1099 Forms are due at the end of the month. This due date pertains not only to the independent contractor copy but also to the IRS copy for any 1099 Forms issued related to non-employee compensation in Box 7.
The classification of your workers as "employees" or "independent contractors" remains a "hot topic" with both the IRS and the State of California. Please see the recent Orange County Business Journal article written by our Senior Tax Manager, Richard Warner (below).
Here are some general guidelines to follow:
• Per IRS regulation, 1099s are due for each non-corporate vendor to whom you have paid during the year:
• At least $10 in royalties or broker payments in lieu of dividends or tax-exempt income
• At least $600 in rents, services (including parts and materials), prizes and awards, other income payments, medical and health care payments
• Gross proceeds of $600 or more paid to an attorney (even if they are incorporated)
We are available to prepare your Forms 1099. For each independent contractor (individual, partnership, LLP, LLC, or attorney) to whom you paid $600 or more during the 2018 calendar year, please provide the following information:
1. Formal name/business name
2. Address
3. Social Security Number or Taxpayer ID Number
4. Amount paid in 2018If you have any questions, please contact Karen Reed (karen.reed@smithdickson.com) or Elaine Kazzi (elaine.kazzi@smithdickson.com) and we will be happy to assist you. You can also reach us by phone at (949) 553-1020.
Richard Warner, Senior Tax Manager, recently wrote an article for the Orange County Business Journal in the "General Counsel Awards" special supplement. Excerpt from the article "New Ruling on Independent Contractors Impacts Many Employers":
Determining whether a California worker is an independent contractor or an employee has always been difficult. However, for many years the laws have been interpreted to mean that the key to distinguishing between employees and independent contractors was whether the company had the right to control the manner and means by which the worker accomplished the desired result. Recently, a ruling by the California Supreme Court changed that understanding.
Reference the AICPA's Federal tax return due dates chart for use in complying with common federal tax return due dates for individuals, businesses (of all types), employers, and estates/fiduciaries.
Some of the important upcoming due dates:
• Jan. 31: Businesses — Forms 1099 — Provide annual information statements (Forms 1099) to recipients of certain payments you made during the previous year.
• Jan. 31: Employers — W2s & W3s — Provide employees their copies of Form W-2 for previous year.
• Jan. 31: Employers — Forms 940 and 941 — For Social Security, Medicare, and withheld income tax, file Form 941 for the fourth quarter of previous year. For federal unemployment tax, file Form 940 (or 940-EZ) for previous year.
Be sure to contact us to discuss your tax questions and needs.
