By Shannon Dohmen
Manager, HBE 360
Form 1099 is typically filed to report annual payment of more than $600 to some person or entity, especially if the payment is expected to be reported as an expense. The form is issued to put the payee on notice that they need to report the payment as income. You are required by federal law to issue Form 1099 using the following guidelines:
- Payments of $600 or more for services (including payment for parts and materials) rendered to your business by any non-employee individual or unincorporated business.
- Payments for fees in any amount paid to any attorney (regardless of whether they are incorporated or not) that you make in the course of your trade or business.
- Payments by your business for rents to unincorporated landlords, prizes and awards to non-employees, and fees to a physician, physician’s corporation, or other supplier of health and medical services. All payments to incorporated veterinarians must be reported in Box 6.
- You are NOT required to report payments to incorporated businesses. An LLC may or may not be considered to be incorporated for tax purposes. Form W-9, completed by the vendor, is required to make the clarification.
- Payments of $10 or more for royalties.
Due to changes in tax law from the enactment of the Tax Cuts and Jobs Act, payments of $600 or more for services related to a rental property may require the issuance of Forms 1099. Please discuss this further with you tax accountant to determine if it applies to you.
To avoid IRS penalties for incorrectly filed returns, you are required to keep a copy of all Forms W9 for all vendors on file. Be advised that the Nebraska Department of Labor requires the taxpayer to have verification on file of any contactor who is not an employee in the form of invoices or other written contract between both parties.
Failure to file a correct Form 1099 or provide correct payee statements, without reasonable cause, may subject a payer to a penalty. The penalty for failure to file these forms timely is up to $550 per return with no maximum, unless the failure is due to reasonable causes.
Special Instructions for HBE 360 Clients
If HBE is engaged to prepare your Form 1099s for the 2019 tax year, please provide the following information by January 10, 2020.
Clients Using QuickBooks: Please send a backup of your file(s) as soon as possible after processing your final checks for 2019 and completing the bank reconciliations for December so that a report for 1099 vendors can be generated. Please update information in the file for your 1099 recipients (i.e. names, addresses, and social security numbers—a checkbox is available for vendors who should receive a 1099). There is a procedure within QuickBooks for “mapping” your vendors and accounts to the 1099 Form.
If you should need assistance with this process, please contact our office at 402.423.4343. Please also be sure to include the version of QuickBooks you are currently using along with applicable passwords.
Clients NOT Using QuickBooks: Please make sure that you are submitting the most current information. We do have a worksheet available to be utilized to assist you in reporting this information to our office.
Payroll Returns and W2 Information
Listed below is additional information that is necessary for the preparation of your Forms W-2/W-3. If you have questions concerning any of the items listed, please contact your accountant.
- Cost of employer-paid medical and life insurance for a 2% or more shareholder of an S-Corp
- Personal use of company-provided auto information, if applicable
- Amount of employer paid group-term life insurance premiums over $50,000 in face value for employees
- Amount of employer paid Disability Insurance for employees
- Amount of retirement contributions made by an employee pre-tax AND type of retirement plan (i.e. SIMPLE, 401(k))
- Employee contributions to an HSA
- Employer contributions to an HSA, if includable in the employee’s income
- Amount of dependent care benefits withheld and paid through a Section 125 Plan
- Whether or not the employee was an active participant in a company sponsored retirement plan for any part of the year
- Employer provided health reimbursement arrangements
If HBE is engaged to prepare your payroll returns and W2s for the tax year 2019, please submit the following information no later than January 10, 2020. If HBE did not prepare the prior quarterly returns in 2019, copies of all prior quarterly returns for 2019 MUST be received before HBE can process the annual return.
Clients Using QuickBooks: Send in a backup of your file as soon as possible after processing your last payroll to employees for 2019 and completing the bank reconciliations for December. Please ensure the name, address and Social Security number of each employee is correct. Also, be sure to include the version of QuickBooks you are currently using along with applicable passwords.
If you need assistance with this process, please contact our office at 402.423.4343.
Clients NOT Using QuickBooks: Wage information must include Gross Wages, Social Security, Medicare, and amounts withheld for Federal Income Tax, Social Security, Medicare, State Income Tax, 401(k) and Health Insurance. We do have a worksheet available to be utilized to assist you in reporting this information to our office.
Additional fees may be incurred for corrected forms due to inaccurate information provided to us as these forms will require subsequent filing with the appropriate government agency therefore, it is your responsibility to submit complete and accurate information.
To safely and securely send this information to our office, please use the “Send Files” link on our website located in the upper right corner of the Home page. Should you have any additional questions or concerns, do not hesitate to contact our office at 402.423.4343.