While it may seem a bit early to begin thinking about taxes, 1099 filing deadlines are looming for businesses. Generally speaking, Internal Revenue Service 1099-MISC is the form used to report miscellaneous INCOME that you paid to persons during 2004 in the course of your trade or business.
DOES THIS APPLY TO MY BUSINESS?
The 1099 forms must be issued to any person that you have paid at least $600 in rents, services or other income payments. Typically, you should issue the form to any independent CONTRACTOR that you paid $600 to during the tax year. For example, if you paid a designer $1,500 to build and maintain a website in 2004 for your business, a 1099 filing would be required. As with practically any Internal Revenue Service filing, there are additional situations that require a 1099 filing [ex: any fishing boat proceeds], so make sure you cover your bases by looking at the relevant instructions. Generally, you are not required to report payments to a CORPORATION.
WHEN AND WHAT MUST BE FILED?
The 1099 form is a multi-layered CARBON form, so make sure the information you provide appears clearly on all of the COPIES. Once you have filled out the form, you must provide Copy B to the person that you are reporting to the Internal Revenue Service by January 31. Using our previous example, you would mail Copy B to your website designer before the end of January.
FILING WITH THE IRS
Copy A of the 1099 form is intended for the Internal Revenue Service. You are required to file it by February 28 if you are sending the form by MAIL. If you prefer to file ELECTRONICALLY, you have until March 31 to file the form.
A BIT OF EXTRA WORK
Revealing a particular flair for red tape, the Internal Revenue Service requires you to file an ADDITIONAL form if you are filing Copy A of the 1099 by mail. In such a situation, you must file an "Annual Summary and Transmittal of U.S. Information Returns" form. This SUMMARY is better known as Form 1096 and you should have already received a copy of it in the mail from the Internal Revenue Service.
WHERE TO FIND THESE FORMS
To the surprise of many people, the Internal Revenue Service has an excellent website containing information and tax forms. Unfortunately, the site is fairly useless when it comes to OBTAINING tax forms that you can actually file. You cannot DOWNLOAD and use any 1099 form from the website. If you try to print forms from the site and use them, you run into two problems. First, the Internal Revenue Service computers will not be able to read the forms and will reject them. Second, it is doubtful that you will be printing on multi-layered carbon paper, which means you will have no Copy B of the 1099. Obviously, either situation can attract unwanted attention from the Internal Revenue Service.
GETTING WHAT YOU NEED
You can order forms from the Internal Revenue Service by calling 1-800-tax-form or ordering them off of the Internal Revenue Service website [do not download]. The Internal Revenue Service suggests it typically takes at least two weeks for the forms to be DELIVERED, but keep in mind that it may take longer. If you need the forms sooner, you usually can find them where you find personal tax filing FORMS -- at libraries and post offices.
Richard Chapo is with BusinessTaxRecovery.com -- providing information on taxes.
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