So, What is a 1099-k?

13
Feb

1099 requirements are changing this year, and you might be scratching your head at a new 1099-K form you are receiving. On the bright side, you don’t have to send 1099-Misc forms to every business you buy from. That part of the Affordable Care Act was scrubbed. What remains is a requirement for your credit card merchant services to issue you a 1099-K form for the monies you received for 2011. 1099-K will report all of your credit card sales that they processed for you to the IRS and to you. So, what do you need to do with it? For now, nothing. Here are the details:

2011 was supposed to be the pilot year for the 1099-K, but the IRS was not prepared in time. The result is that on the corporate return there is a line to include income from 1099-K broken out from the rest of your income, but the IRS has instructed us to leave that line blank this year. Go ahead and send us the 1099-K form for our records, but it will not affect your return this year.

Next year, we will need these forms to finalize your return if you accept credit cards. This means that although we can work up your return starting as early as January 1 of next year, we won’t be able to finalize it until February when the 1099-K’s start being issued. And here’s the real kicker, if the credit card company screws up and has to send you a corrected 1099-K, we will have to amend the corporate return. But what would we do without the government implementing things like this to make our lives “easier”.

Another 1099 Change

Another 1099 rule change to be aware of is that corporate and partnership returns are now asking preparers to answer if the company was required to file 1099-Misc forms. This means that we will be asking you the same question. The basic rule is that 1099-Misc forms must be issued to any individual your company pays more than $600 during the year. In most cases this does not include other businesses you pay more than $600, only individuals. 1099 forms are due to the IRS by February 29, 2012.

As always, if you have any questions or need 1099 forms prepared, please don’t hesitate to contact us.