Monthly Archives: January 2013


So, we have covered the aspects of using 1099 forms for business. The most widely used of the 1099 form is the 1099-MISC, and this is what people usually mean when they say ‘1099’. If you are doing nearly any type of work or service for any type of business, whether it is a single person operation or a corporation with thousands of employees, the 1099-MISC is the form that they will use to keep track of your earnings on their end. They can then deduct those as expenses.

If you have gotten a 1099-MISC from a business that you did any type of work or service for (and were not on their actual payroll), then the government has also received notice, and they will cross check 1099 forms which companies file against the individuals they show payment to.

Any time you do more than $600 in the course of the calendar year they must issue a 1099 form, and in all but a few specific cases it will be a 1099-MISC. Even if you don’t receive a 1099-MISC, if you have make $400 setting up a business’ computer system you do have to report that income. The reporting just isn’t automatic, as it is when the $600 limit is reached as with a 1099.

It is a bit of extra work for the tax payer, but the forms are fairly easy, especially if you are using some sort of software package to help with your taxes. If you are using a professional service, either online or one in your area they will take care of the forms for you. But, never forget you are on the hook if your taxpayer messes up (despite what they say).

At the least you should know what forms have to be filed, even if you are not going to fill them out yourself.

With 1099-MISC income, you will need to file a Schedule C or Schedule C-EZ (if you are filing 1040EZ). It is also on this form that you will list your deductible business expenses. It is extremely important that you document all business expenses with receipts and notations in some sort of book (or computerized records).

These deductions are separate from the deduction you get on your personal taxes, and they will come off the top of the gross income. Remember, though, if you do not have a provable paper trail of payments and receipts you will not be able to use those expenses to adjust your income properly into profit and operating expenses that will not count towards income,

The other form you will file is a Schedule SE. It is possible, especially if you started a consulting firm late in 2012 that your expenses are more than the money you have earned thus far. The Schedule SE simply shows the amount of profit you made from the business or venture after expenses, and shows how much tax you will owe on that money. If you do not show a net profit you will still use the Schedule SE but you will not owe any business taxes. You only pay taxes on net profits (that is, what is left over after all expenses have been paid).

All of these forms are fairly easy to fill out on your own if you are good with a calculator. Even if you are using a computer program or a tax professional, though, it is good to know how they are getting the number at the end of the last page. Now you should have a clear understanding of how the 1099-MISC form works, and what to do with it!

1099’s Have Come Due Again: Here’s What You Need To Know.

The Time Of Year For 1099’s Have Come Around Again, And For Businesses And Individuals There Are Questions About Exactly How The 1099 Works.

The 1099 is the way the government is tracking income; the rules changed for 2012, and now any company that pays you more than $600 for your services must issue you a 1099. These services can include nearly anything – independent consultant or contractor, writing services, legal services or more.

In almost all instances if you are earning money from a business or company the 1099-MISC will be the 1099 form that you receive. There are others, but they are for specific instances usually dealing with financial institutions of one sort or another.

When you receive the 1099-MISC, check the basic information to make sure that everything is correct – your name, your social security number or the TIN (Tax Identification Number) of your business, your address and most of all the total amount of payments.

If you know that you have done over $600 worth of business for a company, do not file your taxes until you receive the 1099. Even if you count the income from it when you file, the federal government will not know that. This can lead to double counting income, something which you must be careful of when using the 1099-MISC as well.

Make sure you check your recorded income from each entity against the 1099 they sent you to make sure the two numbers match and that you are not double counting any income.

Once you have verified the information and amounts contained in the 1099-MISC, there will be a few more forms that go along with your taxes. These will be a Schedule C or C-EZ, and a Schedule SE. These will be filed with your 1040 forms.

Do not forget, you must still report all income even if you do not receive a 1099-MISC. The Schedule C is used to report gross receipts (including income not reported on 1099-MISC because it was less than $600). The schedule C is also used to report deductible expenses. If you have filed a 1099 for someone to whom you have paid more than $600 to, that 1099 would go in this area.

Any deductible expenses are entered on the Schedule C (or C-EZ). These could include equipment and supply purchases, mileage, office expenses, advertising and more.

The final form is the Schedule SE. This will show the net profit from your business, if you had a profit. Many small businesses lose money the first year because of advance equipment purchases. If you did have a net profit, though, the Schedule SE will be used to calculate the amount of self-employment tax that you owe on your 1099/business income.

Online File Taxes can help you with every aspect of your income taxes, including 1099-MISC or any other sort of 1099 you may have received. We will make sure your income is not double reported, and that you are claiming all the business deductions on your Schedule C that you deserve.


In this part of our series, OnlineFileTaxes will look at what happens if you don’t file the 1099’s on time.

The first thing to remember is the date for filing – if you are a business that has generated 1099’s, you must file them by February 28th 2012 or April 1st, 2013 depending on whether you are filing on paper or electronically. If filling by paper you would use the first date, February 28, 2012.

If you are a larger company and have generated over 250 1099 forms, you must file them electronically – the federal government does not give you any choice about that.

The good news is, it is very easy to get an extension to filing the forms, and you don’t need a reason to be late. Also, since you are reporting money that was paid out you do not have to send any money if you are getting an extension, unlike filing an extension on your tax filings.

Remember, the extension must be filed on or before the date that the 1099 forms are due. Penalties begin at $30/form if filed late and can rise to as much as $100/form, depending on exactly when they are filed. Depending on how many forms you have to file, this could easily get quite expensive.

The penalties are arranged so that the amounts go up per form depending on how late you are filing. To file an extension use form 8809, whether on paper or electronically. This will extend the deadline by 30 days, and another extension may be filed under certain conditions.

From the first 30 days of the due date (or the date the extension runs out) the penalty is $30.00/form. The next step is $60.00. This is for forms which are filed more than 30 days after the due date but before August 1st, 2013.

After August 1, 2013 the penalty increases to $100.00/form which is late. This penalty is also the same for not filing them at all. The maximum penalty that can be levied against small businesses is $500,000. Keep in mind, a small business by government definition is any business which has less than $5 million in business (average gross receipts) for the three years previous.

For a person with one or two 1099 forms, the penalties are not very egregious but it is easy to see how quickly they can mount up if you are a larger company that routinely pays workers and contractors using a 1099 form.

For individuals, the form is just a way of keeping track of income, so the penalties would come in on the general tax return. For instance, if you don’t report a 1099 to try to report less income the problem won’t be that you failed to report the 1099, it will be that you failed to report income. This is much worse than the business which simply forgets to mail the forms out in time.

If you are a business and the worst has happened, such as fire, flood, computer meltdown or if some other misadventure occurs the IRS is quite good at working with the company.

The important thing to remember is to talk to the IRS about any situation in which the forms are going to be late or if the record of them have been destroyed.