What is a Form 1099? Who needs to file Form 1099?

Filling out your 1099-Misc for Vendors in 2013

There a several different types of 1099s that exist in the federal 1099 information reporting series. However, one of the most popular forms that small businesses need to file is the Form 1099-MISC.

What is a Form 1099-MISC?
Form 1099-MISC is essentially an information report that is required to be sent to certain recipients who have been paid during the year in the course of a trade or business. A copy of the Form 1099-MISC is also reported to the Internal Revenue Service (and some states) for their records as well. Failure to file a required 1099 may result in denied expense deductions upon audit and additional penalties and fees (typically $30 to $100 per missed filing for federal purposes).

Form 1099-MISC Filing Requirements
Form 1099-MISC is required to be filed in several instances. However, some of the most common examples are as follows:

• Non-employee Compensation/Independent Contractors – required when $600 or more is paid during the year to a non-employee. Includes payment for professional services (fees to attorneys, accountants, engineers, repairman, etc.).
• Rents – all types when the amount paid is $600 or more (unless made to a real estate agent). Examples include real estate rentals for office space, machine rentals, etc.
• Royalties- amounts that exceed $10. Examples include payments to authors, musicians, artists, etc.
• Direct Re-sellers – required when sales are made in the amount of $5,000 or more of consumer products anywhere other than to a permanent retail establishment.

1099-MISC Filing Exemptions
There are a few cases when Form 1099-MISC does not need to be filed even though it may have met the aforementioned requirements.  A few examples are as follows:

• Note that 1099-MISC generally do not need to be issued to corporations.
• Amount paid via credit card, debit card, or third-party settlement company (i.e., PayPal) should not be reported on a 1099-MISC as they will be now be reported on Form 1099-K by the bank or third-party.

Tax Reporting of 1099-MISC
There is now a question on tax returns which specifically ask if a business was required to issue 1099s and if so, whether they were filed.  Therefore, the IRS has implemented extra measures to make sure the 1099s are filed and will likely begin strictly enforcing the rules.  It is advised to collect a Form W-9 from all vendors so that 1099s can be issued if needed.

Form 1099-MISC Due Date
Form 1099-MISC is due each year to the recipient by January 31 and to the IRS by the last day of February. However, if filing your 1099-MISC electronically the date is extended to March 31st. Each state also varies with its deadlines and requirements. For example, North Carolina 1099-MISC reflecting NC income tax withheld must be submitted by the last day of February.

Start of a Great Year!

Website & App We Love I Heart Taxes! Welcome to I Heart Taxes, home of the proud taxpayer. We know that taxes do great things, like build roads and schools, pay our firefighters, and keep our air clean and our water safe.   Parking Pin App Know that overwhelming feeling of panic when you realize you've forgotten where you parked? Forgetful Parkers of the world, fear not! Parking Pin™ is a brand new iPhone app inspired by people who can never remember where they've left their car.

In The Office and Ready For Tax Season Tax season is here again! While the filing deadline might be a couple of months away, soon you will start to receive all required third-party reporting documents: W2s, 1099s for interest and dividends, 1099s for non employee compensation if you are an independent contractor, 1099-Bs from your broker reporting proceeds from the sale of stocks and bonds, 1098s f rom your mortgage holder, and K-1s from partnerships, S Corps, estates, and trusts. If you pay estimated tax payments throughout the year, the due date for your next quarterly installment for prepayment of 2013 income taxes is Wednesday, Jan. 15th.  Don't forget! 1099's are due by January 31st, 2014 to anyone that you paid $600 or more to in 2013 and is not incorporated.     Welcome Jenna Haar! We have a new assistant named Jenna. She is here to help you and answer any of your questions. She will be answering the phone, scheduling your appointments and collecting your information. Make sure you say hi next time you are in.    MB Tax Office News   Happy New Year!  We at MB Tax are very much looking forward to welcoming back our clients for the New Tax Season.  Our office is open Monday through  Friday, 9am-5pm through April 15th.  Your prearranged appointments are coming to you by mail, you should be receiving them shortly.  If you are happy with your appointment time then there is no need to confirm, and the office will send you a reminder by email as well shortly before your individual appointment.  If you are not able to make the appointment listed, just call the office at (503) 595-5890 or email the office at office@mbtaxpro.com to set up another time.  The tax organizing forms are up at our website,  MB Tax Professionals.  please feel free to use any of the forms that suit your needs, and also fill out a Vital Statistics page for our updated records.  We will see you soon!

Client Highlight:  Everyday Odyssey, LLC       Kellan & Jessica Craddock, owners of Everyday Odyssey, have developed a new app that is now available in your app store.   They just launched a new navigation iPhone app that they have been working on for the past few months. It's called Parking Pin. The premise for the app is simple--our friends and family (ourselves included) forget where they've parked all the time, especially if you're driving frequently. Parking Pin remedies this by remembering the last place you left your car and showing you a walking route back to it.   For more information, visit: Everyday Odyssey, LLC

Important Dates  Jan 15th - 4th Quarter Estimated Tax Payment (2013 tax) Jan 31st - 1099s & W-2s due to recipients Mar 17th - Corporations DUE Apr 15th - 1st Quarter Estimated Tax Payment (2014 tax) Apr 15th - Individuals, Partnerships, LLCs DUE

New Tax Law

New Tax Law for 2014 Filing Season

Tangible property regulations: In September, the U.S. Department of Treasury released its final regulations on the tax treatment of expenditures related to tangible property, which includes buildings, machinery, vehicles, furniture and equipment. Generally, amounts paid to acquire, produce or improve tangible property must be capitalized, but amounts for incidental repairs and maintenance of property can be deducted, potentially saving owners more in the current year.

Research credit: The research and development credit for businesses that expired after 2011 has been extended through 2013. The credit is for a wide variety of research activities, including those intended to develop or enhance product performance, manufacturing process or information technology. Wages for researchers, the cost of research supplies and the cost of computer licensing for research purposes are among the expenses that may qualify. Because this credit is scheduled to expire on Dec. 31, businesses might want to increase their research activities now to take advantage of the credit.

Additionally, the tax-planning guide discusses a number of tax issues for individuals:

Same-sex married couples: As a result of the U.S. Supreme Court striking down Section 3 of the Defense of Marriage Act, the Internal Revenue Service clarified that a same-sex married couple's marital status for federal tax purposes is now determined by the laws of the state where the couple was married – not the state in which they reside. Same-sex married couples should consider how this will affect their annual income tax returns and whether they should file jointly or as married filing separately. They should also consider their future estates, as married couples are allowed to transfer unlimited assets to each other under federal law, free of federal gift and estate taxes.

High-income earners: Lower ordinary-income tax rates are now permanent for most taxpayers, but some top earners previously in the 35 percent bracket now face the 39.6 percent top tax rate. There also is a reduction on many deductible items, which kicks in when adjusted gross income (AGI) exceeds $250,000 (singles), $275,000 (heads of households) or $300,000 (joint filers). Furthermore, as a result of the Affordable Care Act, for 2013 taxpayers must pay an additional 0.9 percent Medicare tax on FICA wages and self-employment income exceeding $200,000 per year ($250,000 for joint filers and $125,000 for married filing separately).

Sales tax deduction: The tax break allowing taxpayers to take an itemized deduction for state and local sales tax in lieu of state and local income tax was extended, but only through 2013. The deduction is valuable to those who reside in states with no or low income tax, and it can also benefit taxpayers in other states who plan to purchase a major item, such as a car or boat, before the end of the year.