1099 Help

[just_sawing]

2012 Started new filing for 1099s.
As I am understanding that if I sell $600.00 worth of Lumber I have to file a 1099.
Has anyone got this figured out yet?

[taylorsmissbeehaven]

I am by no means an authority in accounting, BUT thats never stopped me before! In my experience, a 1099 is something I receive from an employer if they do not take taxes out of what they have paid me for work completed. I would think that selling lumber would be income and after deducting your cost you would pay income tax on your profit. Just my two cents so check with an accountant if possible. Good luck

[terrifictimbersllc]

Haven't got to the bottom of it myself yet, but it's the other way around.   1099's report income to the IRS and to the recipient of the income, too.  Whoever must file them are sending them to those people they gave more than $600 to.  So if a 1099 is necessary in your case (not saying it is), a person who gave you money would send you a 1099 and also one to the IRS. 

[ladylake]

 I think you might get a 1099 if you get over $600 from a customer for sawing, don't know if that applys for sold lumber. So far I've got 1 1099 from a construction company one a large sawing job.    Steve

[red oaks lumber]

its my understanding that 1099's go from buisness to buisness, not to private people.

[Norm]

I report my farm help to the IRS on a 1099.

This new rule is supposed to be rescinded by politicos except they keep kicking the can down the road. Gee wonder why....

[Dave VH]

yep, businiess to business.  If you do work for a business, they don't have to give you a 1099, but most do.  They most likely are going to write off their expense to you whether they send you a 1099 or not.  Its not a bad thing.  You can file a 1099, and a w2.  If you just work your mill as a hobby, it will most likely look like a loss on paper.  By the time you write off you mill, truck (if needed for the mill).  Any and all equipment needed to run the mill, 20% of your house, (assuming that is where you home office is).  I got a good cpa.  He showed me how even with a decent income, as long as you have a lot of tools and equipment, on paper it doesn't look to good.  (and that is good for mr tax payer)  I'm not talking about anything illegal, just working with the system how it is designed.  Believe it or not, it is in the favor of a small business.  First thing, get a good cpa, worth there weight in gold.  first several years I did my own.  Then one year I did my own and hired a cpa to do mine, he cost me 500$ and saved me 4200$ that year, I was hooked.  Talk to him at the beginning of the year, they will give good business advice to keep you tax safer.

[Norm]

Now I'm confused..not the first time.

On Thursday, President Barack Obama signed into law the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011 (HR 4; 1099 Act), which repeals both the expanded Form 1099 information reporting requirements mandated by last year’s health care legislation and also the 1099 reporting requirements imposed on taxpayers who receive rental income enacted as part of last year’s Small Business Jobs Act (PL 111-240). The Senate approved the bill on April 5, and the House voted in favor of it on March 3

As a result of the repeal, the 1099 reporting rules continue unchanged: Namely, under IRC § 6041(a), “All persons engaged in a trade or business and making payment in the course of such trade or business to another person” of $600 or more must report the amount and the name and address of the recipient to the IRS and to the recipient. The Code applies this requirement to payments of “rent, salaries, wages, premiums, annuities, compensations, remunerations, emoluments, or other fixed or determinable gains, profits, and income,” and the Treasury regulations add, “commissions, fees, and other forms of compensation for services rendered aggregating $600 or more” as well as interest (including original issue discount), royalties and pensions (Treas. Reg. § 1.6041-1(a)(1)(i)).

[ladylake]

yep, businiess to business.  If you do work for a business, they don't have to give you a 1099, but most do.  They most likely are going to write off their expense to you whether they send you a 1099 or not.  Its not a bad thing.  You can file a 1099, and a w2.  If you just work your mill as a hobby, it will most likely look like a loss on paper.  By the time you write off you mill, truck (if needed for the mill).  Any and all equipment needed to run the mill, 20% of your house, (assuming that is where you home office is).  I got a good cpa.  He showed me how even with a decent income, as long as you have a lot of tools and equipment, on paper it doesn't look to good.  (and that is good for mr tax payer)  I'm not talking about anything illegal, just working with the system how it is designed.  Believe it or not, it is in the favor of a small business.  First thing, get a good cpa, worth there weight in gold.  first several years I did my own.  Then one year I did my own and hired a cpa to do mine, he cost me 500$ and saved me 4200$ that year, I was hooked.  Talk to him at the beginning of the year, they will give good business advice to keep you tax safer.

 That's the biggest reason I bought my mill, tax savings.  My cpa cost $350 a year and well worth it.  Steve

[terrifictimbersllc]

One thing I saw yesterday was the deadline for issuing a 1099 is Feb 15.  There is a $30 penalty for doing it up to one month late but then it gets worse.  But in order to issue a 1099 one needs the taxpayer identification number (TIN),  (SSN or FEIN are two), of the recipient, and to get this one needs to send that person a W-9 (I suppose one can call them to get the info, but then one doesn't have a legal statement of the TIN from the recipient).   Also I saw that payments by credit, debit etc. cards are exempt, and mainly it is cash or check payments.   Would be good to get a link posted to readable IRS rules.  I tried a bit to find it yesterday but had to get my sales taxes paid.

[The Canuck]

Dave VH summed it up best: "If you do work for a business, they don't have to give you a 1099, but most do." In your case, you are providing a service so you would invoice your customer for the value of the work done. If it was a company, they'll run it through their Accounts Payable, send you a check, and as stated above, may or may not send you a 1099 in January of the following year. If you did work for an individual, they would not send you a 1099, unless they were a Sole Proprietor and the work done would be a business expense for them. Then again, they could just use your invoice to support the business expense deduction.
Individuals and companies also issue 1099's to their workers (employees) if the amount earned by the employee was (1) greater than $600 in the calendar year and (2) Federal and State taxes, Medicare and Social Security deductions were not withheld from the employee's earnings.
Hope that helps.....

[tcsmpsi]

1099's, in their various forms, are issued by a 'business' to anyone for whom that business has 'given income'.  It has been dedicated to a very wide variety of applications.

How they are given or received depends on the business structure(s).   Mine (both current d/b/a's) are wide variety businesses.  1099's should be issued on any amount, as the accumulative amount that a receiver has will ultimately determine their income for the year.

Summarily, labor wise, any labor hired that the employer does not withold income tax for, should be issued to the laborer, who is summarily contracted to do that job, which causes that person(s) to become a "business".   Then, it get complicated.   

Now, any cancelled debt, negotiated debt, re-financed debt, etc. that renders a 'less than original amount', becomes "income" and is reported on a 1099.   Then, it becomes nightmarish.   

[Lance T]

I receive several 1099's each year. I do private contracting work for engineering and construction companies. As if I was a private contractor and I send them an Invoice for work done. I try and work at least 1 or 2 jobs a year this way because it opens up new tax deductions for the year for me. As far as sawmilling 1099's I couldnt give any advice tho but I would however go long form an depreciate the price of the mill, itemize mileage for the year, tires, sawblades etc...

[Bogue Chitto]

Might want to check with a cpa. I don't think that law passed. The selling of $600.00 or more law.

[woodmills1]

1099

I get a lot of 1099's


they show money that I got from others

THAT IS A GOOD THING

your 1040 income tax form must show that 1099 income either as ordinary income or as business income





sorry to be blunt but  ifin it doesnt then expect an audit

(those who do not understand should hire a money man)

If you bought more than $600 from someone you can or not send them a  1099

[terrifictimbersllc]

Should be able to figure things out now...... ......

2011 1099-misc form and instructions, from the IRS web site (1099-misc is issued by payers of certain payments):
http://www.irs.gov/pub/irs-pdf/f1099msc_11.pdf
http://www.irs.gov/pub/irs-pdf/i1099msc_11.pdf

Related to these is the W-9 form, which is filled out by the recipient of the certain payments, at the payer's request....
http://www.irs.gov/pub/irs-pdf/fw9.pdf

And also related is the 1099k, which is issued by certain payment card and third party payer companies.   Looks like 1099-misc is not issued by payers paying with credit or debit cards, instead the card companies issue 1099-k's to recipients of certain payments
http://www.irs.gov/pub/irs-pdf/f1099k.pdf
http://www.irs.gov/pub/irs-pdf/i1099k.pdf

[Larry]

your 1040 income tax form must show that 1099 income either as ordinary income or as business income

sorry to be blunt but  ifin it doesnt then expect an audit

(those who do not understand should hire a money man)

From past experience.  I leased tobacco pounds to another farmer one year.  He sent me a 1099 correctly showing the lease amount of around $700...I forgot the exact amount.  I incorrectly showed that income as a sale instead of a lease on my return.  Just a small clerical error which made no difference in the amount I owed.  The IRS compared the 1099 to my return.  Gotcha and I got an audit.  The penalty along with payment to my CPA for guidance was more than the income.

Play by the rules...or don't play.

[Ironwood]

My biggest BEEF with the 1099 is,....why the $#%^& do I then need to keep reciepts (for stuff over $600)? That shows the sam thing less the FIEN, or SSN. Argh, making it complicated for all us simple folks.


Ironwood

[terrifictimbersllc]

Another complication, anyone know how it is handled?

I charge sales tax on my sawing services as required by law,  so if someone sends me a 1099 with the total amount paid, some of this would be sales tax. When I enter this amount under "payments from 1099's", the sales tax amount will then be taxed as revenue, which it should not be,  unless I deduct it somewhere.  Unless the payer is not supposed to include sales tax amounts on the 1099. 

[terrifictimbersllc]

My biggest BEEF with the 1099 is,....why the $#%^& do I then need to keep reciepts (for stuff over $600)? That shows the sam thing less the FIEN, or SSN. Argh, making it complicated for all us simple folks.
Ironwood

Ironwood, i understand the "why the $#%^&" perfectly but not quite the rest of your question. djh

[woodmills1]

taxes are tough


neeed to do the math
and the homework

[bugdust]

Dang, I only sold $599 worth last year. Sorry about their luck.

[Ironwood]

Terrific,
 
 You are already creating a "paper trail" with reciepts and invoices that we all use to do our annual accounting, the additional 1099 stuff only create more paperwork (I hate), the only thing missing from the reciepts are folk's FEIN (Federal Electronic Identification Number, for corporations, or Social Security Number, for individuals). I find it VERY redundant and frustrating.


 Ironwood

[pnyberg]

I charge sales tax on my sawing services as required by law

In Connecticut?  I can't find anything that indicates that sawmill services are subject to sales tax in Connecticut. 

--Peter

[Ironwood]

Sales tax issues/rules are VERY conveluted. Because I do so many differing things/sales situations I have a State Tax Agent on my phone registry and I call her frequently to clearify all the permiatations/ combinations. She then knows I am doing my best to follow their regs. Even she many times has to "get back with you" response.

    Ironwood

[terrifictimbersllc]

Another complication, anyone know how it is handled?

I charge sales tax on my sawing services as required by law,  so if someone sends me a 1099 with the total amount paid, some of this would be sales tax. When I enter this amount under "payments from 1099's", the sales tax amount will then be taxed as revenue, which it should not be,  unless I deduct it somewhere.  Unless the payer is not supposed to include sales tax amounts on the 1099.

Regarding question about taxability of sawing services,  see my reply in Business and Managment board (reply #3) on this thread:  http://www.forestryforum.com/board/index.php/topic,55938.msg809496.html#msg809496)

Also concerning my own question  quoted above, an IRS 1099 expert told me that the entire amount of an invoice for services is put on 1099 misc, where the latter is required, box 7 "nonemployee compensation".   Apparently it's up to the recipient to deduct the sales tax as an expense (he wouldn't confirm not his area).

[Handy Andy]

  My experience with the sales tax people is that they always say "yes" you should collect and pay sales tax, even when sometimes the accountant says no. And the accountant is right.  A good accountant is someone whose service you cannot do without.  His knowledge and advice will make you successful, and could even keep you out of jail.  I've only been audited once, and the auditor told me that even though I would have to pay in some money, would not have to worry about going to court.  A bank made a mistake on a closing statement, and the accountant posted a profit item to the expense side.  Cost me about 3500, and the IRS has never bothered me again.