Live Webinar

Form 1099 MISC Explained

Webinar Details $219

  • Webinar Date: August 11, 2022
  • Webinar Time: 12:00pm - 1:40pm EDT   live
  • Webinar Length: 100 Minutes
  • Guest Speaker:   Steven Mercatante
  • Topic:   Taxation and Accounting
  • Credit:   CPE 2.0, ATATX 1.5
All Access Membership

Form 1099-MISC is one of the most common Information Reporting Forms that businesses, estates, trusts and non-profits are required to file at the end of the calendar year. It is also the Form 1099 that most commonly has errors identified by the IRS. Even worse it has been revamped yet again. So what can you do NOW to prepare a Form 1099-MISC early next year and avoid notices of errors from the IRS? By developing best practices and exercising due diligence collecting data to be included on the Forms 1099-MISC.

  • The biggest mistakes revolve around failing to properly identify and locate where to report the payment types in the different Form 1099-MISC boxes and validating the name and TIN of the related payee
  • A second common mistake is failure to understand what gets reported on the Form 1099-MISC versus what is to be reported on the 1099-NEC and other Forms 1099

At the completion of this course you will have the tools necessary to evaluate the W9 and prepare a Form 1099-MISC with all the blocks properly completed.

Contents:

  • Review W-9 for Accuracy & Completeness
  • Match W-9 SSN, EIN, TIN to IRS records
  • Entities Who Should Send 1099 MISC
  • Entities Who Should Receive a 1099-MISC
  • Block by Block Instructions of 1099-MISC

Important Issues Covered:

  • What name and EIN/SSN goes on the 1099-MISC?
  • How do I know what amount goes in which block?
  • Example: When to report rental related payments on the Form 1099-MISC versus those that get reported on the Form 1099-NEC versus those get reported on the Form 1099-S
  • Example: When gross proceeds paid to an attorney and settlement payments paid to a claimant are reported on the 1099-MISC in boxes 3 or 10 versus those reported on other Forms 1099 or not reported at all
  • Example: When to report payments to medical service providers in box 6 of the 1099-MISC versus box 1 of the Form 1099-NEC

Learning Objectives:

  • You will learn the most common mistakes
  • You will learn how to review for accuracy and completeness
  • You will learn entities who should receive a 1099 MISC

Level: Intermediate
Format: Live webcast
Instructional Method: Group: Internet-based
NASBA Field of Study: Taxes (2 hours)
Program Prerequisites: None
Advance Preparation: None

  1. Introduction
  2. IRS Focus: The Tax Gap  00:01:13
  3. The Law Learn it, Know it, Live it 00:
  4. What’s New Big Filing Changes Coming - Changes To FIRE 00:11:50
  5. What’s New Big Filing Changes Coming - IRS Requirements 00:21:45
  6. What’s New Big Filing Changes Coming - New Corrections Processing Rules 00:27:38
  7. The Form 1099 NEC’s New Box Two and Changes to Box One 00:29:39
  8. The Form 1099 NEC Box One - Reportable Payments 00:33:53
  9. The Form 1099 NEC Box One - Examples of Payments 00:36:45
  10. 1099 NEC Box One: Expense Reimbursements, Accountable Plans, T&E, Fringe Benefits 00:39:53
  11. The Form 1099 NEC Box One - Other Implications 00:42:59
  12. The Form 1099 MISC’s New Box Eleven 00:48:20
  13. 1099-MISC Box One Issues 00:50:03
  14. 1099-MISC Box Two Issues 00:53:37
  15. 1099 MISC Box Three Issues 00:56:04
  16. 1099 MISC Box Six Issues 01:02:20
  17. 1099 MISC Boxes 12 and 14 vs. 1099 NEC Box One Director’s Payments 01:03:52
  18. The Form 1099 MISC is Still Big…But Not the Whole Show - Non-Reportable Payments 01:07:02
  19. The Form 1099 NEC Box 4 vs. 1099 MISC Box 4: Watch That Backup Withholding - Your Action Steps 01:07:56
  20. The “Other 1099’s”: The 1099-K vs. The 1099-MISC/NEC 01:13:32
  21. The “Other 1099’s”: The 1099-R vs. the 1099-MISC/NEC 01:17:19
  22. The “Other 1099’s”: The 1099-INT, 1099 B, 1099-DIV, 1099-C vs. the 1099- MISC/NEC 01:18:40
  23.  The W 9 To The 1099-MISC: Be Careful 01:21:41
  24. The W 9 To The 1099-MISC: Be Careful - When to Get an Updated Form W-9 01:24:49
  25. 1099 MISC Data Validation Basics - Identifying Your Payee: Who is 1099 Reportable? 01:26:55
  26. 1099-MISC Data Validation Basics - U.S Persons 01:27:38
  27. Always Validate Claims of Non-Reportability - Corporations 01:28:21
  28. Always Validate Claims of Non-Reportability - The LLC 01:28:54
  29. Always Validate LLC’s - The LLC and Disregarded Entity 01:29:19
  30. The Exempt Organization - Tax Exempt Organization Search Tool 01:30:36
  31. TIN Match Program - IRS TIN Match Program 01:31:02
  32. TIN Match Program - Vendors 01:31:38
  33. TIN Match Program - Using The Tool 01:31:46
  34. TIN Match Program - Delegated Authority 01:31:59
  35. The Middleman And The 1099 MISC 01:31:10
  36. A Note On B Notice Response Best Practices 01:33:12
  37. Protect Yourself - 01:35:06
  38. Attendee Questions 01:36:16
  39. Presentation Closing 01:43:24

  • Accountable Plan 00:40:12
  • Audit 00:02:55
  • Backup Withholding 00:07:33, 00:36:12, 00:47:54, 01:11:52, 01:33:15
  • B-Notice 00:02:36, 00:07:57, 00:11:05, 01:13:29, 01:33:14
  • DBA -Doing Business As 01:22:16
  • De minimus 00:42:54
  • Disregarded Entity 01:22:15
  • EIN 01:26:36, 01:27:02
  • Expense Reimbursement 00:38:17, 00:40:14
  • Fair Market Value (FMV) 00:53:31
  • FATCA 01:24:04
  • FIRE - File Information Returns Electronically 00:16:22, 00:27:20
  • Form 1042 00:20:44
  • Form 1042-S 00:20:44, 01:27:57
  • Form 1099-B 01:18:40, 01:31:02
  • Form 1099-DIV 00:38:08, 01:18:40, 01:31:02
  • Form 1099-INT 01:18:42, 01:31:02
  • Form 1099-K 01:13:52, 01:15:16, 01:13:52, 01:31:02, 01:31:02
  • Form 1099 MISC 00:01:16, 00:03:48, 00:09:19, 00:12:33, 00:22:39, 00:29:42, 00:47:45, 00:48:22, 00:58:38, 01:22:29
  • Form 1099-NEC 00:01:23, 00:03:50, 00:29:46, 00:36:52, 00:48:33, 00:56:17, 01:02:34
  • Form 1099-OID 01:31:02
  • Form 1099-PATR 01:31:02
  • Form 1099-R 00:38:01, 01:17:19, 01:18:36
  • Form 4419 00:17:12
  • Form 8832 01:28:54
  • Form 945 01:27:29
  • Form W-2 00:40:36
  • Form W–8 01:24:21
  • Form W-9 00:07:27, 00:07:44, 01:21:49, 01:26:33
  • Fringe Benefits 00:38:27, 00:41:12
  • IRC Section 3406(a) 00:07:29
  • IRC Section 409A 01:05:26
  • IRC Section 6041(a) 00:07:20
  • IRC Section 6109(a)(2) 00:07:23
  • IRC Section 6724 00:10:46
  • ITIN 01:27:00
  • Limited liability company (LLC) 01:22:13, 01:22:37, 01:28:55
  • Resident Alien 01:27:40
  • Sole Proprietor 01:22:12
  • Tax Exempt Organization Search Tool 01:30:42
  • Tax Gap 00:04:05
  • TIN 00:07:52, 00:11:20, 01:13:12, 00:22:32
  • TIN Match Program 01:31:05
  • Transmitter Control Code (TCC) 00:16:58
  • Unclaimed Property 01:18:34
  • Vendor 00:08:58, 00:11:19, 00:47:53, 01:11:55, 01:24:30, 01:31:29

Accountable Plan: An accountable plan is a plan that follows the Internal Revenue Service (IRS) regulations for reimbursing workers for business expenses in which reimbursement is not counted as income. ... However, these expenses must be business-related to fall under an accountable plan.

Audit: A formal examination of an organization's or individual's accounts or financial situation

B-Notice: A notice from the IRS stating that one or more tax ID numbers were missing from a 1099 or do not match the IRS records.

Backup Withholding: Backup withholding is the tax that is levied on investment income, at an established tax rate, as the investor withdraws it. Backup withholding helps to ensure that government tax-collecting agencies (such as the IRS or Canada Revenue Agency) will be able to receive income taxes owed to them from investors' earnings. (www.investopedia.com)

CP-2100: It is a notice that tells a payer that he or she may be responsible for backup withholding. It is accompanied by a listing of missing, incorrect, and/or not currently issued payee TINs. Largevolume filers will receive a CD or DVD data file CP2100, mid-size filers receive a paper CP2100, andsmall filers receive a paper CP2100A.

CP2100-A: It is a notice that tells a payer that he or she may be responsible for backup withholding. It isaccompanied by a listing of missing, incorrect, and/or not currently issued payee TINs. Largevolume filers will receive a CD or DVD data file CP2100, mid-size filers receive a paper CP2100, andsmall filers receive a paper CP2100A.

DBA -Doing Business As: Sometimes it makes sense for a company to do business under a different name. To do this, the company has to file what's known as a DBA, meaning "doing business as." A DBA is also known as a "fictitious business name," "trade name," or "assumed name."

De Minimis: Too trivial or minor to merit consideration.

Disregarded Entity: A disregarded entity refers to a business entity with one owner that is not recognized for tax purposes as an entity separate from its owner. A single-member LLC ( “SMLLC”), for example, is considered to be a disregarded entity. (www.pntax.com)

EIN: The Employer Identification Number, also known as the Federal Employer Identification Number or the Federal Tax Identification Number, is a unique nine-digit number assigned by the Internal Revenue Service to business entities operating in the United States for the purposes of identification.

Expense Reimbursement: Expense reimbursement is a method for paying employees back when they spend their own money on business-related expenses. These expenses generally occur when an employee is traveling for business but can occur in other work-related situations. (www.thebalancecareers.com)

FATCA: FATCA was enacted in 2010 by Congress to target non-compliance by U.S. taxpayers using foreign accounts. FATCA requires foreign financial institutions (FFIs) to report to the IRS information about financial accounts held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest. (www.treasury.gov). FACTA (Fair and Accurate Credit Transactions Act) is an amendment to FCRA (Fair Credit Reporting Act ) that was added, primarily, to protect consumers from identity theft. The Act stipulates requirements for information privacy, accuracy and disposal and limits the ways consumer information can be shared.

FIRE - File Information Returns Electronically: The IRS FIRE system is the electronic network used to accept and process most types of filing forms. Technically, it stands for File Information Returns Electronically.

Fair Labor Standards Act (FLSA): The Fair Labor Standards Act of 1938 29 U.S.C. § 203 is a United States labor law that creates the right to a minimum wage, and "time-and-a-half" overtime pay when people work over forty hours a week. It also prohibits most employment of minors in "oppressive child labor".

Fair Market Value (FMV): The term fair market value is used throughout the Internal Revenue Code among other federal statutory laws in the USA including Bankruptcy, many state laws, and several regulatory bodies. In litigation in many jurisdictions in the United States, the fair market value is determined at a hearing.

Form 1042-S: Form 1042-S is used to report amounts paid to foreign persons (including persons presumed to be foreign) who are subject to income tax withholding. For an individual taxpayer, Form 1042-S is a document provided to you (and the IRS) by the payer of the income reported.

Form 1099-B: Proceeds From Broker and Barter Exchange Transactions is an Internal Revenue Service (IRS) tax form that is issued by brokers or barter exchanges. The form lists the gains or losses of all broker or barter exchange transactions.

Form 1099-DIV : Form 1099-DIV: Dividends and Distributions is an Internal Revenue Service (IRS) form sent to investors who receive distributions from any type of investment during a calendar year. Investors can receive multiple 1099-DIVs. Each Form 1099-DIV should be reported on an investor's tax filing.

Form 1099-INT: Form 1099-INT is the IRS tax form used to report interest income. The form is issued by all payers of interest income to investors at year end and includes a breakdown of all types of interest income and related expenses. Payers must issue Form 1099-INTs for any party to whom they paid at least $10 of interest during the year.

Form 1099-K: A payment settlement entity (PSE) must file Form 1099-K for payments made in settlement of reportable payment transactions for each calendar year. A PSE makes a payment in settlement of a reportable payment transaction, that is, any payment card or third party network transaction, if the PSE submits the instruction to transfer funds to the account of the participating payee to settle the reportable payment transaction.

Form 1099-MISC: The Form 1099-MISC is an Internal Revenue Service (IRS) tax return document used to report miscellaneous payment?s made to nonemployee individuals, such as independent contractors, during the calendar year. (www.shrm.org)

Form 1099-NEC: In the context of 1099 tax filing, NEC stands for “Nonemployee Compensation” (the first letters of the three words None, Employee and Compensation). Most tax payers recognize NEC as box 7 on Form 1099-MISC. NEC is used to report income paid to independent-contractors / the-self-employed (referred to as 1099 employees for simplification purposes). So, while employers report income that gets paid to employees on Box 1 (Wages, tips, other compensation) of the W2 form, payers report income that gets paid to none-employees on Box 7 (NEC) of the 1099-MISC form. As an individual, if you received form 1099-MISC instead of Form W-2 then the payer did not consider you an employee and did not withhold income tax or social security and Medicare tax.

Form 1099-OID: Form 1099-OID is a tax form intended to be submitted to the Internal Revenue Service by the holder of debt instruments which were discounted at purchase to report the taxable difference between the instruments' actual value and the discounted purchase price.

Form 1099-PATR: File Form 1099-PATR, Taxable Distributions Received From Cooperatives, for each person to whom the cooperative has paid at least $10 in patronage dividends and other distributions described in section 6044(b), or from whom you withheld any federal income tax under the backup withholding rules regardless of the amount of the payment.

Form 1099-S: A Form 1099-S is a tax document used to ensure that the full amount received for a real estate sale of some kind is accurately reported. A 1099-S can also be used to report income made on a rental property or investment property. For selling real estate, the buyer must complete and file their own 1099-S.

Form 4419: Form 4419 is mandated to be electronically filed when requesting an original TCC (first-time application).

Form 8832: Form 8832 is the Entity Classification Election form from the IRS. It is filed to elect a tax status other than the default status for your entity. For example, an LLC can elect to be taxed as a C Corporation.

Form 945: IRS Form 945 is titled Annual Return of Withheld Federal Income Tax. Form 945 is used to report withheld federal income tax from nonpayroll payments, including distributions from qualified retirement plans.

Form W-2: Form W-2 is an Internal Revenue Service tax form used in the United States to report wages paid to employees and the taxes withheld from them. Employers must complete a Form W-2 for each employee to whom they pay a salary, wage, or other compensation as part of the employment relationship. - Wikipedia (https://en.wikipedia.org/)

Form W-8: Form W-8 is filled out by foreign entities (citizens and corporations) in order to claim exempt status from certain tax withholdings. The form is used to declare an entity's status as non-resident alien or foreign national who works outside of the United States.

Form W-9: Form W-9 (officially, the "Request for Taxpayer Identification Number and Certification") is used in the United States income tax system by a third party who must file an information return with the Internal Revenue Service (IRS). It requests the name, address, and taxpayer identification information of a taxpayer (in the form of a Social Security Number or Employer Identification Number). - Wikipedia (https://en.m.wikipedia.org/)

Fringe Benefits: An extra benefit supplementing an employee's salary, for example, a company car, subsidized meals, health insurance, etc.

IRC Section 3406(a): Requires that, under certain circumstances, including the payee's failure to provide a TIN, the payer must perform backup withholding.

IRC Section 409A: Section 409A of the United States Internal Revenue Code regulates nonqualified deferred compensation paid by a "service recipient" to a "service provider" by generally imposing a 20% excise tax when a certain design or operational rules are contained in the section are violated.

IRC Section 6041(a): Provides that persons engaged in trade or business must report certain payments on an information return.

IRC Section 6109(a)(2): Requires that a payee provide a TIN to the payer when the payment will be reportable on an information return.

IRC Section 6724: I.R.C. § 6724(a) Reasonable Cause Waiver — No penalty shall be imposed under this part with respect to any failure if it is shown that such failure is due to reasonable cause and not to willful neglect.

Limited Liability Company (LLC): An LLC is a corporate structure where members cannot be held accountable for the company’s debts or liabilities. This can shield business owners from losing their entire life savings if, for example, someone were to sue the company. Can be a single member (much like a sole proprietor) or a multi-member. It shares certain traits of both corporations as well as partnerships or sole proprietorships. It is not a corporation.

Resident Alien : A resident alien is a foreign person who is a permanent resident of the country in which he or she resides but does not have citizenship. To fall under this classification in the United States, a person needs to either have a current green card or have had one in the previous calendar year.

Sole Proprietor: A business that legally has no separate existence from its owner. The sole proprietorship is the simplest business form under which one can operate a business. The sole proprietorship is not a legal entity. It simply refers to a person who owns the business and is personally responsible for its debts.

TIN: A Taxpayer Identification Number is an identifying number used for tax purposes in the United States and in other countries under the Common Reporting Standard. In the United States, it is also known as a Tax Identification Number or Federal Taxpayer Identification Number.

TIN Match Program: TIN Matching is part of a suite of Internet-based pre-filing e-services that allows “authorized payers” the opportunity to match 1099 payee information against IRS records prior to filing information returns.

Tax Exempt Organization Search Tool: Tax Exempt Organization Search helps users find information about a tax-exempt organization’s federal tax status and filings.

Tax Gap: The gross tax gap is the difference between true tax liability for a given tax year and the amount that is paid on time. It is comprised of the nonfiling gap, the underreporting gap, and the underpayment (or remittance) gap.

Transmitter Control Code (TCC): The Transmitter Control Code (TCC) is an identifier that the IRS uses to distinguish different electronic filing companies. It's necessary when you need to file for a correction. Getting a TCC depends on how you file your 1099 forms

Unclaimed Property: Unclaimed property (sometimes referred to as abandoned) refers to accounts in financial institutions and companies that have had no activity generated or contact with the owner for one year or a longer period. Common forms of unclaimed property include savings or checking accounts, stocks, uncashed dividends or payroll checks, refunds, traveler's checks, trust distributions, unredeemed money orders or gift certificates (in some states), insurance payments or refunds and life insurance policies, annuities, certificates of deposit, customer overpayments, utility security deposits, mineral royalty payments, and contents of safe deposit boxes.

Vendor: A vendor is a person or business that supplies goods or services to a company. Another term for the vendor is the supplier. In many situations, a company presents the vendor with a purchase order stating the goods or services needed, the price, delivery date, and other terms.


Guest Speaker

  • Steven Mercatante