Archive for August, 2019

Aug 14

The Internal Revenue Service has revived a form that hasn’t been used since the 1980s, Form 1099-NEC, Nonemployee Compensation.

Since 1983, the IRS has required businesses to instead file Form 1099-MISC for contract workers and freelancers.
The revival of Form 1099-NEC is part of an effort mandated by Congress in the PATH Act of 2015 to require businesses to file information returns about any non-employee compensation by Jan. 31 of each year. However, there were problems with the IRS’s processing systems because there was still a March 31 due date for any Form 1099-MISC that didn’t contain non-employee compensation. The new form is dated 2020, so it would NOT be used for reporting nonemployee compensation in this year, but in 2020.

However, in March the IRS computers were unable to apply two different due dates to batch Forms 1099-MISC . The results of a single Form 1099 – MISC in a batch submitted after January 31 with an entry in box 7 for non-employee compensation would cause a notice to be issued charging late payment fees on every Form 1099-MISC submitted.

Also, the new Form 1099-NEC is different from the old Form 1099-Misc so pay close attention.

Aug 06

2029_3922234908

 

If you own a business, then a home office provides tremendous tax savings.
Whether you operate your business as a proprietorship, LLC, or corporation, the home office deduction can save you thousands in taxes.
And one of the best aspects of this deduction is that it doesn’t cost you a penny more than what you already pay. That’s because it turns personal nondeductible expenses into business deductions that reduce your taxable income.
What qualifies:
To deduct an office in the home, you must pass the regular-use test.
What is regular use for the home-office deduction?
In its audit manual, the IRS states:
Regular use means that you use the exclusive business area on a continuing basis. The occasional or
incidental business use of an area in your home does not meet the regular use test even if that part of your home is used for no other purpose.
How do you prove regular and continuing use?
A log of time spent, and
Documents that corroborate the time spent.
To ensure compliance with the home-office rule that requires regular use, make sure that you use your home office an average of 10 hours a week or more.
Make an average of 10 hours a week your target until either the IRS or the courts give you a better
number. Next, make sure that you build proof that you worked those 10 hours or more.

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