1099-MISC is required to be filed if you paid $600 or more during the tax year in the course of your trade or business to an individual or partnership. Payments for services (including parts and materials) are the most common 1099-MISC filings. You are generally not required to file a 1099-MISC for payments to a corporation unless the payments were for medical, health care, legal or fishing activities.
The penalty for not filing a 1099-MISC is up to $100 per form. If you had six contractors in your business that you failed to file the required 1099-MISC, your penalty could be up to $600.
To gather the information you would need to file these forms, have the payee complete a W-9.
Thursday, January 12, 2012
Wednesday, January 4, 2012
Do I Need to File a Tax Return This Year?
You are required to file a federal income tax return if your income is above a certain level, which varies depending on your filing status, age and the type of income you receive. However, some people should file even if they aren't required to because they may get a refund if they had taxes withheld or they may qualify for refundable credits.
Even if you don’t have to file for 2011, here are six reasons why you may want to:
1. Federal Income Tax Withheld You should file to get money back if your employer withheld federal income tax from your pay, you made estimated tax payments, or had a prior year overpayment applied to this year’s tax.
2. Earned Income Tax Credit You may qualify for EITC if you worked, but did not earn a lot of money. EITC is a refundable tax credit; which means you could qualify for a tax refund. To get the credit you must file a return and claim it.
3. Additional Child Tax Credit This refundable credit may be available if you have at least one qualifying child and you did not get the full amount of the Child Tax Credit.
4. American Opportunity Credit Students in their first four years of postsecondary education may qualify for as much as $2,500 through this credit. Forty percent of the credit is refundable so even those who owe no tax can get up to $1,000 of the credit as cash back for each eligible student.
5. Adoption Credit You may be able to claim a refundable tax credit for qualified expenses you paid to adopt an eligible child.
6. Health Coverage Tax Credit Certain individuals who are receiving Trade Adjustment Assistance, Reemployment Trade Adjustment Assistance, Alternative Trade Adjustment Assistance or pension benefit payments from the Pension Benefit Guaranty Corporation, may be eligible for a 2011 Health Coverage Tax Credit.
Eligible individuals can claim a significant portion of their payments made for qualified health insurance premiums.
Even if you don’t have to file for 2011, here are six reasons why you may want to:
1. Federal Income Tax Withheld You should file to get money back if your employer withheld federal income tax from your pay, you made estimated tax payments, or had a prior year overpayment applied to this year’s tax.
2. Earned Income Tax Credit You may qualify for EITC if you worked, but did not earn a lot of money. EITC is a refundable tax credit; which means you could qualify for a tax refund. To get the credit you must file a return and claim it.
3. Additional Child Tax Credit This refundable credit may be available if you have at least one qualifying child and you did not get the full amount of the Child Tax Credit.
4. American Opportunity Credit Students in their first four years of postsecondary education may qualify for as much as $2,500 through this credit. Forty percent of the credit is refundable so even those who owe no tax can get up to $1,000 of the credit as cash back for each eligible student.
5. Adoption Credit You may be able to claim a refundable tax credit for qualified expenses you paid to adopt an eligible child.
6. Health Coverage Tax Credit Certain individuals who are receiving Trade Adjustment Assistance, Reemployment Trade Adjustment Assistance, Alternative Trade Adjustment Assistance or pension benefit payments from the Pension Benefit Guaranty Corporation, may be eligible for a 2011 Health Coverage Tax Credit.
Eligible individuals can claim a significant portion of their payments made for qualified health insurance premiums.
Tuesday, January 3, 2012
The Start of Tax Season
It's a new year, and it's time to start thinking about income taxes again. Here's a few tips to get the year started:
- Gather your records - Round up any documents you'll need when filing your taxes: receipts, canceled check and other documents that support income or deductions you're claiming on your return.
- Be on the lookout - W-2s and 1099s will be coming soon; you'll need these to file your tax returns. New for 2011 is the 1099-K. If you receive this form, please forward it to our office.
- Have a question? Give us a call if you have questions pulling your tax information together. We have a new office number of (858) 675-1533.
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