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New Fed 1099 Tax Form Requirements Suck

by coloradoseo
15 replies
I got a letter from my accountant last week describing the new United States Government federal tax reporting requirements for small businesses to collect and distribute a Form 1099 for any company or person they spent $600+ with. This is a new headache to deal with and keep records for and a new tax form.

As Internet Marketers we end up eventually buying link building services, directory listings, or a host of other internet services ending from companies or individuals in other countries such as India, Thailand, Phillipines etc. and now we have to collect Form 1099s from these entities.

Does anybody know a simple to use online system (eg. internet forms) for issuing and collecting 1099's via the internet from global vendors in order to comply with the new fed requirements effective for 2011 business?
#1099 #fed #form #form 1099 #internet forms #requirements #tax #tax forms
  • Profile picture of the author Exire
    How many people have you spent $600+ with? It should be a relatively simple matter to just find out from your accountant exactly what information you need to collect, collect it from anyone you've paid $600+ to and then hand that information over to your accountant and let them handle the paperwork. Either that or just give the contact info to your accountant and let them gather the information they need.
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    • Profile picture of the author whatzit
      I would think that 1099s wouldn't need to be filed for parties that live in foreign countries since they are not subject to taxation by the U.S.
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  • Profile picture of the author HypeText
    Originally Posted by coloradoseo View Post

    I got a letter from my accountant last week describing the new United States Government federal tax reporting requirements for small businesses to collect and distribute a Form 1099 for any company or person they spent $600+ with. This is a new headache to deal with and keep records for and a new tax form.

    As Internet Marketers we end up eventually buying link building services, directory listings, or a host of other internet services ending from companies or individuals in other countries such as India, Thailand, Phillipines etc. and now we have to collect Form 1099s from these entities.

    Does anybody know a simple to use online system (eg. internet forms) for issuing and collecting 1099's via the internet from global vendors in order to comply with the new fed requirements effective for 2011 business?
    US Companies have always have to provide a 1099 to any person they have paid $600 or more in a single tax year. If the company is doing business in the US this has always applied.

    The change to include businesses was brought about by Obama's New Healthcare Law and goes into effect Jan. 1 2012. It is, in part, how he intends to pay for it.

    Here's the good news..."U.S. Representative Dan Lungren (R-CA) has taken the first steps in alleviating this paperwork chokehold on America's small business by introducing legislation to repeal this new burden." With anyluck this requirement will be repealed in the near future.
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  • Profile picture of the author specialized
    It's possible that I might be confused by the original post, but I think you (OP) might have it backwards... isn't the 1099 applicable when someone pays YOU money that could be viewed as income, not when you pay someone else? If you paid others for services in the course of your business, then those are expenses that should be accounted for without a doubt, but as deductible expenses. To my knowledge the 1099 is something that someone (in the US) files to report to IRS that they paid some money to you as a contractor. But maybe I'm missing something here...
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    • Profile picture of the author Chris Chicas
      Originally Posted by specialized View Post

      It's possible that I might be confused by the original post, but I think you (OP) might have it backwards... isn't the 1099 applicable when someone pays YOU money that could be viewed as income, not when you pay someone else? If you paid others for services in the course of your business, then those are expenses that should be accounted for without a doubt, but as deductible expenses. To my knowledge the 1099 is something that someone (in the US) files to report to IRS that they paid some money to you as a contractor. But maybe I'm missing something here...

      My understanding (not legal advice whatsoever) is that the IRS requires you to provide these forms to people you pay, and do business with, to the amount of over $600. The OP is correct but this law is not "new"

      And the person does not have to be an "US citizen" for this requirement.

      I would share more with you but last time I did share something similar I got blasted for giving "legal advice" :p

      Anyways there is a lot of good info on the net from non profits and even the IRS.
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  • Profile picture of the author InternetSuccess001
    My understanding (but of course, doublecheck with a tax account or lawyer) is that 1099 forms are applicable to US citizens only that you are doing business with. Unless something has changed with that requirement, larger firms (in the past) have required that if it is not a us citizen, that they simply send an affadavit (or electroic signature) to the effect that they are not a us citizen, and the 1099 form does not apply to them.

    It's interesting, I thought it was 'always' that way (i.e., last 10 years), and not something new. Perhaps they are just enforcing it more for small businesses.

    John
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  • Profile picture of the author InternetSuccess001
    My understanding (but of course, doublecheck with a tax account or lawyer) is that 1099 forms are applicable to US citizens only that you are doing business with. Unless something has changed with that requirement, larger firms (in the past) have required that if it is not a us citizen, that they simply send an affadavit (or electroic signature) to the effect that they are not a us citizen, and the 1099 form does not apply to them.

    It's interesting, I thought it was 'always' that way (i.e., last 10 years), and not something new. Perhaps they are just enforcing it more for small businesses.

    John
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  • Profile picture of the author cashcow
    Well you always had to send a 1099 to subcontractors or freelancers that worked for you but part of the health care reform added a "new" rule where you would have to send it to companies as well.

    That seems to have been repealed though back in April so, not sure what your account is referring to unless there is some other law that has happened since:

    Obama Signs Bill Repealing New 1099 Requirements | Startup Company Law Blog | Davis Wright Tremaine LLP

    Lee
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  • Profile picture of the author redstanford
    so if we outsource to India, do i need to send my SEO guy a 1099?
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    • Profile picture of the author Rob Howard
      Originally Posted by redstanford View Post

      so if we outsource to India, do i need to send my SEO guy a 1099?
      No. There are different forms for nonresident aliens, but that only applies to work here in the United States.

      If they didn't work actually IN the United States (as in, they worked at their house in India), then there is no forms/withholding needed.

      Payments to Individuals

      See the nonresident alien section. I tried finding the actual IRS document (I found it earlier), but this sums it up.

      Of course, you should talk to a tax professional before you do anything.

      Rob
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      • Profile picture of the author redstanford
        Originally Posted by ccmusicman View Post

        No. There are different forms for nonresident aliens, but that only applies to work here in the United States.

        If they didn't work actually IN the United States (as in, they worked at their house in India), then there is no forms/withholding needed.

        Payments to Individuals

        See the nonresident alien section. I tried finding the actual IRS document (I found it earlier), but this sums it up.

        Of course, you should talk to a tax professional before you do anything.

        Rob

        thanks. taxes are the one topic it seems almost seems taboo to talk about around here. no one ever wants to discuss it and they make it seem like taxes don't exisit
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        • Profile picture of the author Rob Howard
          Originally Posted by redstanford View Post

          thanks. taxes are the one topic it seems almost seems taboo to talk about around here. no one ever wants to discuss it and they make it seem like taxes don't exisit
          Two reasons I think:

          1. The smart ones know that people shouldn't take tax advice on a general forum. Too many "experts" who aren't.

          2. The rest: "proper tax prep = business. And I don't want a business, I just want to make some easy money."
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