Independent Contractor Tax Reporting with Form 1099
As independent contractors and the businesses that hire them, adhering to guidelines and best practices when reporting taxes is crucial. Staying compliant and properly reporting with the right Form 1099 is an absolute must to remain in good standing with the IRS. Watkins & Co. is here to share some important information on 1099 tax reporting do’s and don’ts.
Independent Contractor Reporting
Do: Adhere to all tax reporting guidelines the IRS stipulates. If you’re engaging the services of an independent contractor, make sure the information you provide is accurate, timely, and details all payments made.
Don’t: Issue 1099s late or include incomplete payment records or wrong information.
Electronic Filing Requirements
Do: Use electronic filing if you value expedited processing and fewer errors in tax reporting.
Don’t: Fail to electronically file if your business is required to do so.
Backup Withholding Rules
Do: Ensure that you are providing your independent contractors with the correct taxpayer identification number (TIN). Know the rules – if a payee does not provide an accurate TIN, they may have to withhold a portion of your payment for backup.
Don’t: Fail to provide a TIN expecting this to help you avoid taxes; in fact, doing so may create withholding obligations.
Foreign Accounts and 1099 Reporting
Do: If your business engages in international transactions, investigate whether you do or do not have to report income from foreign accounts. Research the requirements related to such transactions so that you properly claim every mandated transaction.
Don’t: Assume that international transactions do not have to be reported or are not taxed by the U.S. federal government.
Use Tax Software or a Tax Professional’s Services
Do: Utilize the services of tax preparation software, or better yet, use a local professional CPA or accountant. This can help you decrease errors, streamline the tax reporting process, and reduce the amount of valuable time you spend on administrative tasks rather than growing your business.
Don’t: Struggle through tax reporting with Forms 1099 if you’re unsure of what you’re doing and if you’re insecure that you may submit inaccurate information. Accuracy and transparency are key and you always want to avoid any issues with the IRS.
Stay Current on 1099 Legislative Changes
Do: Keep a close eye on changes in 1099 reporting and tax requirements. This is key to ensuring you remain in compliance and are following all regulations.
Don’t: Bury your head in the sand believing nothing will change in the rules and regulations in tax reporting with Forms 1099.
Best CPA for 1099s Near Me
The assistance of a professional when reporting taxes on Form 1099 can prove very important. Watkins & Co. has helped thousands of businesses and the independent contractors they hire file for taxes year after year, ensuring that every “t” is crossed and every “i” is dotted. We’re here to help you too! Proudly serving the tri-county Jackson, Mississippi areas and beyond, we can help you maximize your tax savings while staying compliant and following all IRS regulations. Give our experienced team a call today and we’ll help you save valuable time and effort on your tax filing today!