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1099 Reporting | Tax Tip of the Week | No. 77 January 26, 2011

Posted by bradstreetblogger in : Tax Tip, Taxes, Uncategorized , 3comments

Simplified Summary of 1099-MISC Filing Requirements

If you are engaged in a trade or business, you should issue a Form 1099-MISC to qualified recipients to whom you paid more than $600 during 2010 by January 31, 2011.  The reporting of Forms 1099-MISC that you issue are reported to the IRS along with Form 1096, and are due by February 28, 2011.  Generally speaking, individual taxpayers are not required to issue Form(s) 1099-MISC.

A qualified recipient is defined as any noncorporate entity.  This means any individual sole proprietorship, partnership or limited liability company (LLC).  You are required to issue Form(s) 1099-MISC to attorneys regardless of their entity type.

Examples of payments you have made that might require a 1099-MISC to be issued would be:
– rental payments for land or equipment
– attorney fees
– payments made for subcontract labor
– commissions
– royalties (a 1099-MISC is required when payments exceed $10)

This is a simplified summary of 1099-MISC filing requirements.  There are many other instances where these forms should be issued.

A rule of thumb to use is– if you plan to treat such payments as a business expense, you better issue a Form 1099-MISC!

This area always creates a lot of questions among our clients.  Give us a call if you have any questions.

Note:  See TTW #48 regarding the Form 1099 filing requirements for next year.  Unless Congress acts, next year truly will be a 1099 Nightmare!

We’ll keep you posted.

You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.

Rick Prewitt – the guy behind TTW

…until next week.

Tax Season Filing Delayed for Some Taxpayers | Tax Tip of the Week | No. 76 January 19, 2011

Posted by bradstreetblogger in : Tax Tip, Taxes, Uncategorized , add a comment

Due to the late December passage of the 2010 Tax Relief Act, the IRS recently announced that some taxpayers will need to wait until mid-to late February to file their returns.

Those affected by this delayed processing of tax returns are:

– Those taking the state and local sales tax deduction vs. the state/local income tax deduction on Schedule A.
Note: The option of adding the sales taxes paid on the purchase of a new car to the state and local sales tax deduction was not extended.

– Taxpayers claiming the Higher Education Tuition and Fees Deduction.  Those claiming the American Opportunity Credit and Lifetime Learning Credit for higher education expenses are not affected by delayed processing.
However, you should look at all three treatments of higher education expenses to optimize the best choice.

– Taxpayers claiming the Educator Expense Deduction.  This is for kindergarten-12th grade educators with out-of-pocket classroom expenses up to $250.

We urge all of our tax clients to continue to bring us your tax information as soon as you are ready.  We will monitor when the IRS will accept these returns and will e-file as soon as possible.

FYI: Paid Preparers are now required to e-file all federal and Ohio individual tax returns.  Although, we have been e-filing over 95% of the individual tax returns we prepare for the last 10 years.

As always, give us a call if you have any questions.
You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.

Rick Prewitt – the guy behind TTW

…until next week.

Tax-Free Distributions From IRA to Charity | Tax Tip of the Week | No. 75 January 12, 2011

Posted by bradstreetblogger in : Tax Tip, Taxes, Uncategorized , add a comment

2010 Tax Relief Act

The recently signed 2010 Tax Relief Act extended the availability for taxpayers who are receiving required minimum distributions (RMDs) from an IRA to contribute that amount to a charitable organization. The extension applies to contributions of distributions for all of 2010 and 2011. Also, RMD distributions to a charity can be made in January 2011, and elected to be treated as an RMD for 2010.

Taxpayers over age 70 ½ who elect this option do not get a charitable deduction of the amount distributed.  Instead, the distribution fulfills their RMD requirement and is a tax-free distribution.  To qualify, the trustee of the IRA must send the distribution directly to the charitable organization.

Let us know if you have any questions.

You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.

Rick Prewitt – the guy behind TTW

…until next week.

Happy New Year | Tax Tip of the Week | No. 74 January 5, 2011

Posted by bradstreetblogger in : Tax Tip, Taxes, Uncategorized , 2comments

And Get Ready for the Tax Filing Season.

Hopefully, you followed some of the suggestions we outlined last year to organize your records.  If you did, great!  This will make filing your tax returns a lot easier this year.  It also means that you and your tax advisor can spend more time on tax and financial planning issues for 2011 vs. looking back to 2010.

If you are new to our Tax Tip of the Week series, or didn’t follow our suggestions last year, now would be a good time to review our getting organized tax tip.   You might want to make getting organized your 2011 New Year’s Resolution!

This week we will look at some of the more common forms that you should be watching for in the coming weeks and months:

W-2: Employers should mail these by 1/31/11.  If you have moved during the year, make sure former employers are aware of your new address.

W-2G: Casinos, Lottery Commissions and other gambling entities should mail these by 1/31/11 if you have gambling winnings above a certain threshold.
NOTE: Some casinos will issue you a W-2G at the time you win a jackpot.  Make sure you have saved those throughout the year.

1099-INT: Banks, Credit Unions, Brokerage firms, etc. will issue these by 1/31/11 to show the amount of interest income you earned on your savings/investments.

1099-DIV: Brokerage firms, mutual funds, etc. have until 2/14/11 to issue these forms to show the dividend income you earned for the year.

1099-B: Brokerage firms, mutual funds, etc. have until 2/14/11 to show the proceeds from the sale of stocks and mutual funds.   Most brokerage  firms have gotten better at showing the cost basis on the sale of these investments.  If the statements do not show the basis, then you have some homework to do before filing your tax return.
NOTE: Most of the larger brokerage firms issue “Consolidated Statements” that have the 1099-INT, 1099-DIV and 1099-B earnings reported on the same report.

K-1s: If you are a partner in a business or a limited partner in some investments, your income and expenses will be reported to you on a K-1.  The tax returns for these entities are not due until 4/15/11 (if they have a calendar-year accounting).  Sometimes, you may not receive a K-1 until shortly after the entities’ tax return is filed in April.

If you are a beneficiary of an estate or trust, your share of the income and expenses for the year will also be reported on a K-1.  The timing of when you may receive your K-1 is the same as outlined above.

NOTE: Many times partnerships, estates and trusts will put their tax returns on extension.  If they do, the due date of the return is not until 9/15/11.  We often see clients receiving K-1s in the third week of September.

If you receive, or expect to receive, a K-1 it may be best if you place your personal return on extension.  It is a lot easier to extend your return than it is to amend your return after receiving a K-1 late in the year.

So start watching your mailbox and put all of these statements you receive in that new file you created!
You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.

Rick Prewitt – the guy behind TTW

…until next week.