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Tax Tip of the Week | No. 280 | 1099 and Related Form Changes December 10, 2014

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Tax Tip of the Week | Dec 10, 2014 | No. 280 | 1099 and Related Form Changes

Changes to look for….

When you receive your 1099s and 1098s in the upcoming weeks the forms may have a different look. They may also contain some additional information you will need to complete your 2014 federal tax return. The following is a summary:

1098: Mortgage Insurance Premiums
Mortgage insurance premiums paid or accrued after Dec. 31, 2013, are no longer eligible to be treated as interest paid by the payer/borrower. Box 4 on Form 1098, formerly used for reporting these premiums paid or accrued, has been reconfigured for providing other information.

1098-C: Motor Vehicle Odometer Mileage Entry
Donators of motor vehicles must enter the odometer reading of the motor vehicle in the new box 2a.

1099-B: New Reporting Requirements
Brokers are required to report the adjusted basis of certain debt instruments upon a sale of the debt instrument. In addition, brokers are required to report the adjusted basis of certain securities futures contracts and options upon a sale or closing transaction as well as the gross proceeds from the sale or closing transaction. Brokers also must report whether any gain or loss from these transactions is short-term, long-term or ordinary. Furthermore, there are reporting requirements for a transfer of a debt instrument, an option or a securities futures contract to another broker and for an organizational action that affects the basis of a debt instrument, an option, or a securities futures contract.

Additional changes to this form include:

• The form has been redesigned to conform to the box numbers on Form 8949. A new box has been added at the top center of the form to enter a code that will assist the recipient in reporting the transaction on Form 8949 and/or Schedule D.

• Additional State Copies: Copy 1 (For Payer State) and Copy 2 (For Recipient State) were added for 2014.

• Boxes 14 through 16 (state boxes) allow for a second data entry.

1099-INT
Boxes 10 and 11 were added to accommodate the new reporting requirements for a debt instrument that is a covered security and that is acquired by a taxpayer with market discount, bond premium or acquisition premium.

1099-K 
• Box 1b, Card Not Present transactions: Box 1b was added to the form to be used to enter the gross amount of total reportable payment card/third party network transactions for the calendar year where the card was not present at the time of the transaction or the card number was keyed into the terminal, such as in the case of online, phone, or catalogue sales. Reporting in box 1b is optional for 2014.

• Second TIN notification box: The 2nd TIN notification box was added to Copies A and C.

1099-MISC 
Box 11, Foreign tax paid, and Box 12, Foreign country or U.S. possession, were deleted.  This information is now reported on Form 8966, Foreign Asset Tax Compliance Act Report.

1099-OID
Boxes 5 and 6 headings changed from Foreign tax paid and Foreign country or U.S. possession to Market discount and Acquisition premium respectively. Boxes 5 and 6 are now used for the new reporting requirements for a debt instrument that is a covered security and that is acquired by a taxpayer with market discount, bond premium, or acquisition premium.

1099-R: New Distribution Code
Use Distribution Code K to report distributions of IRA assets not having a readily available fair market value (FMV).

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.

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