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.

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.

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.

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.

The economic conditions of 2010 have been particularly brutal for many small business owners. When business expenses exceed business income it can create what is called a Net Operating Loss (NOL). In very limited circumstances an individual taxpayer can also realize a NOL, but that discussion goes beyond the scope of this Tax Tip.

Highlights of Proposed Legislation – Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 – HR 4853