Year-End 2020 Tax News & Planning Strategies 

Important Client Tax Notice Re: Forms 1098/1099 - Action Required

Dear Clients of Restivo Monacelli:

 

Every individual or entity engaged in a trade or business must file information returns for each calendar year for certain transactions made during such year in the course of their trade or business. The most common information returns filed are listed below:

 

  • FORM 1098 - filed when you receive $600 or more in mortgage interest from an individual in the course of a trade or business.

  • FORM 1099-DIV - filed by the payer for each payee that (1) received $10 in dividends or (2) received at least $600 as part of a liquidation.

  • FORM 1099-INT - filed by the payer for each individual to whom payments of $10 or more in interest was paid in the course of a trade or business.

  • FORM 1099-MISC - filed for each individual to whom at least $600 was paid in gross rents, royalties or other income payments in the course of your business. For Royalty payments, the threshold is $10 or more.

  • FORM 1099-NEC - filed for each independent contractor who is not your employee to whom you paid at least $600 in the course of your business. These were previously reported as non-employee compensation on Form 1099-MISC

 

NEW THIS YEAR:

 

We will be E-Filing all government copies of your Forms 1098 and 1099 and supplying you with a complete copy of your 1099s, as well as the recipients copies, for you to distribute.

 

Taxpayers must file Forms 1099-NEC on or before February 1, 2021. The due dates for filing all other Forms 1098 and1099 (-DIV; -INT and -MISC) remain March 1, 2021.

 

Below is a link to download the 1098/1099 Data Information Form, which needs to be completed and submitted to us for preparation of the Forms 1099. PLEASE FILL OUT ALL THE NECESSARY INFORMATION ON THIS FORM AND RETURN TO RESTIVO MONACELLI BY JANUARY 15, 2021. Remember, the information submitted to us must be legible. Print or type to avoid errors or corrections to the form.

 

Please be advised that penalties resulting from failure to timely file correct information returns with the IRS could occur. For example, the first-tier penalty could be $50 per return, and the calendar year maximum could be as high as $556,500. For small filers, the calendar year maximum could be $194,500 for the first-tier penalty. The minimum penalty for each failure due to intentional disregard could be $550 per return. The penalties for failure to file information returns to payees could be similarly applied. The failure to file may also subject you to backup withholding requirements for the recipient. The Federal backup withholding rate for 2020 is at 24%.

 

Beginning with the calendar tax year 2011, the Internal Revenue Service has revised several business tax return forms and schedules (Schedule C, Schedule E, 1120, 1120S, 1065, etc.) to contain questions to be answered that will determine whether a business has met its information return reporting requirements for the tax year. The answers to the questions will provide the IRS with the information as to whether a business is required to file Forms 1099 and whether they are in compliance. In addition, it is very important to secure a completed Form W-9, Request for Taxpayer Identification Number and Certification, for each individual or business that you are required to issue a Form 1099 up front before the first payment is made in order to have the proper information on file.

 

 

Once you have downloaded and completed the form below, please email it to Ann McQueeney at amcqueeney@rm-llp.com or fax to 401.421.6799. In order for us to have enough time to prepare your 1099s and return them to you for distribution, please return this form no later than January 15, 2021. If you have any questions, please call Ann at 401.223.2425.