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1099-MISC

Learn the steps that the wing should take for IRS 1099-MISC reporting, including verifying information, obtaining Form W-9, and determining reportable amounts for prizes, rent, royalties, services, and attorney payments.

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1099-MISC

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  1. IRS Information Reporting 1099-MISC

  2. Introduction • Steps the Wing Should Take • 1099-MISC • Prizes and Awards • Rent and Royalty Payments • Services • Attorney Payments • Final Notes • Questions

  3. Steps the Wing Should Take • 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. Steps the Wing Should Take • 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.

  7. Steps the Wing Should Take • 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 Civil Air Patrol 105 South Hansell Street Maxwell AFB AL 36112 334-953-7748 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. Upcoming Changes • Corporate exemption expires December 31, 2011. • Any payments made to corporations after this date for reportable transactions must be reported. • Good exemption expires December 31, 2011 • All payments made for goods after this date must be reported. • Penalties will increase • $50 penalty per form will be increased to $250 per form.

  15. 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 • The Wing is responsible for obtaining all information via Form W-9. • The IRS penalizes $50 per form for incorrect information filed on 1099 Forms that are not supported by a W-9.

  16. If You Get Stuck or Need Help • Contact your Wing Financial Analyst or Financial Management at National Headquarters!

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