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1099-MISC REPORTING / CORRECTION REMINDERS. DOA – State Accounting Bureau December 2010. 1099 MISC Deadlines and Dates. January 14 th 2011 Last day for agencies to make1099 adjustment for 2010 and 2011 Submit Interface 1099 Misc files This includes State Fund/DPHHS interface files

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1099 misc reporting correction reminders

1099-MISCREPORTING / CORRECTION REMINDERS

DOA – State Accounting Bureau

December 2010

1099 misc deadlines and dates
1099 MISC Deadlines and Dates
  • January 14th 2011
    • Last day for agencies to make1099 adjustment for 2010 and 2011
    • Submit Interface 1099 Misc files
      • This includes State Fund/DPHHS interface files
  • January 31 2011
    • 1099 MISC forms are mailed to payee’s
  • February 28th 2011
    • 1099 MISC File is sent to IRS
  • March 1st 2011
    • Agencies may make adjustments for current year 2010

1099-MISC Reporting / Correction Reminders

how 1099 misc payments are reported
How 1099 MISC payments are reported
  • Mark voucher at time of payment
  • Manual Adjustments
  • Adjustments done by WWU
    • Correction/Duplicate 1099 Information form
  • Interface 1099 data files

1099-MISC Reporting / Correction Reminders

manual adjustments
Manual Adjustments
  • Enter Vendor Set ID
    • State or
    • HHS01 etc
  • Enter Vendor ID
  • Hit search

1099-MISC Reporting / Correction Reminders

adjustments calendar yr 2010
Adjustments - Calendar Yr 2010
  • Enter Business Unit
  • Enter Start Date (01-01-2010)
  • Enter End Date (12-31-2010)
  • Click Search

1099-MISC Reporting / Correction Reminders

changing dollar amount
Changing Dollar Amount
  • Add row (+) on line to be adjusted
    • Change to correct BU
    • Change amount
      • Make positive if adding
      • Make negative if removing
    • Change date to original payment date
      • Example (payment date 01-14-10 date if adjustment should be 01-14-10)

1099-MISC Reporting / Correction Reminders

changing dollar amount cont
Changing Dollar Amount (cont)
  • Go to Adjustment reason TAB:
    • Type Reason
      • Example “payment not reportable” or “marked in error”
    • Be sure to include your name @ BU, INTL, DATE and Save.

1099-MISC Reporting / Correction Reminders

change withholding box
Change Withholding Box #
  • Add row (+) on line to be changed
    • Change to correct BU, keep the same BOX #, enter amount as negative, change date to same as original date
  • Add row (+) to the above line
    • Change BU
    • Change Box #
    • Enter amount as positive
    • Change Date to original date

1099-MISC Reporting / Correction Reminders

change withholding box cont
Change Withholding Box # (cont)
  • Fill out adjustment reason TAB
    • Wrong box # per your name BU, INTL, DATE
  • Save

1099-MISC Reporting / Correction Reminders

adjustments done by wwu
Adjustments done by WWU
  • This is only applicable for prior years and during the consolidation process
  • Send WWU the Correction/Duplicate 1099 Form
    • Found online at
      • http://doaforms.mt.gov/doaforms.asp?Path=/AccountingForms/SABHRS&base
  • Form must be signed

1099-MISC Reporting / Correction Reminders

interface 1099 misc data files
Interface 1099 MISC Data Files
  • Send file to SABHRS
  • Information for file layout is at:
    • http://mine.mt.gov/content/documentation/sabhrs/financials/IN_1099_Balances_Load
  • For more information contact Brian Buhr 444-4337

1099-MISC Reporting / Correction Reminders

1099 misc consolidation process
1099-MISC Consolidation Process
  • All applicable payments combined to produce one 1099-MISC, when applicable:
    • Payments marked 1099 applicable on SABHRS
    • 1099 Adjustments on SABHRS
    • Payments made on our behalf interface files
    • PCard Transactions (State node only)

1099-MISC Reporting / Correction Reminders

consolidation process cont
Consolidation Process (cont.)
  • Agency 1 paid $60 reportable in Box 3
  • Agency 2 paid $200 reportable in Box 3
  • Agency 3 paid $500 reportable in Box 3
  • As individual payments, they would not be reportable as they are less than $600; however, with consolidation process a single 1099 will be issued with $760 reported in Box 3

1099-MISC Reporting / Correction Reminders

box 1 rental payments
Box 1 – Rental Payments
  • Rental/Lease Payments
    • Land
    • Buildings
    • Offices (unless paid to real estate agent)
    • Conference rooms
    • Equipment
    • Rental assistance payments to property owners
  • 1099 issued if total >= $600

1099-MISC Reporting / Correction Reminders

box 2 gross royalty payments
Box 2 – Gross Royalty Payments
  • 1099 issued if total >= $10
  • Does not include:
    • Surface royalties (Box 1)
    • Oil/Gas working interest payments (Box 7)
    • Timber royalties under a pay-as-cut contract (1099-S)

1099-MISC Reporting / Correction Reminders

box 3 other income
Box 3 – Other Income
  • Reportable damages
    • Punitive
    • Nonphysical injury
    • Discrimination/defamation
  • FMV of awards/prizes not for services performed
  • Honorariums
  • 1099 issued if total >= $600

1099-MISC Reporting / Correction Reminders

box 3 other income23
Box 3 – Other Income
  • Damages not reportable:
    • Received on account of personal injury or physical sickness
    • Do not exceed amount paid for medical care for emotional distress
    • Property Claims

1099-MISC Reporting / Correction Reminders

box 4 backup withholding
Box 4 – Backup Withholding
  • Any amount of federal income tax withheld is reportable

1099-MISC Reporting / Correction Reminders

box 6 medical or health care service payments
Box 6 – Medical or Health Care Service Payments
  • Doctors/Dentists
  • Counselors
  • Home health care workers
  • Clinics/Hospitals/Nursing homes
  • Medical billing services
  • 1099 issued if total >= $600, even if corporation
    • Does not include payments to pharmacies to prescription drugs

1099-MISC Reporting / Correction Reminders

box 7 nonemployee compensation
Bonuses

Commissions

Nonemployee professional/technical services or taxable fringe benefits

Expert witness fees

Legal fees to attorneys in course of business

Purchases of fish for resale

FMV awards/prizes for services performed

Payment for repair parts/services, if parts incidental to repair

1099 issued if total >= $600

Box 7 – Nonemployee Compensation

1099-MISC Reporting / Correction Reminders

box 14 gross proceeds paid to attorney law firm
Box 14 – Gross Proceeds paid to Attorney/Law Firm
  • Gross proceeds paid directly to attorney
    • Reportable even if attorney is a corporation
    • Includes amount paid for fees, if cannot be separated from settlement
  • Payment is jointly payable to attorney and client
    • Full amount must be reported in Box 14

1099-MISC Reporting / Correction Reminders

irs tin matching
IRS TIN Matching
  • Ensures that correct Name/TIN combination
  • Should reduce number of CP2100 items (or B Notices)
  • Names of vendors file should follow policy guidelines
    • Sole Proprietors – individual not DBA name
    • Legal name of company/corporation

1099-MISC Reporting / Correction Reminders

tin s required
TIN’s required
  • Per 2-1655.40 will be required
    • Unless for refund situations
  • W-9 required -
    • For US persons or corporations
    • Substitute W-9 will be placed on web for agencies to use
  • W-8 required -
    • For foreign individuals or corporations

1099-MISC Reporting / Correction Reminders

backup withholding
Backup Withholding…
  • Required -
    • When taxpayer fails to furnish TIN
    • When IRS notifies Montana payee TIN is incorrect and fails to respond to B Notice
    • When IRS notifies payer of payee underreporting
    • Payee TIN certification failure

1099-MISC Reporting / Correction Reminders

backup withholding cont
Backup Withholding (cont…)
  • 28% of payment
  • If Montana fails to report a reportable payment, we are liable for backup withholding requirements for each required 1099 + interest + penalty
    • This penalty will be passed onto each agency that failed to mark the appropriate payments as 1099 applicable

1099-MISC Reporting / Correction Reminders

payments made on our behalf
Payments made on our behalf
  • Montana liable for 1099-MISC reporting when:
    • We have management or oversight:
      • To who payments are made
      • When disbursements are made
      • Who qualifies for disbursements
      • Amount of disbursements
  • Payment interface file should be supplied to SABHRS

1099-MISC Reporting / Correction Reminders

payee does not receive payments
Payee does not receive payments
  • 1099-MISC is still required to be issued to the payee (Beneficial Owner):
    • When a reportable payment is not made to the payee, but assigned to someone else
      • 1099-MISC adjustment must be input into SABHRS in regard to “payee”
    • Payment was offset or partially offset
    • Payment garnished by non-federal bankruptcy trustee
    • Payment for claimant payable to attorney, when taxable

1099-MISC Reporting / Correction Reminders

payments to claimant attorney
Payments to Claimant/Attorney

1099-MISC Reporting / Correction Reminders

  • Need to know some idea as to what the payment is being made for (some reportable/some not)
  • May need to know TIN for both Claimant and Attorney, when reportable
    • Individual or law firm
    • If not, Backup Withholding applies
  • If paid to employee/previous employee, may be W-2 applicable check w/SHRD
claimants attorneys cont
Claimants/Attorneys (cont.)
  • Payments not reportable to claimant if:
    • Received on account of personal injury or physical sickness
    • Do not exceed amount paid for medical care for emotional distress
    • Property Claims
  • Payments reportable if:
    • Does not fall into nonreportable categories, always includes punitive damages
    • Reportable damages paid to a attorney, even if corporation

1099-MISC Reporting / Correction Reminders

payments to attorneys
Payments to Attorneys

Box 7 Reportable

Box 14 Reportable

Services not performed in course of business for us

If name on check

Corporate exemption does not apply

Interest reported on 1099-INT (agency does)

  • Services performed in course of business for us (nonemployee)
  • Corporate exemption does not apply
  • Interest reported on 1099-INT (agency does)

1099-MISC Reporting / Correction Reminders

other attorney payments not reportable box 14
Other attorney payments not reportable (Box 14) …
  • Attorneys acting as closing agents in real estate transactions
  • Attorneys appointed by the federal bankruptcy court to act as trustee

1099-MISC Reporting / Correction Reminders

multiple 1099 s for same payment yes
Multiple 1099’s for same payment? YES

1099-MISC Reporting / Correction Reminders

  • If payment to a claimant is taxable, but is paid to the attorney –
    • Reported in Box 14 in regard to the amount paid to the attorney
    • Reported in Box 3 in regard to the claimant
      • Must be added to SABHRS as an adjustment
claimant some attorney some
Claimant Some/Attorney Some
  • If a claimant is awarded $100,000 for and wants their attorney paid $30,000. The claimant receives a check for $70,000.
    • Reported in Box 14 in regard to the amount paid to the attorney
    • Reported in Box 3 in regard to the claimant
      • Must be added to SABHRS as an adjustment for amount paid to attorney

1099-MISC Reporting / Correction Reminders

irs circular 230 notice
To ensure compliance with requirements imposed by the IRS, any tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties under the IRS code. IRS Circular 230 Notice

1099-MISC Reporting / Correction Reminders