It’s almost time for another “exciting” tax season! Stay tuned for our upcoming Newsletter with more details around mid-January as well as prior client coupons and personalized Tax Organizers based on your last tax return.
We have super-good news for some of you! The IRS announced on Tuesday that they are forgiving late pay penalties for taxpayers who still owe taxes for 2020 and 2021. If that’s you, our suggestion is to do whatever you can to get those taxes paid. IRS will still charge you interest but those were low interest years; it’s the late file and late pay penalties that can double your tax bill!
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Pre-season update time! No tax law changes out of Congress this year, but a possible government shutdown is looming. The good news is that IRS is considered essential services, so you can expect tax filing to continue uninterrupted. The bad news, maybe, is that the government tends to close down the things that hurt average people first (they want you to know when you go to vote!) – so whether there will be a delay in refunds is anyone’s guess.
The IRS has not yet announced when they will open for e-filing, but we anticipate it will be the last week of January. We can prepare your taxes now if you already have all your documents, but we can’t send them to the IRS until e-filing opens. Most early filers should not expect refunds until the middle of February. This is the “new norm” (I hate that phrase!) For clients that need their refunds sooner, we can do refund advance loans of up to $6000 right now, even before the IRS opens!
If you need any help getting organized or want to make an appointment, please call our office (770-471-3003) or email me, and if you know anyone looking for very experienced tax preparers, please forward our name to them! Starting January 3, we are open M-F 9-2 until the 29th when our normal tax season hours begin.
Remote Tax Prep – Basically, get your tax documents to us any way you can. Snail mail, UPS, FedEx, fax, email, or our Secure Portal (like OneDrive or DropBox but for taxes!). We work on them for a few days and then contact you for some Q&A (phone or email). Once everything is finalized, we get some permission signatures and payment, usually by our awesome Secure Portal system, and you’re set. No traffic! No germs! Only limited human contact!
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Reminder for our Business Clients: Tax Facts provides payroll services to our clients. We are currently preparing annual reports as well as W2s and 1099s. Let us know if you need assistance. The IRS is serious about their due date of January 31 to get W2’s and 1099’s to your employees/contractors as well as getting your annual reports filed/paid. If you do these late, expect severe penalties ($$$)!
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When does the IRS requires you to send a form 1099-NEC?
If during the calendar year you hired contractors in the course of running your trade or business and you paid any one person $600 or more, you may have to issue them a 1099-NEC. This requirement is to remind folks you pay to include such payments on their tax returns (although ANY amount you pay someone is supposed to be included on a tax return). You also are required to furnish the IRS with a copy of the 1099-NEC you issue.
Who does not get a 1099?
- The recipient is a corporation
- You included the payment in a W-2 form (to an employee)
- The payment is for a tangible product (office supplies, computers, etc), or
- The total payments during the calendar year were less than $600.
Who must get 1099?
- The payments were Professional fees paid to an attorney, doctor or other professional for services made to your trade or business. Do not issue a 1099 for payments that are for personal expenses.
- Any person you paid $600 or more who perform services for you in your business or trade.
- Payments to corporations are included only if they are for medical, health care, legal or fishing activities (yes, fishing!).
- Payments of $600 or more in rent for office space, machines, equipment or land in the course of your trade or business require a 1099-MISC (don’t confuse the 1099-MISC with the 1099-NEC) if the payment was made to an individual or partnership and not to a corporation.
What is a payment?
Payments include commissions, fees, interest, rents, royalties, annuities and any other type of compensation or income to a single recipient.
The IRS deadline for mailing 1099 forms for payments made in 2023 is Jan. 31, 2024.
OOPS! If you inadvertently fail to issue a proper Form 1099 by Jan 31st, the IRS can assess a $300 penalty. The penalty for each intentional failure can be $500 and more.
It’s important to note that individuals are not required to send 1099-NEC or 1099-MISC for personal payments. Individuals are not required to send a 1099-NEC to an independent contractor to whom you have made a personal payment unrelated to your trade or business. So you don’t have to issue a 1099-NEC to your landscaper or house painter… not yet anyway. This exception extends to landlords as well, even though renting your property is considered a business.