1099-MISC Information for Small Businesses

Am I Required to File a Form 1099 or Other Information Return? (IRS)

If you made or received a payment during the calendar year as a small business or self-employed (individual), you are most likely required to file an information return to the IRS. 

• Payments, in the course of your trade or business: (1099-MISC) 

• Services performed by independent contractors or others (not employees of your business) (Box 7)

• Rent (Box 1)

• Royalties (Box 2)

You are not required to file information return(s) if any of the following situations apply.

• You are not engaged in a trade or business.
• You are engaged in a trade or business and the payment was made to another business that is incorporated, but was not for medical or legal services or, the sum of all payments made to the person or unincorporated business is less than $600 in one tax year.

Do not file Copy A of information returns downloaded from the IRS website. The official printed version of the IRS form is scannable, but the online version of it, printed from the website, is not. A penalty may be imposed for filing forms that cannot be scanned.


Do LLC Get 1099s? (Upconsel)

In general, sole proprietorships may need to file these, but corporations do not.

If a business buys or rents products or services that amount to more than $600 from one person or LLC during the year, it has to file a 1099 for that contractor or vendor.

For contractors that operate and file taxes as corporations — such as a C-corp. or S-corp. — for tax purposes, they're treated as corporations, so in general, they don't get a 1099.


2019 Instructions for Form 1099-MISC (IRS)

Exceptions. Some payments do not have to be reported on Form 1099-MISC, although they may be taxable to the recipient. Payments for which a Form 1099-MISC is not required include all of the following.

• Generally, payments to a corporation (including a limited liability company (LLC) that is treated as a C or S corporation).

Deducting Car Expenses in an S-Corp

"An employee (or a shareholder employee) who uses a personal vehicle for business can submit a request for reimbursement to the corporation, based on documented business miles. The corporation can then reimburse the employee based on the standard mileage rate for business.
In this case, the corporation gets a deduction for vehicle expenses paid, and the reimbursement is not reportable as taxable income to the employee."
Intuit Forum

"You do not need to write yourself a check.  You can deduct the mileage or percentage of actual expenses on your own return as a employee business expense the same as any other employee.
Alternatively, the S-Corp could reimburse you and deduct the reimbursement."
Intuit Forum

Business Mileage Does Not Include Commuting
There are some strict rules on what makes up deductible business driving. The one that most people get in trouble with is commuting. This is never deductible because the IRS considers it to be a personal expense.
MileIQ

1040-ES Summary Instructions

The 1040 is the standard form to fill out for personal income taxes.
The 1040-EZ is for people with no children (dependents).
The 1040-ES is used to calculate the estimated tax for individuals with income not already subject to withholdings, such as income from business profits for a self-employed person.

1040-ES Instructions for 2014 Summary
- Maximum amount of earned income (wages and net earnings from self-employment) subject to the social security tax is $117,000.
- The rate for business use of your vehicle is 56 cents per mile.
- Payments; 4/15/2014, 6/16/2014, 9/15/14, 1/15/15. You don't have to make 1/15/15 payment if you file by 2/215 and pay balance. If you file on 4/15/15 then any balance due should be paid at that time.

How can a small business deduct donations?

How Small Businesses Can Get Tax Deductions for Charitable Giving, SBA
- about 75 percent of small business owners donate some portion of their profits — about 6 percent on average — to charitable organizations each year.

- by following these general guidelines and consulting your accountant or tax attorney, your small business should be set to get credit.

• Identify an eligible charity, usually a 501(c)(3), using this IRS search tool
• Make an eligible donation: cash, volunteered services, sponsorship of a charity event or the donation of inventory or services
• Understand that each category has its own limitations (for example, you can’t deduct the value of your volunteered service, but you can deduct expenses incurred such as supplies) — links to all the related forms and limitation information are available from the IRS (see also: IRS Publication 526)

2014 W2 Instructions

How to Fill out W2 Box 4

Box 4—Social security tax withheld. Show the total employee social security tax (not your share) withheld, including social security tax on tips. For 2014, the amount should not exceed $7,254 ($117,000 × 6.2%). Include only taxes withheld (or paid by you for the employee) for 2014 wages and tips. If you paid your employee's share, see Employee's social security and Medicare taxes (or
railroad retirement taxes, if applicable) paid by employer.
Source: 2014 IRS W2 Instructions

Box 4: Social Security tax withheld. Box 4 reports the total amount of Social Security taxes withheld from your paychecks. Normally, the Social Security tax2 is a flat tax rate of 6.2% on your wage income, up to a maximum wage base of $113,700 (for 2013). Wages above the Social Security wage base are not subject to the Social Security tax. Accordingly, the maximum figure shown in Box 4 should be $7049.40 ($113,700 maximum wage base times 6.2%).
Source: About.com

Box 4 = Box 1 * 6.2%

Box 6 = Box 1 * 1.45%

Traditional Versus Roth IRA

"The main difference is when you pay income taxes on the money you put in the plans. With a traditional IRA, you pay the taxes on the back end - that is, when you withdraw the money in retirement. But, in some cases, you may escape taxes on the front end - when you put the money into the account.

With a Roth IRA, it's the exact opposite. You pay the taxes on the front end, but there are no taxes on the back end.

There are other differences too. While almost anyone with earned income can contribute to a traditional IRA, there are income limits for contributing to a Roth IRA. So not everyone can take advantage of them.

Roth IRA contributions are limited by income level. In general, you can contribute to a Roth IRA if you have taxable income and your modified adjusted gross income is either:
less than $167,000 if you are married filing jointly."

Source: CNN Money Retirement Guide

"For 2013 and 2014, the maximum you can contribute to all of your traditional and Roth IRAs is the smaller of: $5,500 ($6,500 if you’re age 50 or older), or
your taxable compensation for the year."

Source: IRS - IRA Contribution Limits

"With 2013 over, taxpayers may think it's too late to stash earnings in a retirement account and get a tax deduction for the year.

But 2013 contributions for many kinds of retirement accounts can be made up until April 15, or whenever you file your taxes, and some can be made even later by those who get extensions."

Sourde: USA - Money - It's not too late to contribute to your IRA

Form BA-403 Extension Vermont Corporate Income Tax

Form BA-403 Vermont Corporate Filing Extension.
Instructions for Form BI-471, Vermont Business Tax Return

From page1, paragraph 8, "Who must file"
"Effective for tax years beginning on or after January 1, 1997, every Subchapter S Corporation, Partnership and Limited Liability Company which engages in activities in Vermont must file a return
with the Commissioner of Taxes. This includes entities receiving income as a shareholder, partner or member."

From page 2, paragraph 3, "The pass‑through entity is liable for the minimum annual (entity) tax of  $250 for each taxable year beginning on or after January 1, 1998."

Vermont State Income Tax, Nolo
"The business entity tax applies to S corporations, LLCs, and partnerships. These types of business entities must pay a flat annual tax of $250."
- "S Corporations. An S corporation is created by first forming a traditional corporation, and then filing a special form with the IRS to elect “S” status; unlike a traditional corporation, an S corporation generally is not subject to separate federal income tax. Rather, taxable income from an S corporation is passed through to the individual shareholders, and each individual shareholder is subject to federal tax on his or her share of the corporation’s income; in other words, S corporations are “pass-through” entities. (Note that a shareholder’s share of the S corporation’s income need not actually be distributed to the shareholder in order for the shareholder to owe tax on that amount.) Vermont recognizes the federal S election; however, Vermont S corporations are required to pay the state’s business entity tax. In addition, an individual S corporation shareholder will owe tax on his or her share of the company’s income.
Example: For the 2012 tax year, your S corporation had net income of $500,000. The corporation will owe the $250 business entity tax. In addition, the corporation’s net income will be allocated among the various shareholders and each shareholder will pay tax on his or her portion on his or her individual state tax return; the rate will vary depending on the shareholder’s overall taxable income for the year."

Multistate Tax Considerations for S Corporations, Journal of Accountancy
- "Multistate S corporations are allowed to apportion their income to the states with which they have nexus. For many years, most states followed an evenly weighted three-factor apportionment by sales, tangible property and payroll in each state."
- " Composite returns. Many states allow multistate S corporations to file a composite tax return on behalf of all shareholders of the S corporation. With it, the income of each shareholder is reported to the state, and the S corporation pays the tax on behalf of the shareholder. The advantage is that shareholders do not have to file individual income tax returns for that income with any state where the S corporation filed a composite tax return. The states that do not accept composite tax returns include Nebraska, Oklahoma, Tennessee and Utah (although Utah did issue a private letter ruling (02-033) in 2003 allowing a composite return for nonresident shareholders in an electing small business trust). Some states, including Arizona, New York and Vermont, restrict the use of composite returns, based on income or number of shareholders."

Required Entries
Indicate Federal Tax Return > 1120S for S-Corp
Begin date 1/1 to 12/31 of previous year
Calculation of Tax Due, 1. $250, 2. $0, 3. $250 because S-Corp is pass through entity