1099 deadline has past but you should still send in your 1099s and 1096 by Jeff Brooks

Although the 3-1-12 deadline will pass to get the 1099s and 1096 filed for your company, IF YOU FILE now you will PROBABLY not have any penalties!!

1. Due date for 1099-Misc is February 15th to recipient, and to the IRS March 1st when paper filing
2. Form 8809 – automatic 30 day extension
3. Additional 30 day extension (hardship)
4. 1099’s given generally, any payments made to a no corporate business entity for services
5. 1099 needed if $10 royalties paid
6. $600 in rent, services, awards, other income payments, medical, and health care payments, crop insurance proceeds, cash
7. In addition, use Form 1099-Misc to report that you made direct sales of at least $5,000 of consumer products to a buyer for resale anywhere other than a permanent retail establishment
8. $600 non employment income subject to self employment tax
9. Need tax ID number if you keep getting bad number you will have to make up backup withholding. Name and ID number must match SSN exactly 28%
10. If you received incorrect ID number and cannot contact 1099 recipient make sure to document all attempts to contact individual. IRS will usually forgive if you have made good faith effort
11. You can issue W-2 and 1099-Misc to same employee only if they are 2 completely different jobs
12. Employee vs. Contractor – Employee in direct control of employee. Fill SS8 Form and send to IRS to determine which one if you are not sure
13. Common failures to file correct information by the due date:
a. Fail to file timely
b. Fail to include all required information
c. Include incorrect information
d. File paper when electronic is required
e. Fail to report or report an incorrect TIN
f. File paper forms that are not machine readable
14. Penalties for information returns
a. $15 per Form if correctly filed within 30 days of due date (March 30/Apr 30?)
b. $30 per Form if filed more than 30 days, but before August 1st
c. $50 per Form if after August 1st
d. Maximums apply ($75,000; $150,000 and $250,000 but for small businesses $25,000; $50,000 and $100,000)
e. Intentional disregard of filing or correction requirements – $100 per Form, no maximum
15. Reasonable cause
a. Inconsequential error or omission
b. Does not hinder processing
c. Error in TIN, payee surname, or any money amount never inconsequential
d. De minimis rule for corrections
e. Few than greater of 10 or ½ of 1% of forms filed
f. Forms were filed timely
g. Contain incomplete or incorrect information
h. Corrections filed by August 1st
16. Failure to provide correct payee statements by due date for furnishing (January 31st or February 15th)
a. $50 per Form to $100,000 maximum per year
b. Exception for reasonable cause or inconsequential error or omission
c. At least $100 per statement with no maximum for intentional disregard of requirements
17. Willful filing of a fraudulent information return for payments claimed to be made to another person
a. That person may be able to sue for damages
b. Payment may be $5,000 or more
18. Common Mistakes
a. Omission of the decimal point and cents from entries (show decimal points and cents)
b. Using ink that is too light or using a color other than black
c. Making entries that are too small or too large (use 10 or 12 pt block print – not script characters)
d. Adding dollar signs to the money amount boxes (dollar signs are not required and will scan badly)
e. Duplicate filing
f. Filer’s information (name, address, TIN) on 1099 does not match information on Form 1096
g. Failure to use official or authorized substitute forms
h. Machine readability issues
i. Assures that the required Advance Earned Income Credit notification is given to eligible employees
j. Two or more types of returns submitted with one Form 1096
k. Reporting information in the wrong box or on the wrong Form
l. Changing the names of the boxes
m. Using prior year Forms
n. Submitting photocopies or a copy other than Copy A
o. Separating Copies A when printed 2 or 3 to a sheet

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About Jeffrey Brooks

Jeffrey Brooks, CPA, CFP, MBA since 1976 has specialized in helping clients save significant taxes, help businesses increase their cash flow, revenues and profits while increasing their control and satisfaction. Jeff and his accounting firm sincerely cares about the happiness of his clients.

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JBrooks Wealth Advisors, PC.

Certified Public Accountant
Address: 4647 N 32nd Street, Suite B245
Phoenix, Arizona 85018
Phone: 602-292-2009
Email: jeff@jbrookswa.com