Reminders & News
A REMINDER ABOUT THE IMPORTANCE OF OBTAINING FORM 1099 INFORMATION
1099’s are needed for CONTRACT LABOR or SERVICES paid for in the amount of $600 or more in a calender year. Money’s paid for rent, interest, or attorney services, in some instances, require a 1099 also. Make sure that you have a completed Form W-9 that contains the recipient’s complete name, along with their DBA (doing business as) fictitious name, e.g., John Smith dba: John’s Handiwork. In addition, you will need their current mailing address, and Tax ID number.
Your Federal 1040 tax return contains several questions on your Business Schedule and your Rental Schedule asking: “Did you make any payments that would require you to file Forms 1099?” If you answer “Yes”, did you or will you file all required Form 1099’s?” Whether your answer is “Yes” or “No”, there is a system in place to accurately track this information. You should expect that IRS will be cross-checking this information in their databases, so it's strongly recommended to place importance on reviewing your internal procedures to ensure correct reporting and avoidance of future problems. If you need help with this please call our office. Also, we can prepare the 1099 forms for you.
WAGES EARNED-in December 20x1, but paid in January 20x2, are considered 20x2 wages.
BONUSES-Paid to employees must have taxes withheld.
WAGE ADVANCEMENTS-are wages in the year paid and are subject to all withholdings and income taxes and employer payroll taxes.
YEAR END INCOME AND EXPENSES-all checks received by you in December 20x1are considered income in the year 20x1, even if you do not deposit or cash them until 20x2. Make all your December payments to your creditors BEFORE the year end to allow them time to receive and deposit the payment. Payments mailed out on December 31, may be considered an expense in the following year, if you are ever audited by the IRS.
INVENTORY-Remember physical inventory counts must be listed at cost ... what you actually paid for it ... not the sale price you charge your customers.
LAST MINUTE DONATIONS-Donations charged to major credits cards (Visa, MasterCard, Discover, AmerExp), are deductible when the charge is made, not when you pay the credit card. The interest incurred, if any, is not deductible. You must have a receipt, cancelled check or bank statement verification in order the donation on your income tax return.