1099 Requirements for 2010
The IRS requires that you file information returns (1099's) for payments issued by your trade or business to individuals not treated as your employees as well as non-incorporated entities.
| The payments include such things as: | Amount Requiring Reporting |
| Contract Labor, Commissions, Director Fees and Other Non-employee Compensation | $600 or more |
| Dividends, Interest and Royalties | $10 or more |
| Professional Feels | $600 or more |
| Rents (other than to real estate agents) | $600 or more |
| Attorneys Fees for legal services | $600 or more |
| Payments to attorneys for settlements | ALL |
| At this time, payments to corporations are exempt with the exception of legal services | |
Baldwin CPAs is a partnership for income tax purposes and thus all clients who pay our firm over $600 are required to prepare a 1099 for our professional services. Our federal EIN is 20-1416603.
Baldwin CPAs would be happy to prepare or assist you in the preparation of your 1099s. To ensure accurate preparation, please forward the name, address, social security or federal identification number, amount and type of compensation (rent, dividends, commissions, etc), and phone number for all recipients. To comply with the IRS deadlines, please provide necessary information to our offices by January 15, 2011.
1099 Changes for 2011
Under the Small Business Jobs Act, beginning January 1, 2011, landlords have been clarified for inclusion as an “active trade or business”. This clarification will require 1099s to be issued for services performed on rental properties in excess of $600. Examples of such services include plumbing, repairs, cleaning, and maintenance. Accordingly, all landlords should begin collecting recipient information as payments are being made in 2011. The gathering of this information can be accomplished through the use of IRS Form W-9.
Certain W-2 Requirements
You should also be aware of what must be included on your employees W-2’s for 2010.
The following items must be included in gross wages:
| Subject to FICA Tax | |
| Wages | Yes |
| Christmas bonuses | Yes |
| Tips | Yes |
| Other compensation | Yes |
|
Value of group life insurance policy in excess of $50,000.00 |
Yes |
|
Amounts paid to employees for business expenses under a non-accountable plan or payments in excess of allowed amounts |
Yes |
| Moving expenses | In Some Cases |
| Scholarships and fellowship grants | In Some Cases |
| Sick pay | Yes |
| Fringe Benefits | |
| Automobiles furnished (personal portion) | Yes |
| Club dues | Yes |
| Tickets to sporting events | Yes |
| Flights on company planes | Yes |
| Flights on commercial planes | Yes |
| Discounts on property or services | Yes |
| Financial counseling plan benefits | Yes |
| Education assistance payments | In Some Cases |
| Legal and educational services | Yes |
| Retirement plan contributions (employer’s match) | No |
| Health benefits or insurance coverage for 2% owners S Corporations | No |
Recipient copies of 1099s and W-2s should be distributed on or before January 31, 2011. Form 1099s and W-2s along with their respective transmittal forms should be submitted to the Internal Revenue Service by February 28, 2011. If you have over 250 information returns, you must file all federal forms electronically. Kentucky requires electronic filing on all returns over 100 forms. Improper filing and failure to file information returns can result in substantial penalties. In addition, the government has backup withholding regulations that require you to deduct and withhold income tax at a 28% rate if the payee fails to furnish an identification number to you.
We are able to provide you with any of the required forms outlined above. The laws and regulations surrounding 1099s and W-2s can be very complex. Please call us if you have any questions or need assistance.
Sincerely,
Baldwin CPAs PLLC
TO COMPLY WITH U.S. TREASURY REGULATIONS, WE ARE REQUIRED TO INFORM YOU THAT ANY TAX ADVICE CONTAINED IN THIS MESSAGE OR IN ANY ATTACHMENT IS NOT INTENDED TO BE RELIED UPON AND CANNOT BE RELIED UPON, TO AVOID PENALTIES UNDER THE INTERNAL REVENUE CODE
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