Month: October 2017

Let’s Talk 1099s

/ Meghan Birmingham Vangeli / Leave a comment

If you use independent contractors (service providers who are not your employees) in your business, you may be required to file Forms 1099-MISC and the related Form 1096.  This is a form that you don’t want to miss because the IRS penalties for late filing or failure to file are a serious bummer.

Here is a link to the Form 1099 instructions, but these are the general rules for most small business owners and sole proprietors:

  • The Form 1099-MISC/Form 1096 filing deadline is January 31, 2018.  This is both to distribute forms to nonemployee compensation recipients AND to file with the IRS.
  • Prepare a Form 1099-MISC for any nonemployee compensation recipient paid $600 or more during 2017.
  • Nonemployee compensation paid to independent contractors is reported in Box 7 of Form 1099-MISC.
  • Form 1099-MISCs generally are not required to be issued to service providers that are organized as corporations (both Subchapter C and S).*
  • For Form 1099-MISC filing using paper forms, the original forms suitable for filing with the IRS must be purchased.**  They can be ordered online or purchased at an office supply store.  (Pro tip: spring for the 1099 envelopes too.  Makes life easier and looks a lot more professional than plain envelopes.)
  • If you pay independent contractors, be sure to have them fill out a Form W-9 so you have their tax identification number and updated address information.  Keep this Form W-9 in your files so it is available should the IRS ever want to see it.
  • If you are a sole proprietor, I strongly recommend that you obtain an employer identification number.  You can apply for one online here.  This keeps your social security number from being distributed with every Form 1099-MISC.

It’s not too early to start thinking about this.  January is right around the corner!

 

*Attorney fees over $600 must be reported on Form 1099-MISC even if the legal provider is organized as a C or S Corporation.  Use Box 7.

**Unfortunately, the sample Forms 1099-MISC/Form 1096 on the IRS.gov website are not suitable for filing, and can trigger a penalty if submitted to the IRS.

 

2017 is Coming to a Close

/ Meghan Birmingham Vangeli / Leave a comment

Even though the 2016 filing season just wrapped up, it will be time for 2017 tax returns (and 1099s and Texas Franchise Tax and 2018 Estimated Taxes) before we know it.

Some things to think about BEFORE the end of 2017…

  • If you are worried that you have not paid enough in federal tax withholding for 2017, please contact me now to discuss increasing your withholding or making an estimated payment.
  • If you have some stocks that have fallen and can’t get up, sell before the end of the year to claim a capital loss.*
  • If you are planning a Traditional or Roth IRA contribution, start setting money aside. Contributions to these accounts must be made by April 17, 2018.
  • If you plan to donate to charity (especially if you are donating a large non-cash item like a vehicle), be sure to complete the donations by 12/31/2017 to deduct on the 2017 tax return.**
  • If anything out of the ordinary has happened with your income or expenses during 2017, let me know so we can prepare for any possible tax effects.

It’s not too early to get a head start on collecting your expenses, tallying mileage, and organizing documents for 2017.  I’ll be making a push to get tax returns done early this year, so getting things done ahead of time will be a huge help.

Your favorite CPA,
Meghan

* Subject to capital loss limitations.
** Subject to itemized deduction limitations.