by Richard A Chapo
While the middle of January may seem a bit early to begin thinking about taxes,
1099-MISC filing deadlines are looming for businesses. Generally speaking, IRS
1099-MISC is the form used to report miscellaneous income that you paid to
persons during 2004 in the course of your trade or business.
Does This Apply To My Business?
The 1099-MISC forms must be issued to any person that you have paid at least
$600 in rents, services or other income payments. Typically, you should issue
the form to any independent contractor that you paid $600 to during 2004. For
example, if you paid a designer $1,500 to build and maintain a website in 2004
for your business, a 1099-MISC filing would be required. As with practically any
IRS filing, there are additional situations that require a 1099 filing [ex: any
fishing boat proceeds], so make sure you cover your bases by looking at the
relevant instructions. Generally, you are not required to report payments to a
corporation.
When and What Must Be Filed?
The 1099-MISC form is a multi-layered carbon form, so make sure the information
you provide appears clearly on all of the copies. Once you have filled out the
form, you must provide Copy B to the person that you are reporting to the IRS by
January 31, 2005. Using our previous example, you would mail Copy B to your
website designer before the end of January.
Copy A of the 1099-MISC form is intended for the IRS. You are required to file
it by February 28, 2005 if you are sending the form by mail. If you prefer to
file electronically, you have until March 31, 2005 to file the form.
Revealing a particular flair for red tape, the
IRS requires you to file an
additional form if you are filing Copy A of the 1099-MISC by mail. In such a
situation, you must file an "Annual Summary and Transmittal of U.S. Information
Returns" form. This summary is better known as Form 1096 and you should have
already received a copy of it in the mail from the IRS.
Where To Find These Forms
To the surprise of many people, the IRS has an excellent website containing
information and tax forms. Unfortunately, the site is fairly useless when it
comes to obtaining tax forms that you can actually file. You cannot download and
use any 1099 form from the website. If you try to print forms from the site and
use them, you run into two problems. First, the IRS computers will not be able
to read the forms and will reject them. Second, it is doubtful that you will be
printing on multi-layered carbon paper, which means you will have no Copy B of
the 1099. Obviously, either situation can attract unwanted attention from the
IRS.
You can order forms from the IRS by calling 1-800-tax-form or ordering them off
of the IRS website [do not download]. The IRS suggests it typically takes at
least two weeks for the forms to be delivered, but keep in mind that it may take
longer. If you need the forms sooner, you usually can find them at libraries and
post offices.
Richard Chapo is CEO of http://www.businesstaxrecovery.com -
Obtaining tax refunds for small businesses by finding overlooked
tax deductions
and credits through a free tax return review. He can be reached at richard@businesstaxrecovery.com.
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