Pre-season update time! Our Newsletter will be going out with your prior client coupons in a week or so, and we have a lot of tax and stimulus related announcements this year, so it should be riveting reading! The IRS has not yet announced when they will open for e-filing, but we anticipate it will be the last week of January. We can prepare your taxes now if you already have all your documents, but we can’t send them to the IRS until e-filing opens. Additionally, the IRS has pretty much made permanent their policy of holding the entire refund of any returns that include Education Credits, Child Tax Credits or Earned Income Tax Credits (pretty much everyone filing early) until at least February 15! For clients that need their refunds sooner, we can do refund advance loans of up to $6000 right now, even before the IRS opens!
If you need any help getting organized or want to make an appointment, please call our office (770-471-3003) or email me, and if you know anyone looking for very experienced tax preparers, please forward our name to them! Starting January 4, we are open M-F 9-4 until the 31st when our normal tax season hours begin. Due to Covid-19, we will have to limit appointments in our office, but we’ve gotten pretty good at eTaxPrep (see below). If you cannot make it in and are uncomfortable with eTaxPrep, fear not! We can set up a tax appointment via phone once you send your documents over to us.
eTaxPrep – Basically, get your tax documents to us any way you can. Snail mail, UPS, FedEx, fax, email, or our recommended method, SecureFilePro (our Encrypted Portal – like the Dark web, but safer!). We work on them for a few days and then contact you for some Q&A (phone or email). Once everything is finalized, we get some permission signatures (the same forms you’ve always signed) and payment, usually by that awesome SecureFilePro system, and you’re set. No traffic! No germs! Only limited human contact!
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Reminder for our Business Clients: Tax Facts provides payroll services to our clients. We are currently preparing annual reports as well as W2s and 1099s. Let us know if you need assistance. The IRS is serious about their due date of January 31 to get W2’s and 1099’s to your employees/contractors as well as getting your annual reports filed/paid. If you do these late, expect severe penalties ($$$)!
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When does the IRS requires you to send a form 1099-NEC?
Oh, BTW, there is a new form 1099-NEC for contractors this year. The 1099-MISC has been replaced, mostly. If during the calendar year you hired contractors in the course of running your trade or business and you paid any one person $600 or more, you may have to issue them a 1099-NEC. This requirement is to remind folks you pay to include such payments on their tax returns (although ANY amount you pay someone is supposed to be included on a tax return). You also are required to furnish the IRS with a copy of the 1099-NEC you issue.
Who does not get a 1099?
- The recipient is a corporation
- You included the payment in a W-2 form (to an employee)
- The payment is for a tangible product (office supplies, computers, etc), or
- The total payments during the calendar year were less than $600.
Who must get 1099?
- The payments were Professional fees paid to an attorney, doctor or other professional for services made to your trade or business. Do not issue a 1099 for payments that are for personal expenses.
- Any person you paid $600 or more who perform services for you in your business or trade.
- Payments to corporations are included only if they are for medical, health care, legal or fishing activities (yes, fishing!).
- Payments of $600 or more in rent for office space, machines, equipment or land in the course of your trade or business require a 1099-MISC (don’t confuse the 1099-MISC with the 1099-NEC) if the payment was made to an individual or partnership and not to a corporation.
What is a payment?
Payments include commissions, fees, interest, rents, royalties, annuities and any other type of compensation or income to a single recipient.
The IRS deadline for mailing 1099 forms for payments made in 2020 is Jan. 31, 2021.
OOPS! If you inadvertently fail to issue a proper Form 1099 by Jan 31st, the IRS can assess a $300 penalty. The penalty for each intentional failure can be $500 and more.
It’s important to note that individuals are not required to send 1099-NEC or 1099-MISC for personal payments. Individuals are not required to send a 1099-NEC to an independent contractor to whom you have made a personal payment unrelated to your trade or business. So you don’t have to issue a 1099-NEC to your landscaper or house painter….not yet anyway. This exception extends to landlords as well, even though renting your property is considered a business. More about that in the newsletter.