|Posted on January 22, 2014 at 4:35 PM||comments (4)|
Basics of Form 1099-MISC:
Businesses report their certain payments on Form 1099s.Individuals receive Form 1099s for payments they receive. Most nonemployee payments above $600.00 in a year are reported on Form 1099. Most commonly used form is Form 1099 MISC. We shall confine major part of our discussion to this form. However for the purpose of general information, there are following types of Form 1099:
- ·1099-A: Acquisition or Abandonment of Secured Property by the lenders.
- ·1099-B: Proceeds from Broker for Saleof Securities and Barter Exchange Transactions
- ·1099-C: Cancellation of Debt
- ·1099-CAP: Changes in Corporate Control and Capital Structure
- ·1099-DIV: Distributions in the form of Dividends, Capital Gains Distributionsand Non-Taxable Distributions paid on stocks.
- ·1099-G: Government Payments
- ·1099-H: Health Insurance Advance Payments
- ·1099-INT: Interest Income
- ·1099-K: Merchant Card and Third Party Network Payments
- ·1099-LTC: Long Term Care Benefits
- ·1099-MISC: Miscellaneous Income
- ·1099-OID: Original Issue Discount
- ·1099-PATR: Taxable Distributions Received From Cooperatives
- ·1099-Q: Payment from Qualified Education Programs
- ·1099-R: Distributions from Pensions, Annuities, Retirement Plans, IRAs, orInsurance Contracts
- ·1099-S: Proceeds from Real Estate Transactions
- ·1099-SA: Distributions From an HSA, Archer MSA, or Medicare Advantage MSA
- ·1042-S: Foreign Person's U.S.Source Income
- ·SSA-1099: Social Security Benefit Statement
- ·RRB-1099: Payments by the Railroad Retirement Board
- ·RRB-1099R: Pension and Annuity Income by the Railroad Retirement Board
Out of all these forms, most commonly used byindividuals and a small business is the Form 1099MISC. During this topic, weshall concentrate on Form 1099MISC.
Form 1099MISC is issued under certain conditionsfor the payments made in the course of trade or business. Personal payments are not reportable.Form 1099MISC is issued for making payments in a year under followingconditions:
- At least $10 in royalties
- .At least $600 in rents, services, prizes and awards, other income payments, medical and health care payments, crop insurance proceeds, cash payments for fish to a party engaged in catching fish.any fishing boat proceeds
- Gross payments of $600 or more paid to an attorney.
- Direct sales of $5000 or more of consumer products to a buyer for resale anywhere other than a permanent retail establishment.
- Any person from whom you have withheld any federal income tax under the backup withholding rules.
- Payments made for compensation, vacation pay or any accrued wages for a deceased employee should be reported to the estate or beneficiary of the deceased employee on a form 1099MISC. (These payments should be reported in Box 3).
- A state that has control over instant and online lottery games issues Form 1099MISC to report commissions paid to licensed sales agents.
- Escrow agents maintaining owner provided funds for construction projects should file Form 1099MISC for reportable payments of $600 or more.
- Payments, and tax withholdings, to tribal members of Indian tribes for licensed gaming activities.
Detailed instructions for filling out Form 1099MISC can befound in Internal Revenue Service web site at www.irs.gov under forms and publications tab.
A Form 1096 should be filed by the issuing person/businesswith the IRS. It is a compilation providing subtotal of all Forms 1099MISCissued by the person/business.
|Posted on December 9, 2013 at 3:40 PM||comments (0)|
Most commonly used Federal Income Tax Forms:
There are three types of forms that are used to file Federal Income Taxes by majority of tax payers in America. These are 1040EZ, 1040A and 1040. There are other less common tax forms like 1040PR, 1040NR and 1040X. However we shall confine our discussion to three commonly used forms.
All income should be reported even if you have not received W-2, 1099s or any other relevant forms. It is the taxpayer’s responsibility to keep track of all income received and report it on relevant Income Tax Forms.
Every low income earner does not have to file tax return. If you are single and your gross income is less than $9,350 you do not have to file a tax return. Similarly, if you are married and your joint gross income is less than $18,700 you do not have to file a tax return. However it is a good idea to always file a tax return, even if it is to get the refund of taxes withheld.
Which form you should use:
The form you use, or can use, depends upon your income level, type of income, dependents, age and a few other factors. We are going to discuss these further.
1040 EZ: (click here to download Form 1040EZ)
This form is suitable for singles or married people without any dependents who meet certain requirements. Only two filing statuses are allowed on this form: Single or Married Filing Jointly. Claim fo rdependents is not allowed on this form.
- For 2013, your total taxable income should be less than $100,000.
- Interest Income should not exceed $1,500.
- Neither you nor your spouse can be older than age 65, nor can you or spouse be blind.
- You cannot claim any adjustments to income.
- The only tax credit you can claim is Earned Income Tax Credit (EIC).
- Your income was only from wages, salaries, tips, taxable scholarships or fellowship grants, unemployment compensation or Alaska Permanent Fund dividends.
- You cannot itemize deductions with Form 1040EZ.
Also called a short form, 1040A is a two page form and can be used in more complex situations than 1040EZ. However it also has its limitations. It does not cover a lot of situations that are covered only by Form 1040, also called the long form.
- Your income can be only from wages, interests and dividends, capital gain distributions, taxable grants and scholarships, pensions, annuities, IRA distributions, unemployment compensation, social security, railroad retirement benefits and Alaska Permanent Fund dividends.
- Your taxable income is less than $100,000.
- You can only claim following adjustments to the income:
- Classroom Expenses
- IRA Contributions
- Student Loan Interest
- College tuition and fees.
- You cannot itemize deductions.
- Not all the tax credits allowable can be taken on Form 1040A
Also called the long form, Form 1040 is the most comprehensive tax form and covers tax situations covered by Forms 1040EZ and1040A. It also covers those situations that are not covered by forms 1040EZ and1040A. Form 1040 can be filed by all tax payers. Form 1040 has attachments, called Schedules, and certain specialized forms and worksheets that need to be filled to explain the details on all the lines on the form.