Form
1099-MISC Requirements and Best Practices
On all current federal business income
tax returns are found these “yes, or no” questions:
Did you make any payments in 2019 that would require to file file Forms(s) 1099?
If "Yes," did you or will you file required Forms 1099?
Tax law requires a Form 1099-MISC be
issued by taxpayers prior to January 31 of the succeeding year for
all vendors/payees paid $600, or more, during the prior year. Form
1099-MISC must be sent to both the IRS and the vendor/payee using the
appropriate forms. Business taxpayers which must comply with this
requirement include:
- Sole proprietors (Form 1040, Schedule C, Trade or Business)
- Rental property operators (Form 1040, Schedule E, Rental Income)
- Farm businesses (Form 1040, Schedule F, Farming)
- Limited liability companies (LLCs) of all kinds
- Partnerships, associations and non-profit organizations of all kinds (Form 1065 or Form 990)
- S-Corporations (Form 1120-S)
- C-Corporations (Form 1120)
- Trusts and estates (Form 1041)
The following are exceptions to the
general rule, that is, do NOT need to be issued Form 1099-MISC:
1. Material only vendors (must not include any labor content to
qualify for exception)
- Corporations (LLCs & partnerships are not corporations and do not qualify for exception)
- Utility, telephone companies, and the like
- Payments made by credit card (debit card payments do not qualify for the exception)
The law does NOT except the
following:
1,
Attorneys/lawyers of all organizational types must be
issued a Form 1099-MISC, no exceptions
2. Foreign vendors/service
providers doing business in the U.S. must be issued a Form
1099-MISC because the income is U.S. source income.
Failure to comply with this requirement
subjects the taxpayer and/or return preparer to these consequences:
- Filing a fraudulent tax return – knowingly answering a tax return question incorrectly
- Tax return deduction disallowance for payee/vendor payments
- Penalty assessment for failure to file, or late filing, $50 up to $500 for each form
- Backup withholding from payee/vendor payments for non-compliance
- Expose the tax return preparer to IRS practice sanctions
Best
Practices
- Require a completed and signed Form “W-9 – Request for Taxpayer ID Number” before the first payment to vendor/payee
- Validate taxpayer number and name match at IRS.gov website for accuracy
- When in doubt, require a Form W-9 and issue a Form 1099-MISC
If you look at the current scenario with regards to the grants for small business expansion, the federal government actually offers no direct grants. There are however, some programs by the government, through which grants for research and development activities that a small business might carry out are provided by the SBA. Then there are indirect grants in the form of small business loan guarantees as well as subsidized loans, wherein you get loans at reduced rate of interest from the bank as the government pays some part of your loan. Or if you default on your loan payment, the government pays the bank on your behalf. As you can see, there are opportunities galore for small business funding and grants through Mr Pedro and his funding company. They offer a loan at 2% rate which is very affordable. As a start-up business owner you just have to make an effort to find the one that is most suitable for your business goals.
ReplyDeleteContact Mr Pedro on pedroloanss@gmail.com for loans.
All the best!
HOW Pedro Jerome GRANTED ME A BUSINESS LOAN!!!
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