Posts Tagged "1099 reporting"

Contractor or Employee? Knowing the difference is important

Posted on Sep 28, 2017

Is a worker an independent contractor or an employee? As an employer, getting this wrong could land you with an IRS audit and cost you plenty in many other ways.Here’s what you should know: As the worker: If the worker is a contractor and not considered an employee, he/she must: Pay self-employment taxes (Social Security and Medicare-related taxes). Make estimated federal and state tax payments. Handle his/her own benefits, insurance and bookkeeping. As the employer: You must ensure your employee versus independent contractor determination is correct. Getting this wrong in the eyes of the IRS can lead to: Payment and penalties related to Social Security and Medicare taxes. Payment of possible overtime, including penalties for a contractor reclassified as an employee. A legal obligation to pay for benefits. When the IRS recharacterizes an independent contractor as an employee, they look at the business relationship between the employer and the worker. The IRS considers if the employer has the right to control the work (when, how and where the work is done) and the financial relationship (i.e., a contractor has a contract and customers, and invoices the company). The more reasonable your basis for classification and the more consistently it is applied, the more likely an independent contractor classification will not be...

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New law repeals the expanded Form 1099 reporting rules

Posted on May 3, 2011

On April 14, 2011, President Obama signed legislation – the “Comprehensive 1099 Taxpayer Protection and Replacement of Exchange Subsidy Overpayments Act of 2011” – repealing expanded reporting rules for businesses and landlords that had been created by laws passed in 2010. * Business reporting. The Form 1099 reporting rules were changed by the 2010 health care legislation. Under the “Patient Protection and Affordable Care Act of 2010,” every business, charitable organization, and governmental unit was required to file a Form 1099 for payments to any vendor or supplier of goods or services (other than a tax-exempt organization) totaling $600 or more for the year. Both the vendor and the IRS had to receive a copy of the Form 1099. These rules were scheduled to take effect for payments made after December 31, 2011. Before the passage of the health care law, payments to corporations were generally exempt from the Form 1099 reporting requirements. The law just signed by President Obama completely repeals this expansion of business reporting requirements, and the reporting rules return to what they were before health care legislation. * Rental property reporting. Similarly, new Form 1099 reporting requirements were recently imposed on landlords. Under the “Small Business Jobs Act of 2010,” owners of rental properties were generally required to file a Form 1099 for rental-related payments to any provider for services totaling $600 or more for the year. These reporting rules were to be effective for payments made after December 31, 2010. The new law repeals these expanded Form 1099 reporting rules for landlords. As with the repeal for business reporting, it’s like the requirements never existed. Repeal of the expanded business and rental property expense reporting rules will eliminate a flood of paperwork for most small business and rental property...

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New 1099 reporting rules may be repealed

Posted on Dec 28, 2010

The recent health care reform legislation included a new reporting requirement for businesses. Beginning in 2012, a Form 1099 must be filed with the IRS for payments of $600 or more made to corporations. Previous law required such reporting only for amounts of $600 or more paid to unincorporated businesses. The “Small Business Jobs Act of 2010” added another reporting requirement, this one to take effect January 1, 2011. Landlords will be required to file Forms 1099 with the IRS for payments of $600 or more made for rental property expenses. Responding to the complaints from businesses that these new reporting requirements would be very burdensome, Senate Finance Committee Chairman Max Baucus has announced legislation that would repeal both of these provisions. Stay tuned to see if repeal will actually happen. If it doesn’t, get your business ready for these new...

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