Category Archives: 1099, 1098, and W-2 related articles

This group shows articles thar are related to relevent topics on 1099, 1098, and W-2 forms.

Tax Preparation Deadline Approaches

File 1099s onlineThe January 31, 2014 deadline for filing your tax forms for your small business is quickly approaching!  Don’t let yourself and your business fall victim to massive penalties for untimely tax filing.  It seems daunting, but don’t worry!  Whether you have one or hundreds of forms to file, we are here for you!

At Online File Taxes, we’ve set a personal goal of making tax filing as hassle free as possible.  We’ve narrowed down the process of filing all of the different 1099 forms and W-2s into three easy steps.  Our simple end-to-end online solution eliminates the need for printing on preprinted forms, stamps, envelopes, and the general confusion associated with filing with paper returns. There is no software to download and no forms to purchase. Simply register with us and begin entering your 1099 form information; we’ll take care of the rest.

We also eliminate the concern of making sure the forms get to your employees.  Our services include both e-filing with the IRS and printing and mailing recipient copies.  You can also select the option of having your employee receive their forms online.  Our pricing starts at just $3.50 per form and pricing discounts come with quantity.  However, the discounts apply per order so if you’ve got multiple forms to file, it is suggested you do it all at once!

For the CPAs out there buried in a mountain of W-2s and 1099s, we also offer a referral service.  If you refer your clients to us, they will receive 10% off their order, and you will receive a referral bonus of 10% of the total cost of their order!

Time is running out, so please don’t hesitate to open an account with us and start filing today!

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Tax Penalties for Not Filing

Online File TaxesWith everything you encounter in life, there are rewards if you complete a task and penalties if you don’t.  The IRS is no exception.  Failure to file or filing your 1099 forms and W-2s will cost you and the punishment is pretty serious.

Filing a W-2 a day late probably won’t cost you all that much, but file it thirty days late and you may be looking at a fine of up to $30 per W-2.  This fine is only counting on the W-2 being correct when it is filed too.  If you file your W-2s between 30 days after the due date and August 1, the rate of penalty increases to $60 per W-2.  Anything filed after August 1st, and you’re looking at $100 per W-2.  The maximum penalties for these items range from $250, 000 to $1,500, 000 per year.  Can your business afford that?

Filing 1099 forms is no exception.  There are stiff punishments doled out for those failing to file these forms as well.  With these, you’re looking at a $50 fine per unfiled form.  Should the IRS believe you haven’t filed intentionally?  Well then the rate increases to $100 per form or 10 per cent of the tax amount that should have been filed.

Essentially, penalties will happen both for late filing and failure to file at all.  The IRS allows extensions to be granted for those having issues meeting deadlines, so they are hesitant to accept excuses from businesses that are failing to file.

Fortunately, we’re here to help!  We take the hassle out of filing your tax forms so you don’t have to worry about extensions or penalties.  We have the ability to e-file large numbers of W-2s and 1099s thus avoiding any punishments from the IRS.  Stop by our website and check out the numerous services we offer to help you prevent penalties.

Sources:

http://www.irs.gov/instructions/iw2w3/ch01.html

http://smallbusiness.chron.com/penalties-company-face-not-filing-1099s-subcontractors-31665.html

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Your business is up and running and you’re finding yourself getting busy. You know you need morehelp, but you’re unsure if you want to hire an employee or bring in an independent contractor.  You might also be wondering the difference between the two. It’s very important to discern the status of these workers as that status makes all the difference for your company and your taxes.
1099
 We’ve compiled a list of the primary differences between the two and have listed them here for your reference. We hope you find it helpful as you decide which is best for your business.

  1. By law, you’re required to withhold taxes for an employee. These include Social Security and Medicare taxes as well as the unemployment taxes you’ll need to pay for an employee.  There are no such requirements for an independent contractor.
  2. An employee is obligated to follow the rules of the company about when they work, how they work, and where they work.  An independent contractor provides a service but is given little instruction about how or where to work.
  3. An employee rarely has the opportunity to hire people to work under him if the workload is too intensive, where as an independent contractor has that ability.
  4. An employee is typically paid an hourly wage or a salary with a specified pay schedule.  An independent contractor is paid for the service he provides in a lump sum.
  5. For an employee to travel or go above and beyond normal duties, you, as the employer must reimburse the employee for mileage or travel expenses.  An independent contractor incurs their own expenses as those are typically built into the fees for the project.
  6. Unless otherwise approved by you, an employee typically works only for you.  An independent contractor may work for many different people and/or businesses.
  7. For an employee, the employer is required to provide the equipment needed to get fulfill the job duties whereas independent contractors provide their own equipment.

Hiring an employee or an independent contractor comes down to a matter of preference. And there are many nuances to each of these factors. We recommend consulting an attorney for specific legal advice and guidance before proceeding.

Should you decide on independent contractor, be sure to check out the services we offer for filing the required tax documentation – a 1099.

Resources:
IRS
Legalzoom
MDC

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Requirements And Information On The Various 1099 Forms, And When To Use Which One

Almost all businesses will only have to worry about the most common 1099, the 1099-MISC. This form will be used for the most part to pay for labor and services by small businesses, independent contractors, doctors or health clinics.

Corporations are for the most part exempt from this, except for legal and medical corporations. You also must file a 1099 form for any monies paid to an attorney or crew members of a fishing vessel.

Payouts of substitute dividends, royalties or tax-exempt interest will also demand a 1099, as well as the sale of products for resale worth $5000 or more to a retailer who does not have a permanent establishment.

The forms must be filed by February 28th in 2013. This date usually falls in the last week of February if you are filing by paper, and 30 days later if filing electronically. The electronic filing date for 2013 falls on April 1, 2013.

You will need the Social Security Number or the TIN of the business with whom you are filling to form out to. Many small business owners use their SSN, so don’t be surprised if that happens. The TIN is a federal Tax Identification Number.

The 1099 form is the way the government is trying to track income which had been very hard to trace previously, and while there is some extra paperwork, the reporting data is not that hard to adhere to. Online File Taxes can help you with every aspect of your 1099 situation, and help you to make sure that you file the correct 1099 and that their reporting is accurate.

Some of the other 1099 forms are below:

• 1099-INT

• 1099-R

• 1099-B

• 1099-DIV

• 1099-C

• 1099-S

The letter designation behind the 1099 usually gives a clue as to what the form is for. 1099-INT, for instance, is issued by banks and other financial institutions to show how much interest income you’ve had – for instance, from a CD.

If you are forgiving, or canceling a loan, you will issue a 1099-C whether or not the person who had the loan can count that as income. The 1099-S deals with the sale of real estate, while a 1099-DIV deals with dividend income.

Also, as you draw money out of a retirement or pension plan, a 1099-R will be issued so that the taxes can be paid on the money drawn out.

The 1099 form, if used properly can be a good thing to your taxes – it is a much more reliable form of record keeping for expensing purposes. The penalties can be stiff, but if you are keeping decent records the 1099 reporting requirements will not add a huge amount of effort to your tax routine.

Online File Taxes can make sure that all your 1099 requirements are being met, and can do it in paper or e-filing form. Remember, if you have over 250 1099 forms, you must file them electronically.

Go to our website now to see how we can help you with the new 1099 requirements, and any tax service you may need!

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1099 Penalties – What You Need To Know And How To Avoid Them

1099 forms are becoming the method of payment for a growing number of people acting as independent contractors and small businesses. Any company or individual with whom you do over $600 must be issued a 1099. This includes payments for rent or any service a contractor, consultant or expert provides.

Professional fees are included in this requirement. These would include doctors, lawyers or other professionals. Payments to corporations are excluded only if they are not involved in supplying you with medical and health care, legal services or fishing activities.

These forms must legally be filed whether or not you are going to declare the money as expenses, and the forms must be filed if you are a business or a nonprofit organization.

Typically, form 1099s must be filed in the last week of February, and if filing electronically about 30 days later. In 2013, the current year, the exact dates are February 28 if filing by paper and April 1 2013 if filing electronically.

If you are filing over 250 1099s, the federal government requires that they be filed electronically. Extensions can be easily obtained using form 8809. You can file it in paper form or over the internet, but if you have more than 10 1099s that you are extending you must file this form electronically.

The extensions must be posted before the regular due date, and extend the period by 30 days. There is recourse if you have lost the information through no fault of your own, such as fire or flood, but you will have to be able to prove how you lost the information.

The penalties can quickly become a major liability to businesses, and can occur for one of two reasons.

The first occurs when you are filing the forms after the due date, or after the extended due date. If it is less than 30 days past due, the penalty is $30/form that it is late, with a maximum penalty of $250,000 ($75,000 for small business).

The rate climbs to $60/form if it is more than 30 days late but is filed before August 1st.

The last and highest rate includes anything filed after the 1st of August, and assigns a $100 penalty per form. The cap on total penalties at the highest end is $1.5 million, and $500,000 for small businesses.

1099 penalties can quickly accumulate. If you enter incorrect information on the 1099 forms, the highest penalty level will be used of $100/form, but if you intentionally disregard the filing requirements or intentionally enter false information the penalties start at $250/1099 form, with no maximum limit.

Online file taxes can easily guide you through the 1099 process, and make sure that you are using the correct 1099 forms. In almost all cases that will be the 1099-MISC, but there are some specialty applications that call for other 1099 forms, such as the 1099-INT, the 1099-B and others.

Keep good records, and there is no need to worry about your 1099s – and Online File Taxes is here to help when you need it!

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When Is My 1099 Due, And What Can I Do If I’m Not Ready?

1099′s are becoming more and more popular with businesses and individuals as the employment norms continue to shift, but some things must be kept in mind – and now is just the time to be keeping them in mind!

1099s are the easiest way to keep track of how much you paid individuals or small businesses and are essential if you plan on claiming the money spent as an expense.

Typically, 1099 forms have to be filed in the final week of February – that is if the filing is by paper. If filing electronically the deadline is typically 30 days later. In 213, the deadlines are February 28 if filing by paper and April 1 2013 if filing electronically.

If you are not quite ready yet (there can be a lot of reasons small businesses get behind on their paperwork) the government has actually streamlined the procedure. You just need to file a Form 8809, electronically or by paper, before the due date on the 1099 would have been. This will give you a 30 day extension. There is another 30 day extension available for hardship causes, but it is not easy to get.

The first one is automatically granted as long as the Form 8809 is filled out and mailed before the due date on the 1099s.

You must also be careful of how you send them – other than the post office, the only recognized carriers are the big three.

DHL Express (Same Day Service option only), FedEx (multiple services available) and UPS (also multiple services available). No other carrier can be used to send the forms in.

Also, if you have over 250 forms you must file the forms electronically.

The penalties for late filing can add up rather quickly, starting at $30/form and increasing to $100/form for all forms filed after August 1, 2013 or not filed at all.

There is also an intermediate step, $60/form, which is used if the form is more than thirty days late but is filed prior to August 1 2013. The important thing to remember is that it is not too late to file an extension or the forms, especially if you are filing them electronically. In fact, it is almost worth it to file electronically because of the automatic extension built into the system.

1099 forms are the payment method of choice for contractors, and any other business that you do more than $600 with. The 1099-MISC is the 1099 most widely used and when someone says 1099 that is the one that they mean by default.

There are other 1099 designations but they are for very specialized circumstances which do not normally occur.

It is very important to keep close track of your 1099 usage, and it is best to have multiple backups. The IRS does make exceptions for circumstances beyond your control, but it is always better to have this information in at least 2 places.

Now you have a good idea of the basic schedule that 1099 forms work on – there is still time to file, and if you are not ready yet you can file an extension online. We can help you with every aspect of 1099 filing and preparation!

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What Do I Do With This 1099 MISC and Do I Need to Report It?

Many people who may have performed work or services for others may be a little surprised to find a Form 1099-MISC in their mailbox at the beginning of the year. The Form 1099-MISC is used by businesses of all sizes to report money that they paid out to non-employees. Non-employees are usually independent contractors. If you get a Form 1099-MISC, hold on to it because you will need it in order to properly file your federal (and most likely) state taxes.

You should get a Form 1099-MISC from any person or business that paid you $600 or more during the tax year as long as you were not an employee of that company or person. The earnings that they report on the Form 1099-MISC will also be reported to the IRS, so you have to add this amount to your gross income when doing your taxes. Gross income is any income regardless of the source and includes commissions and fees that you have charged someone.

The first thing to do is to check to make sure that information is correct, especially your Social Security Number or Tax Identification Number. People make mistakes, so double check this. Next, make sure that the amount reported in Box 7 is accurate. This is the amount paid to you for work or services you did for the payer. Check Boxes 4 and 11 to see if any taxes were withheld. Withholding is not typical for 1099-MISC as this form is to be used to “non-employees”.

If you worked on a fishing boat and received shares, check the amount in Box 5.

If you provided medical or health care services, check Box 6 to find out how much was paid for your services.

Box 9 is checked if $5000 or more in goods intended for resale were received by you with the intent to resell those goods in something other than a retail establishment. This usually applies to those who sell goods on a buy-sell, commission, or deposit-commission basis.

Box 10 will tell you how much crop insurance you were paid, if any.

Box 13 will tell you how much in legal services you were paid.

Form 1099-MISC is also used to report rents, royalties and certain other income.

Box 1 should contain the correct amount that was paid to you for rent of land, office space, equipment, or machinery.

Box 2 should contain the amount that you received from royalties that were $10 or more.

Box 3 is for “Other Income.” This can be anything from cash prizes to legal awards for punitive damages.

Any payments listed in Box 1 probably will require that you use Schedule E in order to report your rental income.

For those payments that are in Boxes 5, 6, 7 and 13, consider them self-employment income. Generally, you will need to fill out Schedule C or C-EZ as well as Schedule SE.

The IRS will get a copy of your 1099-MISC and will check it against your tax return to make sure that you are reporting all of your gross incomes. Do not try to stiff them because you could face some hefty fines.

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What are the Current IRS 1099 Requirements for Small Businesses?

The requirements for Form 1099-MISC can seem confusing at times. The good news is any tax professional can clear up questions, and there is a wealth of information online as well concerning who must send out the forms and who are to get them. Here is some general information on the Form 1099-MISC requirements.

All businesses are required by law to issue Form 1099-MISC to those who have performed work or services for them who were not classified as employees. This can include professionals, independent contractors, and other types of individuals and business entities. The Form 1099-MISC is used by the IRS so it can matches the reported income to the person getting it to see that that person is properly reported that money as income. Businesses that do not send out Form 1099-MISC when they are required to do so can face stiff penalties for noncompliance.

Generally speaking, the Form 1099-MISC is to sent out no later than January 31 to the payee, and copies must also be sent to the IRS prior to the last day of February. Some states require that they, too, get copies before certain deadlines. Also, those sending out Form 1099-MISC must file Form 1096. This is a summary of 1099-MISC forms that were sent out.

A Form 1099-MISC must be given to anyone who falls into one of the following:

When non-employees (such as independent contractors) are paid $600 or more.

When there are payments that exceed $10 for royalties, substitute dividends, or and tax-exempt interest.

When payments are made to attorneys or the crew members of fishing boats regardless of the amount paid.

Any payments to persons who are subject to the backup withholding rules regardless of the amount paid.

If there is a sale of $5,000 or more and the sale was for consumer products that are for resale anywhere other than what is considered a permanent retail establishment.

Many times it may be confusing to understand the difference between an employee and an independent contractor. Generally, the IRS says a person is an independent contractor if that person is only subject to the control or direction of another for the sole purposes of detailing or outlining the work that is to be accomplished, BUT is not subject as to methods or to the means by which that intended work is accomplished.

Here is a simple example: A company hires a landscaper to mow the grass. The company can tell the person where the grass is and how often they want it mown, and agree on a price. The landscaper provides his or her own tools, transportation, sets his or her own hours, and is not required to be “on the clock”…this would be an independent contractor.

On the other hand: a company hires a person to do maintenance and this includes mowing the grass. The person is required to clock in and out, is required to be at work at a certain time, is subject to the rules of the company, and is provided the tools needed to get the job done. This person is an employee.

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What are the Penalties Imposed by IRS for Failure to File 1099 Forms?

In general, there are two types of penalties associated with 1099-MISC forms. The first concerns those who are required to issue the forms; the second concerns those who receive the forms. Let’s take a look at both.

For those who are required to send out 1099-MISC forms, there are penalties for not issuing Form 1099-MISC. It does not matter if you are a company or a person, if you are required to give someone who worked for you a Form 1099-MISC, you must do to. Generally, you have to give it to the person by the end of February of the year that follows the tax year that the income was paid.

In the event the Form 1099-MISC is not sent out on time, the company may be fined a penalty that can range from $30 to $100 (for each form), with a penalty maximum of $500,000 per year. This will depend on just how overdue the company has missed the deadline in issuing the form. Keep in mind, that if someone intentionally ignores the legal requirement to provide a timely and correct Form 1099-MISC statement, that company may be subject to a $250 minimum penalty per statement, and there is no maximum limit associated with in this case.

Some taxpayers wonder if they should be getting a Form 1099-MISC. The most common reason for someone to send you a Form 1099-MISC is that you did work for that person or company as an independent contractor. Do not confuse this with normal earned wages or salaries which you may have received from a job in which taxes were withheld from you by the employer.

The pay that is reported on your 1099-MISC is normally subject to both federal income tax and as well as state income tax. It is the responsibility of the one who paid you those monies to send you a copies of your Form 1099-MISC. You must then report these earnings on your tax returns.

What Income Can Go On Form 1099-MISC?

The answer is there are many types of income which can be reported using the 1099-MISC. This might include rents, non-employee compensation, most types of royalties and charter bus or even fishing boat proceeds. However, most often, the reason for getting a Form 1099-MISC for someone is that you worked as an independent contractor at some point during the year. An independent contractor is NOT considered an employee and therefore the company or person you worked for is not responsible for withholding taxes on you.

If you do not include the 1099-MISC income on your tax return, you may be penalized. In some cases, such as you underpay your tax, the IRS can charge you as much as 20 percent of the underpayment. For instance, if you underpaid (because you ignored your Form 1099-MISC, by, say, $500, the penalty could be $100 (which is $500 x .20 = $100). You can avoid these problems by making sure you include all of your miscellaneous income. If you are not sure about any of this, contact a professional for advice.

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Article Title 1 What is the Deadline to file 1099s and What Happens If I Miss It?

Millions of Americans will receive one or more 1099-MISC forms this year. In order for taxpayers to file their taxes on time, they need to have these forms delivered to them by a certain deadline which is established by the IRS. Failure to provide the forms to those who are entitled to them can bring about serious consequences. Here are the deadlines for submitting 1099s for 2012.

1099-MISC Deadline:

You must send Copy B as well as Copy 2 of the 1099-MISC to the person or company no later than January 31, 2013. However, payments reported in box 8 or 14, the due date is extended to February 15, 2013. In addition, you must also send Copy A to the IRS. This must be done by February 28, 2013.

For those who file electronically, the deadline is April 1, 2013. It is important to understand that to file electronically it is required that you have software that is able to generate a file that is in accordance with the specifications outlined in Pub. 1220. For those that are required to file electronically (and fail to do so) there can be a $50 penalty for each return that was not filed. There are, however, waivers which can be applied for, but you just show reasonable cause.

1099 Deadline Penalty:

Those who do not file within the deadlines (and do not have a good reason) may be subject to penalties. Persons may face penalties if they: fail to file timely; if they fail to list all the required information on the 1099; if they include information that is not correct on the return. You should double check all of this information.

There can also be penalties for those who file on paper if there are required to file electronically; if they report a Tax Identification Number that is not correct, or if they fail to report a TIN altogether. For those facing a penalty, the 1099 deadline penalty is based on when the corrected version is filed. Generally, the penalty is:

An amount of $15 per return if the corrected form is filed within 30 days or by 30 March if the deadline date is February 28. There is a maximum penalty of $75,000 per year for large businesses and $25,000 for small businesses.

A penalty of $30 for each return if the corrected form is filed more than 30 days after it is due but before August 1. The maximum penalty is $150,000 per year; $50,000 for small businesses.

An amount of $50 per return for those who file after 1 August, or do not file required forms at all. The maximum penalty is $250,000 per year; $100,000 for small businesses.

As you can see, failing to file your 1099s on time can lead to expensive fines. If you are required to send out these forms to those that may have worked for you during 2012 make getting forms completed and send out a priority. It can save you a lot of money and stress.

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