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Recognize terms such as sales tax, excise tax and use tax
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3.02 IRS 1099 Forms - Exercise.docx51.1 KB 3.02 IRS 1099 Forms - Exercise Solution.docx
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Quick reference
US Tax Forms for Small Businesses
The IRS Form 1099 is crucial for businesses operating within the US, serving as a means to report certain types of payments made over the course of a financial year. Here’s a brief overview of what businesses need to know:
Purpose of Form 1099
- To report information about payments made to individuals and businesses.
Types of Form 1099
- 1099-INT: For reporting interest payments
- 1099-K: Used for reporting payments made through third-party networks like Square, Stripe, and PayPal
- 1099-MISC: Covers miscellaneous payments, including rent, prizes, and some attorney fees
- 1099-NEC: Stands for Non-Employee Compensation, which is used for reporting payments for services rendered by non-employees
Key Points to Remember
- If a business pays for services via third-party processors (e.g., credit cards, PayPal), they do not issue a 1099; the processor will issue a 1099-K
- Understanding the criteria and thresholds for each form is critical
- Forms are not optional; they are mandatory and must be filed appropriately
Helpful Links
- https://www.irs.gov/forms-pubs/about-form-1099-int
- https://www.irs.gov/forms-pubs/about-form-1099-k
- https://www.irs.gov/forms-pubs/about-form-1099-misc
- https://www.irs.gov/forms-pubs/about-form-1099-nec
- https://www.irs.gov/forms-pubs/order-products
- https://www.irs.gov/businesses/small-businesses-self-employed/am-i-required-to-file-a-form-1099-or-other-information-return
- https://www.track1099.com/
- https://www.tax1099.com/
- https://quickbooks.intuit.com/payroll/1099-efile/
- https://www.xero.com/us/accounting-software/run-financial-reports/file-1099/
- 00:03 Working with businesses in the US means learning about the IRS Form 1099.
- 00:10 This lesson will be about the Form 1099 and where to go to find resources.
- 00:15 So first, let's talk about the 1099s.
- 00:19 The IRS has a form called 1099 something.
- 00:23 It always has an addendum after the 1099.
- 00:26 The purpose of the form is to collect information about payments made
- 00:31 to businesses or individuals and report that information to the IRS.
- 00:36 The four types of forms I'm going to discuss
- 00:41 are the INT, K, Miscellaneous, and NEC.
- 00:46 The IRS form 1099-INT is used to report
- 00:50 interest payments above a specified amount.
- 00:54 With each of these forms, I'm providing a link to the IRS website,
- 00:58 so that you always have accurate and up-to-date information about the form.
- 01:03 What are the regulations?
- 01:05 Who gets them?
- 01:06 How do you fill them out?
- 01:07 All of that good stuff.
- 01:09 The second form is the IRS Form 1099-K.
- 01:14 The 1099-K is used to report payments made through a third-party network.
- 01:19 Examples of third party payments are Square, Stripe, and PayPal.
- 01:25 The reason that it's important to know what a 1099-K is,
- 01:29 even though you're probably not issuing them.
- 01:32 Because you don't work for Square, Stripe, PayPal, or
- 01:37 similar businesses is because your business may not need to issue a 1099 to
- 01:43 somebody else if you paid that other person using a third party method.
- 01:48 For example, if you purchase services from somebody, and it fit the criteria for
- 01:54 one of the 1099 forms, if you pay for those services using your credit card,
- 01:59 the person who received the money, they didn't get it directly from you.
- 02:04 They got it via their third-party processor.
- 02:07 So via Square or Stripe or PayPal or QuickBooks or HoneyBook,
- 02:12 or whatever the case is.
- 02:14 You would not need to issue anything because the third-party processor is
- 02:18 going to issue a 1099-K.
- 02:20 The next form is the IRS 1099-Miscellaneous.
- 02:25 This is used to report miscellaneous payments such as rent, prizes,
- 02:29 and some payments to attorneys.
- 02:32 The last form I'm going to cover is the 1099-NEC.
- 02:36 The NEC stands for non-employee compensation.
- 02:40 This is used to report payments to people in businesses hired to perform a service.
- 02:45 There are endless rules about who to issue the form to and when to issue it, and
- 02:50 what's the threshold, and what are the criteria where you don't issue it unless
- 02:55 there's an exception to the exception.
- 02:57 I really encourage you to review the links that I provide at the bottom of the slides
- 03:02 and also in the handouts.
- 03:03 I encourage you to understand your obligations of what you need to do to file
- 03:08 these forms.
- 03:08 These forms are not optional.
- 03:10 These forms are mandatory.
- 03:13 So filing the forms, there's a variety of ways to file the forms.
- 03:18 Have some options below.
- 03:20 You can order forms from the IRS.
- 03:22 You can use third party websites specifically set up for
- 03:26 this sort of thing.
- 03:27 There's track 1099 and tax 1099.
- 03:30 You can do this through QuickBooks.
- 03:33 You can also do it through Xero.
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