- March 7, 2014
During filing IRS Form 1099 season, the big and small companies work their business in a way that is defensible. One needs to be careful in submitting them in time to avoid penalties. The cost load on businesses rapidly grows every year and therefore the requirements of some IRS forms 1099.
Now it seems Form 1099 is a burden for many as they dislike neither receiving it nor issuing them to their vendors from whom they get the services done and also to IRS. People offering business services and people getting the services should cooperate in order to make the form 1099 to be filed successfully with IRS. Forms 1099 must be issued by every person in business paying $600 or more during the year for services. Even corporate recipients of $600 or more should be issued with Form 1099.
Even though there are a lot of cries for the repeal of Form 1099, IRS and Congress are clear that when some of the chunks of income that Form 1099 would raise will be reasonably big, and hence if it is not reported in Form 1099 amounts to not being reported on a tax return The little forms 1099 that IRS receives from people to process on their vital pieces of information will be like a trap of flaws which cost them big.
a) To follow up e-mails regularly- will help people to be careful and watch for each form of 1099 as they are tracked with Social Security Number.
b) To inform and update your changes of address with issuers, payers, and U.S.post office-this is important for the IRS based on SSN and state tax authority. So people get a copy from the payers. By this, you will see the forms 1099 as IRS sees it. One can use Change of Address form 8822.
c) Be cautious and alert of mistakes- Do not pile up incoming emails on forms 1099 and open them to follow-up immediately- for mailing 1099 forms to your taxpayer the deadline is January 31, so the payer gains some time up to February end to send the copies to IRS. This advantageous delay may help payers to correct and fix mistakes. So it will be better for companies to take the 30-day delay. If there is any discrepancy in the 1099-Misc claiming to pay $4000 as against the original and true income of only $400, this information should be passed on to the payers for making necessary corrections in the forms 1099 before submitting to IRS. So IRS may not add the unnecessary addition of amounts together.
d) Do not lose envelopes – Open the envelopes and study the form and keep them in a safe place as one needs them for filing returns on own or through a paid preparer.
e) Ask for the right form 1099 – This is to avoid duplication, if one misses a form 1099 and asks for another form 1099 from payers who may send them incorrectly will lead the IRS computers to compute one’s income double. This is because the income and amount filed in the TAX return and form 1099 should match.
f) Do not ignore form 1099 – By careful submission to the IRS of what is the income from capital gains and or from a recovery of basis say an injury lawsuit recovery which may not be an income or something that needs to be reported properly will help many clients file tax bills peacefully.
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