As we move through the first few weeks of January, it is important to take critical steps regarding any people or businesses you have paid throughout 2014 to decide if a 1099 should be issued. Preparation for Form 1099 for the year 2014 has already begun. Should you need assistance preparing this form see the information below for clarification.
To prepare and complete Form 1099, you will need the following information for each recipient:
- Completed Form W-9
- Reason for the expenditure (see below)
- Amount paid in 2014 to the recipient
- Amount of backup withholding, if any
To better assist you, some of the most common Form 1099 recipients are listed below:
- Service providers (accountants, attorneys, independent contractors and maintenance services)
- Medical and health care providers, including veterinary services
- Interest income paid in excess of $10 or more
- Cancellation of debt
- Race winnings to allocate in shared-ownership arrangement
- Auto expenses and reimbursement (for non-employees)
- Household employees (Housekeeper, Nanny, etc.)
Not sure if you should issue a Form 1099 to someone? Contact one of our payroll experts to discuss payments made to related parties, including relatives.
The Internal Revenue Service has begun an intensive program auditing employers for employment tax compliance. They are looking for the issuance of 1099 Forms, proper issuance of W-2 Forms and worker classifications, to name a few. In addition to increased penalties, they will be disallowing the tax deduction for those expenses without proper support.
Now might be a good time to convert any questionable 1099 workers to employee status. If you have any questions about the status of an individual who is providing services for you, please contact us.
If you have any questions regarding this matter, please do not hesitate to call Aggie Kagan at (732) 634-5100, Ext. 117 or Diane Massa at (732) 634-5100, Ext. 113.