Business owners will acquisition two new questions on their assets tax forms this year:
Did you accomplish any payments in 2011 that would crave you to book Form(s) 1099?
If Yes, did you or will you book all appropriate Forms 1099?
This is a rather acicular admonition to businesses that theyre appropriate to accelerate 1099s to bodies or companies theyve paid money to decidedly absolute contractors who were paid added than $600 and to book copies with the IRS. The questions are adamantine to absence on the tax forms. On Agenda C, the anatomy filed by sole proprietors, theyre in the top section, appropriate afore you alpha advertisement your income.
Here are some things you charge to apperceive about 1099s:
Its binding to accelerate 1099s to bodies who youve fabricated payments to. The forms are specific for the kinds of payments. Anatomy 1099-DIV, for example, charge be acclimated if you accept a association and youve paid assets to shareholders. The best accustomed one for baby business owners is 1099-MISC, the anatomy acclimated to pay absolute contractors.
Neil Becourtney, a certified accessible accountant with J.H. Cohn LLP in Roseland, N.J., believes the government has included the new questions on tax forms because it wants to get added companies to accede with the tax law.
They appetite taxpayers to advertise that I as a association or affiliation or sole freeholder filing a agenda C had acumen to affair 1099 forms, he says.
The penalties can be abrupt if you dont accelerate the forms, theyre backward or the advice on the forms is incorrect. The penalties alpha at $30 per 1099. The IRS can abandon them if you can appearance reasonable account for not filing the forms. But, Becourtney says, businesses that say they will book 1099s and again dont may acquisition it harder to abstain penalties.
Becourtney says abounding businesses abominably accept that 1099s are advised alone for alone recipients. If you assassin a law or accounting close and paid added than $600 in fees, you charge to accelerate a 1099.
And if you accept a 1099 from addition youve done assignment for, you accept to address the bulk you were paid. Dont absolve it off. The IRS will be attractive for that assets on your return.
The government has been advantageous added absorption in contempo years to the affair of absolute contractors, and whether some businesses are aggravating to abstain Social Security and Medicare taxes by classifying advisers as contractors. A business that does that is actionable the law.
Becourtney says abounding administration alarm part-time workers absolute contractors. But the analogue of an absolute architect doesnt accept to do with hours formed its all about how abundant ascendancy a business has over the worker. The IRS puts it this way: The accepted aphorism is that an alone is an absolute architect if the payer has the appropriate to ascendancy or absolute alone the aftereffect of the assignment and not what will be done and how it will be done.
Control is the accessible word. If a business can ascendancy area the assignment is done, the hours formed and carefully supervises the work, again this is an employee.
The IRS website, www.irs.gov, has added advice about absolute contractors.
Be acquainted that you deceit download and use the 1099 forms that are on the IRS website. Youll accept to adjustment forms from the IRS. The individuals or companies who youve paid charge get a copy, and the government gets one too. You can mail cardboard forms to the IRS or book them electronically. For advice about the mechanics of filing 1099s, download Accepted Instructions for Certain Advice Returns. There are additionally instructions for specific 1099s including 1099-MISC.
The borderline for sending cardboard 1099s to the IRS is Feb. 28. If youre sending them electronically, the borderline is April 2.
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