1099’s Are you in compliance?
After failing to pay your taxes, failing to file the appropriate returns is the second easiest way to incur the wrath of the IRS. Your reporting obligations go beyond issuing W-2s to your employees. Many other outgoing payments should be reported on Form 1099.
Although there are numerous selections of 1099’s, we will focus on the most popular missed by taxpayers being form 1099-MISC and 1099-NEC.
Forms 1099-MISC and 1099-NEC (back in enforcement for 2020 tax year) play a major role in tax compliance. In order to comply with these tax forms submission a proper tracking of payments made to recipients must be done. The best option to comply with this form requirements is by having a bookkeeping service where such payments are tracked and a simplified issuing process at the time the forms as due: January 31, 2021.
Required 1099 Submission
Common payments made by a Taxpayer that require a Form 1099-MISC to be issued should you pay them $600 or more in total during the tax year include but are not limited to;
- Services rendered
- Rents
- Royalties
- Broker payments
- Fishing boat proceeds
- Legal fees
- Any payments to an LLC
- Any Payments to an individual
Excluded from 1099 Requirement
There are a few exceptions from the mandatory requirement submission of 1099’s. Listed below are the most known exemptions;
- The purchase of goods and other tangible assets
