Pre-Season Update 2020

Pre-season update time!  Our Newsletter will be going out with your prior client coupons in a week or so.  The IRS has not yet announced when they will open for e-filing, but we expect it will again be the last week of January (seems to be their thing now).  After the massive changes to the tax code last year, this year’s changes are relatively minor; more about that in the Newsletter. 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 announced that they will hold 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 loans of up to $6000 right now, even before the IRS opens!

If you need help getting organized or want to schedule an appointment, please call our office.  Starting January 6 (delayed from Jan 2 due to the flu!  Ick!), we are open M-F 9-4 until the 31st when our normal tax season hours begin.  Penny is still retired and will not be taking appointments again this year, but be assured our entire staff is highly experienced and Penny will be available to assist when needed.

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Reminder for our Business Clients:  Tax Facts provides payroll services to our clients. We are currently doing annual reports as well as preparing W2’s and 1099’s.  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-MISC?

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-Misc.  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-Misc 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!).
  • Payment of $600 or more in rent for office space, machines, equipment or land in the course of your trade or business will also require a 1099-Misc 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 2019 is Jan. 31, 2020.

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-MISC for personal payments. Individuals are not required to send a 1099-MISC 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-MISC 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.