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Forms 1099 & W-2 for Tax Year 2018

This is a friendly reminder to update your accounting and QuickBooks to see if you need any forms 1099-MISC for tax year 2018.  If so, you would need any new mailing addresses or tax ID numbers for any new 1099 vendors or subcontractors.

Reminder:  the W-2 and 1099 deadline has moved up to January 31 for both paper and electronic filings.  In addition, the penalties for late filing have increased, so we want you to stay out in front of this.   If you have any questions, please contact us.

In order to assist you in determining the filing requirements for the preparation of the annual Form 1099-MISC, we have set forth some general, but not exhaustive, IRS rules to be applied in your review.  Please contact us if the general information presented below does not address your question(s) regarding a specific payment(s) made to any person or business during the calendar year.

Generally speaking, a Form 1099-MISC should be prepared for payments made only in the course of your trade or business, The payments made to individuals and partnerships (including LLC's), are reportable in the amount of $600 or more.  Usually, payments to corporations are excluded from 1099-MISC filing requirement except for payments to law firms operating as corporations (see below) who render legal services.  Certain rental property expenses are not required to be reported by those receiving rental income.  Other exclusions not reported are:  merchandise, telephone, freight, storage, life insurance and payments made to Non-Profit Organizations.

Specific payments made for services (includes parts and material), consulting, rent, and/or legal services should be considered.  Copies of the Form 1099-MISC must be provided to the worker and to the IRS.  For the purpose of preparing this year end reporting form and for your recordkeeping, you should prepare a schedule showing the payee, check dates, amount of check and the Employer Identification Number (EIN) or SSN for each recipient.

Any Form 1099-MISC sent to the IRS must be transmitted with Form 1096, the Annual Summary and Transmittal of U.S. Information Returns.  This summary form reflects the total of the individual Form 1099-MISC's issued.

Due dates for Forms 1099-MISC and 1096 are as follows:

• January 31: Forms 1099-MISC must be provided to each income recipient.
• January 31: Forms 1099-MISC must be submitted to the IRS for Efile or paper.
• Form 1096 must accompany paper submissions of Forms 1099 to the IRS.

General Common Filing Guidelines:

File Form 1099-MISC, Miscellaneous Income, for each person or business to whom you have paid during the calendar year at least $600 in the course of your trade or business for:

1)  Services (including parts and materials), prizes and awards, and other income payments

• All payments to attorneys for services rendered greater than $600 must be reported on Form 1099-MISC, even if operating as a corporation.

2)  Rents paid to an individual, partnership or LLC.  We suggest preparing Form 1099-MISC for rents paid to a Real Estate Investment Trust (REIT), even though this entity may operate as a corporation.  Please do not hesitate to contact us should you have any questions and call us soon to schedule the work associated with these filings.

Very truly yours,

Murray & Cavanaugh, P.C., CPAs