E-File Magic 1099 Software – Blog

Form 1098 is pretty self explanatory. You need to use Form 1098 to report Mortgage Interest of $600 or more received during the year from an individual and you receive in the course of your trade or business.  The only time you do not need to file Form 1098 is for interest received from a corporation, partnership, trust, estate, association, or company (other than a sole proprietor) even if an individual is a coborrower and all the trustees, beneficiaries, partners, members, or shareholders of the payer of record are individuals.  According to the IRS, “A mortgage is any obligation secured by real property.”  And that basically sums up Form 1098…

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This morning, when I looked at the weather report it said that there was a 100% chance of rain.  So the odds are pretty good that it will be pretty wet in the Pacific Northwest today.  And thanks to new laws established by the IRS, the odds are greater that you will receive a 1099-DIV this year.

In general a 1099-DIV needs to be filed for each person; you have paid dividends and other distributions on stock of $10 or more, you have withheld and paid foreign tax on dividends and other distributions on stock, you have withheld any federal income tax on dividends under the backup withholding rules, or you have paid $600 or more as part of a liquidation.

It looks like more people will be receiving form 1099-DIV this year.  The IRS is now requiring that Exempt-interest dividends from a mutual fund or other regulated investment company be reported on Form 1099-DIV instead of traditionally where it has been reported – Form 1099-INT.

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In a tax class many years ago, my professor said that many schools do not know how to fill out form 1098-T correctly.  It’s a shame really, but most schools have thousands of students and at times, information about tuition paid can get a little jumbled.

According to the IRS, you should furnish a 1098-T if you are an eligible educational institution.  You must file a 1098-T for each student enrolled and has a reportable transaction.  You must also file a 1098-T form if you are an insurer and have made reimbursements or refunds of qualified tuition and related expenses.

Not all students qualify for a form 1098-T.  If there has been no academic credit for a class taken, a non-resident student, if the students tuition is completely paid by scholarships or grants, or if the student isn’t paying for school, but their employer or a government entity is paying for their schooling instead.

For the applicable students, all qualifying tuition must be reported.  Tuition that is not considered to be qualifying; amounts paid for any course or other education involving sports, games, or hobbies, unless the course or other education is part of the student’s degree program or is taken to improve job skills, and charges and fees for room, board, insurance, medical expenses, transportation, and similar personal, living, or family expenses.

Phew! I hope that clears up some of the confusion a bit.  Hopefully my old tax teacher will be proud.

Working in E-File Magic’s 1099 Software is a perfect way to spend a rainy afternoon! Download the 1098-T version today!

Who must file form 1099-Misc?

If you or your business has paid a person during the year; at least $10 in royalties or broker payments in lieu of dividends or tax-exempt interest, at least $600 in rents, services (including parts and materials), prizes and awards, other income payments, medical and health care payments, crop insurance proceeds, cash payments for fish (or other aquatic lice) you purchase from anyone engaged in the trade or business of catching fish, or, generally the cash paid from a notional principal contract to an individual, partnership, or estate, Any fishing boat proceeds; or gross proceeds of $600 or more paid to an attorney.
Some new Legislation about Form 1099-MISC for 2011.  At the end of 2010, many people were concerned about a law passed by the legislature that stated, all rental expense payments over $600 had to be reported to the IRS via a Form 1099-MISC.  This law has been changed, and is no longer required.

If you fall into the category of someone who needs to file 1099-MISC, I would start by asking your payment recipients to submit to you a completed Form W-9.  Form W-9 will give you all of the important information about the recipient.  It will have the legal name, address, and their taxpayer identification number.  That way you will be able to complete the Form 1099-MISC quicker.  I would look over your receipts now, and if you have paid someone or are close to paying them the required amount to send them Form 1099-MISC, I would start requesting Form W-9′s from them.

1099-MISC has a few different deadlines to keep track of; you must provide the recipient with their copy of the form by January 31st, and you must electronically file the form to the IRS by March 31st.  E-File Magic can help you accomplish both mailing the forms to your recipients and electronically filing the forms to the IRS.

Like with most things dealing with the IRS, if you don’t issue  Form 1099-MISC on time you will be penalized.  Here are the list of penalties: there is a $30 penalty for filing a 1099 not more than 30 days late; a $60 penalty for filing a 1099 more than 30 days late and before August 1; a $100 penalty for filing a 1099 on or after August 1; and a $250 penalty for intention failure to file.

E-File Magic can help you with all of your 1099-MISC needs.  Download our simple to use software, choose whether you would like to print and mail or have E-File Magic Print and Mail the forms to your recipients for you, and in March we will e-File the forms to the IRS for you!

Ready or not, the holidays are fast approaching.  Which also means the end of the year is also fast approaching.  During this time of year, it seems like we think more about charitable giving.

I like to give, and I’m happy to feed the kettle of someone poor person stuck outside of Macy’s in 35 degree weather ringing their freezing cold bell.  But lately, I’ve realized I’ve been doing it all wrong – I usually drop some cash into the kettle, while this is perfectly acceptable you shouldn’t claim the contribution on your taxes unless you have a receipt or a check stub for the contribution.

So, this year, I will write a check for all of my charitable donations, and get receipts when available so I have an acceptable paper trail of my contributions.

New for 2011 E-File Magic is offering 1097-BTC and 1099-K Software!

My husband and I spent a year debating if we should purchase a Nissan Leaf, which is one of the new plug-in electric cars being released.  We decided there were many pros and cons to purchasing a Leaf. And after many hours of debating we decided we should do the most prudent thing ~ we went to the IRS website to check out what kind of tax credits we could receive.

There is indeed a Plug-In Electric Vehicle Credit (IRC 30 and IRC 30D).  The credit basically states that the vehicle needs to be purchased after December 31, 2009, it only qualifies for the first 200,000 qualifying vehicles sold for use in the United States.

The credit begins at $2,500 with a maximum credit of $7,500 depending on the capacity of the battery.

The Leaf just happens to qualify for the maximum credit!

Now if we could only agree on a color.

E-File Magic can fulfill all of your needs for 1099 software. Download the 2011 version today!