Coffee Time with Marie Torossian CPA - Episode 40

Coffee Time with Marie Torossian CPA - Episode 40

Hey there, everyone! If you've been tuning in to Coffee Time with Marie Torossian, you know we've covered a lot of ground. Today, let's dive into the key concepts discussed in our recent episode about tax planning and 1099 forms. 

Tax Planning: 

• Start Early: Begin thinking about your tax planning now. Consider the changes happening in your life and anticipate future events to better prepare. 

• Reach Out for Help: If tax planning feels overwhelming, don’t hesitate to seek professional advice. We're here to assist you! 

1099 Forms: 

• What is a 1099? It's an information return, required for businesses to report various types of income. There are different types, including 1099-MISC, 1099-NEC (Non-Employee Compensation), 1099-DIV (Dividends), and 1099-INT (Interest). 

• When to Use 1099: Typically used for professional services and compensation to independent contractors. However, there are other scenarios where a 1099 might be required. 

• Importance of W-9: When hiring an independent contractor, have them complete a W-9 form. This helps in preparing accurate 1099 forms at year-end. 

• Common Mistakes: 

• Missing deadlines 

• Incorrect or missing Tax Identification Numbers (TIN) 

• Using the wrong form or box for reporting 

• Filing paper forms instead of electronic when required 

• Not sending the 1096 transmittal form when required 

Correcting Errors: 

• Type 1 Errors: Incorrect amounts, codes, or other details. File a corrected 1099 with a "corrected" box checked. 

• Type 2 Errors: Incorrect TIN or wrong form entirely. File two corrected 1099s: one with correct information and another with zeros in the incorrect fields. 

Helpful Tips: 

• Use Professional Services: Payroll services like ADP or Paychex can handle your 1099 filings and corrections. 

• Invest in Accounting: A proper accounting system helps in accurate reporting and reduces errors. 

• Be Proactive: Review your employee-contractor relationships to ensure proper classification. This area is a hot topic with the IRS, and misclassification can lead to penalties. 

Additional Insights: 

• Late Fees and Penalties: Always file on time to avoid penalties. Check out Episode 18 for more on this topic. 

• Be Prepared for Audits: With an increase in IRS and state audits, be proactive in correcting potential issues before they contact you. 

Final Thoughts: 

Remember, tax planning and accurate reporting are crucial for your business's financial health. If you're feeling overwhelmed, don’t go it alone. Seek professional help to ensure you're on the right track. 

Don't forget to check out Marie's Pinterest ebook linked in the banners for more valuable insights. And as always, thank you for tuning in to Coffeetime with Marie Torossian. Stay tuned for more informative episodes!