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IRS Reporting

IRS Reporting. Form 1099-MISC Raffles Civil Air Patrol 2009 National Conference Learning Lab FM02 Stacy Jackson. Introduction. Wing Responsibilities for 1099-MISC Reporting 1099-MISC Prizes and Awards Rent and Royalty Payments Services Attorney Payments Scenarios for Volunteers Raffles

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IRS Reporting

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  1. IRS Reporting Form 1099-MISCRafflesCivil Air Patrol2009 National ConferenceLearning Lab FM02Stacy Jackson

  2. Introduction • Wing Responsibilities for 1099-MISC Reporting • 1099-MISC • Prizes and Awards • Rent and Royalty Payments • Services • Attorney Payments • Scenarios for Volunteers • Raffles • Wrap Up • Questions

  3. Wing Responsibilities • Be diligent with Accounts Payable postings. The first step is having correct information. • Have only one vendor card for each vendor. • Your WFA can merge vendor cards if more than one card exists for a vendor. • Verify that transactions posted are accurate. • Indicate 1099 Eligible Vendors in QuickBooks • Done by editing the vendor and checking the 1099 option under the “Additional Info” tab. • Add the vendor Taxpayer ID information to QuickBooks

  4. Vendor Edit Screen Enter vendor Tax ID from W9 here Check this box if vendor is eligible for 1099 reporting

  5. Wing Responsibilities • Decide which vendors should receive a 1099-MISC • Obtain Form W-9 from vendors • The Form W-9 is used as a tool to obtain the necessary information from vendors. It will help determine if payments to vendors are reportable. • A Form W-9 should be obtained from all vendors and kept on file at wing headquarters.

  6. W-9 Example Vendor should choose one business type. Vendor should enter one TIN number. This number should match their annual tax returns. Vendor must sign!

  7. Wing Responsibilities • Determine the amount to be reported on each 1099-MISC • Provide all information needed to file your 1099-MISC Forms to your WFA. A spreadsheet will be provided that will aid in consolidating the information. • All information must be provided no later than Jan 15th for the preceding calendar year. • NHQ will file all 1099-MISC Forms with the IRS, state tax authority, and recipients

  8. 1099-MISC • Required for the following • Prizes and Awards • Rent and Royalty Payments • Services performed by individuals who are not employees and are not incorporated • Gross Proceeds paid to Attorneys

  9. 1099-MISC Example All of the information for the recipient must match their annual income tax return

  10. Prizes and Awards • Reportable amount: • $600 per calendar year • Information needed: • Individual’s name and address • Individual’s Social Security Number • Total amount of all prizes and awards paid to the individual or on the individual’s behalf during the year • Example: • Flight scholarships or any cash awards to members • Scholarships are considered awards unless paid to a candidate to attend an educational institution for a degree

  11. Rent and Royalty Payments • Payments made to corporations and governments are not required to be reported • Reportable amount: • $600 per calendar year for Rent • $10 per calendar year for Royalties • Information needed: • Name and address that the vendor uses to file their annual tax return • Taxpayer Identification Number that the vendor uses to file their annual tax return • Total amount of all rent or royalty payments paid to the vendor during the year. • Example: • Hangar rental, office rental, or storage rental

  12. Services • Payments made to corporations are not required to be reported. • Reportable amount: • $600 per calendar year • Information needed: • Name and address that the vendor uses to file their annual tax return • Taxpayer Identification Number that the vendor uses to file their annual tax return • Total amount of all payments made for services to the vendor during the year. • Example: • Catering, facility cleaning, lawn care, or pest control

  13. Attorney Payments • Payments made to corporations must still be reported. • Reportable amount: • Reportable for any amount paid per calendar year • Information needed: • Name and address that the vendor uses to file their annual tax return • Taxpayer Identification Number that the vendor uses to file their annual tax return • Total amount of all payments made to the vendor during the year • Example: • Retainers and legal fees paid to law firms

  14. Scenarios for Volunteers • There are several instances when a 1099-MISC is required to be sent to volunteers. • A volunteer receives a flight scholarship or activity scholarship from a CAP entity. • A volunteer receives a cash award from a CAP entity. • A volunteer rents out hangar, office, or storage space to a CAP entity. • A volunteer provides cleaning or lawn care services to a CAP entity and receives compensation.

  15. Raffles • All raffles must be reported to NHQ/FM prior to the raffle taking place. • All required information must be obtained by the Wing or Unit. • IRS Form 5754 must be completed by each winner. • All prizes with a fair market value of $600 or more must be reported to the IRS. • IRS Form W-2G

  16. Raffles • All prizes with a fair market value of $5000 or more are taxable. • Winner will pay 25% withholding tax on the fair market value less the initial wager. This must be collected from the winner when they collect the prize. OR • Wing or Unit sponsor will pay 33.33% withholding tax on the fair market value less the initial wager. • NHQ/FM will complete all IRS Forms and filing requirements. • Taxes will be drafted from the Wing or Unit bank account and submitted to the IRS

  17. Form 5754 Example All information must be completed by the winner. Part I = all winners Part II = only taxable winners All information must be completed by the winner. All information must be completed by the winner. All information must be completed by the winner. All information must be completed by the winner.

  18. W-2G Example

  19. Some Final Notes • All forms must be filed with the same information as the individual or business uses to file their income taxes each year • Sole Proprietorships should be sent in the individual’s name, not the business name • Forms sent to individuals should contain their social security number, not an employer identification number. • All information should be reported by calendar year, not fiscal year

  20. Some Final Notes • The Wing is responsible for obtaining all information via Form W-9 or Form 5754. • The IRS penalizes $50 per form for incorrect information filed on 1099 Forms or W-2G Forms that are not supported by the required back up.

  21. If You Get Stuck or Need Help • Contact your Wing Financial Analyst • Contact National Headquarters • Stacy Jackson, WFA • sajackson@capnhq.gov 877-227-9142, Ext. 427 Cell – 334-224-7657

  22. Questions?

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