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.

Party Time!

Join us for beverages, appetizers & music 3rd Annual Holiday Party!

Host:   MB Tax Pro When:  Friday, December 6th from 5pm-9pm  Where: NW Production Center 2580 NW Upshur St. Portland, OR 97210 The businesses of NW Production Center have joined forces to create an event to remember including beverages, appetizers, music & so much more: * Photo booth + props to take your very own  Awkward Family Photos!   * Wine and beer tastings from local breweries!  * Delicious Food! * Family Friendly!     NW Production Center Businesses Include:  CineRent West  MB Tax Professionals, LLP     Red Door Designs Morinka Schworm Law Offices LLC RMG Sjobeck Integration Professionals Brewvana Chris Ryan Photography Studio Services NW Andrea Fisk Skin Care  Please RSVP by responding to this email with the number of guests that will be attending.  The more the merrier!   Sincerely, Erin & David

Uncomplicating The Healthcare Reform Issue

Healthcare Reform is a complicated issue. This diagram was prepared by the Joint

Economic Committee, and shows just how much consideration had to go into

developing a plan.

Fortunately, they made room for Physicians in the bottom left and Patients in the bottom

right. That they’re not directly connected might be a slight oversight.

 

There are four key provisions of the Patient Protection and Affordable Care Act, typically

referred to as the ACA, that will affect most people: Exchanges, Subsidies, Guaranteed
Insurability, and Individual Coverage Mandates.
 

Exchanges (also referred to as The Marketplace) are a place where people can go to

compare health insurance plans and premiums. In Oregon, it’s called Cover Oregon,
and in Washington, it’s called the Washington Healthplan Finder. As much as possible,
it’s an apples-to-apples comparison. Carriers now have to design their plans based on
Metal Tiers. You may see Platinum, Gold, Silver, and Bronze levels of benefits, although
carriers aren’t required to offer benefits within every tier. And with some minor variation,
a Gold Plan is a Gold Plan no matter which carrier you use. One critical issue now will
be the Provider Network. This will be the easiest way for carriers to affect their rates. So
expect carriers to tighten up their networks, and cut out expensive provider groups.
The primary reason that one would use an Exchange rather than going directly to a
carrier, is the subsidy.

Subsidies are determined by your Modified Adjusted Gross Income (MAGI). If your

MAGI is below 400% of the poverty level, you may qualify for a subsidy. The subsidy
can be used to reduce your premium, or as a tax credit when you file. There are subsidy
calculators available on the websites for all of the Exchanges. There’s also anindependent subsidy calculator created by the Kaiser Family Foundation.

As of January 1st, there is Guaranteed Insurability for everyone. Carriers can no

longer decline coverage to an individual based on previous or current medical issues.
This is critically important for a lot of people. Carriers will have to allow you onto their
plan regardless of your medical conditions. But there are open enrollments (discussed
below) and one must apply by the 15th of the month prior to the effective date. If you
want to have a plan on January 1st, you must apply for that plan (through the Exchange
or directly with the carrier) by December 15th.

In order to help the carriers keep premiums low, Individual Coverage Mandates are

implemented starting in 2014. That means everyone must have health insurance or pay
a penalty. In 2014, that penalty is the greater of $95 or 1% of household income. In
order to discourage people from going without insurance and just paying the penalty,
the ACA only allows individuals to start health insurance at one time during the year.

This year, that’s January through April. In following years, it will be January 1st. If

someone has a major medical issue, they may have to wait for several months until that
issue is covered by health insurance.

There is a lot more to the ACA, and we’re discovering more every day. Some of the

detail may change, but here are some important issues that will not change.

Become more engaged in choosing a plan

Make sure you understand your benefits. A broker can help you, and you won’t have
to pay anything for their services.

Know that provider networks will be shrinking

Verify that providers who are critical to your care are on the plan before you apply.

Consider increasing your deductible

 

Most of the out-of-pocket maximums will be the same now. Health insurance is risk

management. If your biggest risk is bankruptcy, and you can afford to pay the
smaller bills yourself, maybe a higher deductible plan with a lower premium is a
better fit for you.

Become a consumer of your care

Understand the costs. Check out websites like www.healthcarebluebook.com, where

you can see what a procedure should cost in your area. Go directly to the labs to getwork done. I’ve used www.healthcheckusa.com in the past and have been very
happy with them. A quick Google search will show labs in your area. In both Oregon
and Washington, there are free resources to get prescription discounts.



JR Hinds, Health Insurance Broker

http://www.hindsandassociates.net/

How Will The Affordable Care Act Affect My Taxes? (Obamacare)

KEY PART OF HEALTH REFORM TAKES EFFECT JAN 1:

 

Individuals without insurance will owe a tax.

 

Although the Obama administration delayed to 2015 the rule that firms with 50 or more full-time employees must provide affordable health insurance to workers or pay a stiff fine, the individual mandate’s start date wasn’t deferred, despite a push for this by the GOP.

 

 

 

Now IRS has issued rules on when this tax applies.

 

Folks must have minimum essential coverage for themselves and their dependents to avoid the tax.

 

This includes coverage provided by an employer that meets minimum federal requirements, coverage purchased through an exchange and federal coverage such as Medicare, Medicaid, Tricare and veterans coverage.

 

Several groups of people are exempted from the individual mandate:

1) Individuals for whom coverage is too expensive.

 

If an employee is eligible for coverage but his or her share of the premium exceeds 8% of the household’s AGI, the penalty tax doesn’t apply. Ditto for folks who are  eligible for employer coverage if the cost of a basic bronze-level plan in an exchange, less any federal tax credit for buying insurance, exceeds 8% of the household’s AGI. Members of households where total income is below the level needed to file a tax return also are exempted.

2) Filers who go without coverage for periods of less than three months.

3) People who can show that a hardship forced them to go without coverage.

4) And members of religious groups opposed to private or public insurance.

 

The tax for being uninsured is normally the higher of two amounts:

The basic penalty or an income-based levy.

 

The basic penalty is $95 a person for 2014 ($47.50 for each family member under the age of 18), with a $285 ceiling. The income-based penalty is 1% of the excess of the  taxpayer’s household’s AGI over the minimum level of AGI needed to trigger filing a tax return. In either case, the tax is reduced proportionally for any months that the taxpayer had coverage.

Both of these levies are scheduled to be significantly higher in 2015 and 2016.

 

 

But in no case can the tax exceed the cost of a bronze-level exchange plan

 

For the taxpayer and family members, also adjusted for months with health coverage.

 

The tax is paid annually on the 1040. So 2014’s levy is paid in early 2015.

 

The Service is going to have a hard time policing the tax penalty for 2014.

Employers are supposed to send IRS a report with details about employee coverage so the agency can determine who is uninsured and check whether the penalty is paid. But when the administration delayed the start date of the employer mandate to 2015, it also made employer reporting voluntary for 2014. As a result, the Revenue Service will not have completely accurate data on people who are going without coverage.

And IRS’ enforcement remedies are limited to collect the tax. It is barred from filing a lien or levying a person’s assets, so it’s allowed only to offset tax refunds to collect the penalty. Nor can it charge interest on the unpaid balance of the tax.

 

*taken from www.kiplinger.com

Small Business Health Care Tax Credit

If you employ less than 25 employees, pay an average wage of less than $50,000 and pay at least half of your employee health insurance premiums then you can qualify for the Small Business Health Care Tax Credit.  Just realize that starting in 2014 you must purchase your employee health insurance through a Small Business Health Options program (SHOP) to qualify.  

Here in Oregon you will go to www.coveroregon.com to purchase your coverage.  Enrollment for 2014 closes March 31st so be sure to make changes soon so you don't miss out.