back to school basics – form 1099 misc
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Back to School Basics – Form 1099 MISC. Welcome. Back to School Basics - Form 1099 MISC . Agenda Purpose of Form 1099 MISC Typical Recipients Overview – Line by Line Detail Filing Requirements. Purpose of Form 1099 MISC. - PowerPoint PPT PresentationTRANSCRIPT
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WELCOME
Back to School Basics – Form 1099 MISC
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Agenda Purpose of Form 1099 MISC Typical Recipients Overview – Line by Line Detail Filing Requirements
Back to School Basics - Form 1099 MISC
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A record of income received from a business for services rendered
Cost-cutting alternative for companies needing specific tasks completed Non-employee compensation means no company paid taxes No need to provide benefits or offer employee incentives No risk of investment loss to the company
Typically the relationship can be ended once the task is completed
Purpose of Form 1099 MISC
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Independent Contractor or “freelancer”
Actors, novelists, freelance writers and other creative artists
Also used to report income from the following : At least $10 in royalties or broker payments in lieu of
dividends or tax-exempt interest Gross proceeds of $600 or more paid to an attorney Fishing boat proceeds $600 or more in Rents, services, prizes and awards
Form 1099 MISC Recipients
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$600 or more in medical and health care payments, crop insurance proceeds, cash payments for fish
$600 or more in cash paid from a national principal contract to an individual, partnership, or estate
$600 or more in other income payments direct sales of at least $5,000 of consumer products
to a buyer for resale anywhere other than a permanent retail establishment.
Form 1099 MISC Recipients
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Payroll departments usually handle the “other income” payments and nonemployee compensation
Audience Poll – Does your business hire Independent Contractors?
Overview – Line By Line Detail
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Payer’s Information Identification Numbers Recipient’s Information Account Information 2nd TIN Not
Overview – Line By Line Detail
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Box 1 – Rents Box 2 – Royalties Box 3 – Other Income
Prizes and awards FMV of merchandise from game shows or sweepstakes Punitive Damages
Compensatory damages for non-physical injuries or sickness
Damages received for emotional distress Physical symptoms from emotional distress reportable Damages received due to emotional distress from
physical injuries or sickness NOT reportable
Overview – Line By Line Detail
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Payments of a deceased employee’s wages Estate or Beneficiary
Payments of Indian gaming profits or to Tribal Members
Termination payments to self-employed insurance salespeople
Box 4 – Federal Income Tax Withheld Backup Withholding
Box 5 – Fishing Boat Proceeds
Overview – Line By Line Detail
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Box 6 – Medical and Health Care Payments $600 or more to physicians and medical/health care service
providers Includes payments made by medical and health care insurers
under health, accident and sickness insurance programs No requirement to report payments to pharmacies for
prescription drugs
*Corporation exemption applies when payments made to a health care provider are done through a credit or debit card in an FSA, HRA or HSA.
Overview – Line By Line Detail
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Box 7 – Nonemployee Compensation $600 or more Fees, commissions, prizes and awards for services performed Expenses incurred for the use of an entertainment facility Federal executive agencies
Conditional Guidelines Non employee payment Services in the course of the payer’s trade or business Individual or partnership $600 or more
Overview – Line By Line Detail
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Box 7 common examples Professional Service Fees Referral Fees Fees and travel reimbursement not accounted to
the payer if the fee and reimbursement total is at least $600 or more
Non-employee entertainers for services Taxable Fringe Benefits to nonemployees Directors fees Nonqualified deferred compensation (409A)
Overview – Line By Line Detail
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Box 8 – Substitute Payments in Lieu of Dividends or Interest Definition of “Substitute Payment” means a payment in
lieu of: Tax-exempt interest that has accrued while a short
sale was openand A dividend if the ex-dividend date is after the
transfer of stock for use in a short sale and before the closing of the short sale
Overview – Line By Line Detail
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Box 9 – Payer Made Direct Sales of $5,000 or More of Consumer Products to a Buyer (Recipient) for Resale Enter X if applicable Do not enter a dollar amount
Box 10 – Crop Insurance Proceeds Boxes 11 and 12 – Foreign Tax Paid and Foreign
Country or US Possession (For 2013) Box 13 – Excess Golden Parachute Payments Box 14 – Gross Proceeds Paid to an Attorney
Overview – Line By Line Detail
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Box 15a – Section 409A Deferrals Box 15b – Section 409A Income
Amounts considered subject to a substantial risk of forfeiture are not included
Also reported in Box 7 Box 16 – State Income Tax Withheld Box 17 – State/Payer’s State Number Box 18 State Income
Overview – Line By Line Detail
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TIN (Tax Identification Number) What is a TIN When is a TIN required Missing or Incorrect TIN
Not provided Less than 9 digits Mixture of digits and numbers
Filing Requirements
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IRS 1099 TIN Matching Process TIN’s are matched against two files:
All SSN’s issued by the SSA All IRS assigned employer identification numbers
(EINs) CP2100/2100A Notice
“B” Notice Incorrectly Reported TIN by the payee
Correct the data in the system, do not send B Notice
Filing Requirements
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Provided TIN and Name Control do not match Send B Notice to payee
Procedure when a TIN is not Provided Backup Withholding @ 28% W-9 Report withholding on Form 945- Annual Return of
Federal Income Tax Withheld
Filing Requirements
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When to File 1099 MISC Reporting Period February 28th of the following Tax Year Form 1096 Must be properly addressed and mailed by the due
date to be considered timely Holidays and Weekend due dates
Filing Requirements
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Electronic Reporting Automatic Extension of 1 month Must be reported via Filing Information Returns
Electronically (FIRE) system 250 or more forms
Recordkeeping Requirement 3 years from the due date of the returns 4 years from the due date of the returns if backup
withholding was imposed
Filing Requirements
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**ELECTRONIC FILING IS NOT ACCEPTED ON MAGNETIC MEDIA FOR 1099 MISC RETURNS**
https://fire.irs.gov
Test files can be submitted in advance to http://fire.test.irs.gov
Filing Requirements
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http://www.irs.gov/pub/irs-pdf/i1099msc.pdf - Instructions for Filing Forms 1099 MISC
http://www.irs.gov/pub/irs-pdf/f1099msc.pdf - Form 1099 MISC
http://www.irs.gov/pub/irs-pdf/p1220_11.pdf - Publication 1220, Specifications for Filing Forms 1099 electronically
References
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THANK YOU FOR ATTENDING!
J ILLIAN ROBINSON, CPPPENSOFT
(757) 873-1199JR OB [email protected]
Thank You