Ep. 75 | 1099s - The What, When, and How They Are Issued
Download MP3In this episode of the Teaching Tax Flow podcast, hosts Chris and John dive deeply into the intricacies of 1099 forms with the help of guest expert Kaitlyn Rummel from EH Business Services. Kaitlyn brings her experience to the table, discussing how 1099 forms work, their significance in tax documentation, and strategic tips for businesses to manage them efficiently.
Opening with an introduction to the topic, Kaitlyn sheds light on different types of 1099 forms, emphasizing the infamous 1099-NEC. With a focus on how businesses can minimize tax burdens legally and ethically, the episode uncovers best practices, common misconceptions, and the dos and don'ts of 1099s. The conversation explores the close interplay between professional bookkeeping and foolproof tax planning, presenting guidance that listeners can implement immediately.
Key Takeaways:
- 1099-NEC forms are essential for businesses to report non-employee compensation, and they must be filed by January 31 each year.
- Businesses should collect a W-9 form from contractors before commencing financial transactions to facilitate accurate 1099 documentation.
- Payments made via credit card do not require a 1099-NEC because they are reported on a 1099-K by the card processor.
- Penalties for not filing 1099s can range from minor fees to substantial charges, depending on the delay and the nature of non-compliance.
- Keeping organized records and leveraging bookkeeping software like QuickBooks can significantly ease the process of issuing 1099s.
Notable Quotes:
- "It's better to have [a W-9] and then find out that you don't need it." - Kaitlyn Rummel
- "Just because you have a contractor doesn't always mean that you will file a 1099 for them." - Kaitlyn Rummel
- "Quickbooks will automatically take out those transactions made with a credit card and just give you the transactions that count towards the 1099." - Kaitlyn Rummel
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