need to file the appropriate forms if you received any of the following types of payments:

Did you receive a payment of mortgage interest or reimbursements of overpaid interest from individuals? Then you will need to complete Form 1098. Note that the reported amount can include points paid by the borrower at the time of purchase of a primary residence.
If you were involved in the sale or exchange or real estate, then you will need to file Form 1099-S. Such transactions could be for money, property, or services of any present or future ownership interest in any land. Residential, commercial, and industrial properties all fall into this category.
Let’s consider a different sort of reporting scenario. Maybe you forgave someone’s debt to you in the past year and now it’s time to account for it with the IRS. In this case, Form 1099-C needs to be filed for each debtor for whom the debt owed is $600 or more if the debtor is an individual, corporation, partnership, trust, estate, association, or company.

You are not required to file an information return

We’ve already outlined which 1099 you need based on whether you made or received a payment. Here are some situations in which you are not required to file an information return:

You are not involved in any business or trade matters.
You made a payment to an incorporated business, but it was not for medical and/or legal services.
The sum of all payments is less than $600 in the last tax year.

File 1099 Forms With Ease

At OnlineFileTaxes.com, we understand the complexities that often come with 1099 preparation.

That’s why we sought out to develop a quicker and easier filing system. With OnlineFileTaxes.com, you can process any number of forms seamlessly and economically.

No longer do you have to waste valuable business hours filling out lengthy forms and trying to figure out confusing software. Whether you’re a business owner, CPA, or individual, OnlineFileTaxes.com could be a game-changer come tax season. Plus, you can’t beat our price of $1.25 per form.

It’s time to make the switch to OnlineFileTaxes.com! Contact us today for more information.

New due date announced for ACA Form 1095-B and 1095-C

IRS has extended the due date for employers to mail recipient copies of ACA forms (Form 1095-B and Form 1095-C) to employees until March 4, 2019. IRS through its Notice 2018-94 extended this deadline. Prior to this notice, the due date was January 31, 2019. This comes as a little bit of relief for the employers struggling to file the health care forms 1095-B and 1099-C in a timely manner. Many employers have complaints that the tight deadline has put the employers at a disadvantage. They find it difficult to meet the deadlines. Now with the extension to file ACA forms employers get extra 30 days to prepare and file their forms. It is important to note that the due date to e-file the 1095-B and 1095-C has not changed and employers must e-file their forms with the IRS by March 31, 2019. OnlineFileTaxes.com remains committed to providing an exceptional service to its clients in filing ACA forms 1095-B and 1095-C in a timely fashion.