1099-MISC tips

Below are some tips on 1099-MISC forms from the instructors of our recent webinar on that topic -

• According to the IRS, payments made with credits cards do not have to be reported on the Form 1099-Misc.

• Forms 1099-Misc can be filed electronically no matter the number processed. If 250 or more are processed, then they are required to be filed electronically.

• Payments made to attorneys should be included on the Form 1099-Misc. Payments are reported in Box 7 or Box 14 depending on the type of payment.  Box 7 would include professional services fees paid. Box 14 would include payments made in connection with a legal settlement.

• Box 6, Medical and Healthcare Payments should include payments of $600 or more made to physicians, hospitals or other vendors for medical healthcare services. This would include charges for physicals, drug testing etc.   If you are only purchasing supplies and no service is provided, do not issue Form 1099- Misc. If supplies are provided as a part of a service (i.e. injection, drugs etc.) then include the total for supplies and services in Box 6. Payments to pharmacies for prescription drugs or insurance companies for premiums for insurance coverage does not have to be reported on the Form 1099-Misc.

Legal and Tax Advice Disclaimer:

The information presented above does not constitute legal advice or tax advice. The authors and Heinfeld, Meech & Co., P.C. make no claims about its accuracy, completeness, or currency of information presented, including any external references provided.  The authors are not acting as your tax consultant or attorney.  Legal rules and tax rules change frequently, therefore, we cannot guarantee that any information is accurate or up to date.
The information presented in this webinar is not intended to be used for the purpose of state or federal tax penalty protection.  The law varies widely from jurisdiction to jurisdiction, and it is subject to varying interpretation. Legal advice, including tax advice, must always be tailored to your circumstances, and no content of this presentation should be viewed as a substitute for the advice of a competent attorney.  Please consult your legal counsel for advice pertaining to your specific organization.

Payroll Tips

Our annual Payroll Basics workshop took place last week.  Below are some takeaway items provided by the instructors:

1. Ensure you properly classify individuals as Employees or Independent Contractors.  This can be done by utilizing the IRS tests that include Behavioral Control, Financial Control and Relationship of Parties.  Improperly classifying an individual as an Independent Contractor when they should be classified as an employee will result in the employer being responsible for back taxes, penalties and interest.
2. Create a timeline of all the important deadlines for employee related documents such as I-9, W-4, A-4 and E-Verify.  Additionally, monitor to ensure all 941s, A1-QTRs, W-2s and 1099s are filed timely. There are stiff penalties if these forms are not completed in entirety and timely.
3. Verify the exempt vs. non-exempt status of your employees to ensure they are properly classified.  Be sure you are following all FLSA rules associated with the docking of non-exempt and exempt employees wages.
4. Review IRS Publication 15-B to ensure you are taxing all appropriate fringe benefits.
5. Conduct an internal review on the segregation of duties within your payroll and human resources department.  To protect your organization, ensure one person is not able to set up an employee, establish a rate of pay, process their bi-weekly pay, and issue a paycheck.
6. Arizona Minimum Wage increases to $7.80 effective January 1, 2013