Get ready for 1099 filing

Every trade or business must file information returns (Forms 1099) for each year that certain payments are made to non-corporate recipients.

One of the most common information returns for most small businesses is Form 1099-MISC. You use Form 1099-MISC to report miscellaneous payments to non-employees. This includes fees for services provided to your business by independent contractors, such as consultants, cleaning people, and others. Generally, you don't report fees paid to corporations, but there are exceptions. Payments to lawyers, for example, must be reported whether the lawyers are incorporated or not.

This month is the perfect time to start assembling what your company will need to meet the reporting requirements for Form 1099: a list of recipients, verification as to corporate/non-corporate status, and the recipient's taxpayer information. Getting a head start now will eliminate a last-minute scramble next month.

Failure to file returns or to include correct information can result in a fine of up to $100 per information return to a maximum of $500,000 for a small business.

Information returns are to be given to payees by February 2, 2015, and copies are to be mailed to the IRS by March 2, 2015. The IRS due date is extended to March 31, 2015, for electronically filed returns.

If you need help determining your 1099 filing requirements for this year, contact our office.

Consider last-minute tax cutters for 2014

Before you get set to enjoy the holiday season, take a look at steps you can still squeeze into 2014 to minimize your taxes. Here are some possibilities.

*  If you're feeling charitable, consider giving appreciated stock to a favorite charity. You will avoid capital gains tax on the appreciation while claiming a tax deduction for the market value of the stock.

*  Use your credit card to pay tax-deductible expenses by December 31 if you're short of cash. You'll be able to deduct the expenses on your 2014 return even though you don't pay your credit card bill until 2015.

*  Make your January mortgage payment before December 31 to squeeze an extra interest deduction into 2014.

*  Make tax-free gifts to use your annual gift tax exclusion for 2014. You can give up to $14,000 to as many individuals as you like without tax consequences. These gifts to individuals are not deductible by you; nor are they taxable to the recipients.

*  If a wedding or divorce is in your year-end plans, be aware that your marital status as of December 31 determines your tax status for the whole year. Changing the dates of a year-end event may save taxes.

*  Consider investing in a health savings account (HSA). You'll get a current-year tax deduction for your contribution, while providing a savings account to use to pay out-of-pocket medical expenses currently or in the future. An HSA is not a "use it or lose it" plan. Any funds in the plan can be used in future years. Also, be aware that you can make your 2014 contribution up to April 15, 2015.

For guidance in choosing the best year-end moves for your situation, give us a call.