OT: Changes in Tax code?

Last night on our local news, a CPA was talking about new changes in the Tax code. He said that if we spend more than $599 at Wal-mart buying a computer for a business and we want to claim it as a business expense, we will need to get a W-9 from Wal-mart and send Wal-mart a 1099 at the end of 2011.

Is there any truth in this?

Was this part of the 3000 page health care bill that no one read?

Some say that this might get repealed. Not sure if it has.

If I buy something on e-bay, how will I get a w-9 from the buyer?


PLEASE DON'T GO POLITICAL ON ME AND GET THIS POOFED! I can see why the IRS may have made these change. Let's say I pay a tree trimmer $900 to cut down trees and I use the expense as a tax write off. The tree trimmer puts the money in his pocket and doesn't pay any taxes. Uncle Sam comes up on the short end. Some extimates say there are over $2 Billion dollars worth of tax cheats yearly.

I pay my taxes and would like to be informed as to the changes I need to make in my account department. If this is true, is there any advice on how to keep good records and avoid problems?

Thanks,
George

It is a proposal that we would have to send a 1099 to anyone or any business that we pay $600 or more to in any one year. Current law requires you to do that with any individual, not a company, so you already have to send one to your tree trimmer. If we had to send one to anyone over 600 bucks, and businesses had to do the same with anyone they pay 600 to, including each other, the paperwork would be horrendous. Then hire more IRS people to check the paperwork! That"s why it makes no sense.

My Understanding is that you are right.If you think a bit ahead you will see the logistics of doing this are nearly impossible. My understanding is that I will have to send my power supplier a 1099 for the electric at my shop. the slight problem here is that I will send them a 1099 for the calendar year that I use and it will not match the fiscal year that they will report (different year dates) I will not try to get into politics, but did anyone that put this together think of the costs to businesses to implement this? Better get down off of my pedestal before I get cranked up.I will start to track those that will need to get 1099s
Good Luck,
Andy

external_link said he will hire 16000 new agents to deal with this and the health care. G-O-D help us all.

external_link said he will hire 16000 new agents to deal with this and the health care. G-O-D help us all.

The 1099 is a done deal as part of the health care bill. That portion will probably get repealed.

Sounds to me like this is a job creation bill too.

Our Farm Bureau newsletter said the average small farmer will be sending out something like 16 of the 1099s. Guess we'll need health care.

We send out 1099's to individuals, or LLC's that we pay $600 or more to. We also request a W9 from corporations that provide labor based services to us.

What really sucks is buying a home on a fixed income. I don't make enough to file , but my mortgage interest that would have been a partial deductible item is not valid for me , but somewhere there is a guy pocketing it for his wages.

Yes, its in the bill, this provision will create a mind boggling amount of paperwork for taxpayers and will be impossible to manage for the IRS. Probably result in less tax collected overall, people get away with all kinds of tax avoidance scams now because the IRS can't possibly scrutinize every return or enforce all of the rules. Tax forms after 2010 are supposed to include a schedule that individuals will use to itemize business purchases made from box stores, the internet, etc., such as the printer from wal-mart. An individual will still be liable to 1099 every service provider the business uses. Another nail in the coffin of small operators.

we have a 130 cow dairy farm. we hit 40 vendors before we gave up counting. its a really stupid idea. apparently, we don't have enough to do already.

I have to do it for all labor anyway, and my software will sort them real easy. The postal service will benifit from it, unless we can use a e-mail.

Taxes must be paid to offset the jobs going over seas. Simple,.... less jobs means less taxes being paid in......eliminate the death tax...less taxes paid in again. Then we have a tax break for the wealthy to stimulate the econony..less taxes paid again....so the national debt going up seems to be a posibility.

I would assume Wal-Mart keeps very accurate records anyway. So I think they are reporting their income.

There are alot of shady deals going down all the time, and it isn't the poor folks cheating usualy. It would be dumb for low income folks to cheat, because they otherwise probably would qualify for earned income credits.

The IRS isn't my favorite folks to deal with, so I try to report every cent of my income. They also realy do not care if it takes more paperwork, as it will be job security for them, as stated before, they will need lots more hands on deck.

well he said he would make more jobs he just don't say where or how.
now he has king richard's bro prince william on his staff.
before long the whole country will know why il is so broke.

Yes, the $600.00 limit is there, and transactions for more than that will require a Form 1099. Your CPA is not lying to you. That is old news. There is or was talk about amending (omitting) that specifically, or during a repeal of the whole darn thing, but neither happened and won't happen anytime soon.

Bottom line, your CPA is telling you the truth. It is still very much there. I have to imagine that rates for CPAs will go up this year, if for nothing more than weeding through that alone. CPAs are like you and me and everyone else, they expect to be paid for services rendered, and like you and me and everyone else, they should be.

Mark

LAA,
Maybe they are just looking for more red tape to get larger fines. Evens it all out, less work.


Some of these guys needed to get caught . . . .
http://www.ytmag.com/ttalk/messages/957062.html#postfp

I've never hired an individual to work for me, I've only hired a company or contractor, so I've never turned in a 1099. It's my understanding that if I pay more than $600 to a business or contractor, in a year, I'll be required to turn in a 1099. This is all new to me.

For the past 15 years I've used spread sheet to do my business records and send it to my CPA.

What program do you use and how much fun is it to switch over?

Is there a easy way around this mess, like doing business with company and paying them with their credit card. Like Menards and Lowes both have credit cards. So, at the end of the year you can get a credit card print out from each business?

How can you buy something on line and get the tax info you need to fill a 1099?

BTY, I'm all for putting a stop to TAX CHEATS! If this helps GREAT

40 - that aint s***! I'm looking at over 2000 next year. From Wal-Mart to the Staples to the Chevy dealer.

Farm Bureau doesn't know what the *$*)@ its talking about.

The new law is any and all payments over $600 for any good or service to any kind of entity - individual or corporation.

You buy a used pickup for the farm - you have to send a 1099 to the dealership. You buy tires for that truck its another 1099 to the tireshop. You have a $600+ mechanic bill on that truck (or accumulated repairs of $600) you have to send a 1099 to the mechnic. You buy $600 of fuel in the course of the year from one gas station you have to send a 1099 to that station (good luck getting a FIN from Phillips 66). You buy grain for your livestock - a 1099 to the seller. You buy cattle or hogs from the sale barn - you have to issue a 1099 to the salebarn. Buy a new computer for the farm you have to issue a 1099 to Dell or Best Buy.

If they think the "average" farm only has 16 venders that were paid $600 or more I'd like to know what kind of "farms" those are.

They've tried to repeal it three times already - all three bills failed.

I think the kicker, and my accountant is looking into it, is, if you buy a used pickup from a private individual, you have to 1099 them and they will have to show it on their tax return as income. Wouldn't that be a kick to the rear if they would have to pay income tax for simply selling a used truck, or any piece of equipment, to a business instead of to an individual? Unintended consequences........

If you buy a personal vehicle there is no gain for the seller (unless they are unbelievable lucky). I paid $16,000 for a pickup 4 years ago and drove it to and from work. I sell it to you for $6,000 and you send me a 1099. I don't "report" the $6000 in income because I actually lost $10,000 on truck. I can't deduct the loss either. So you sent me a 1099 for not reason.

Tax cheats are running this program. This is to give the 16,000 new IRS agents something to do.

I understand what you are saying, but under the new rules, the 1099 has to be sent.

My question to my accountant was more or less with the 1099 in the hand of an IRS agent, how many times will the agent try to match the 1099 to the tax return of the person selling the truck. When there is no match, will the IRS go after unreported income and the associated tax even though it is not owed? I just see a whole lot of problems that we the tax payers are going to foot the bill for the IRS to chase it's tail and innocent people are going to spend lots of money fending off a greedy government agency. I'm willing to bet that this is a money losing proposition for all involved and after all the extra expense in enforcement, this will be a net tax loss for the government.

I used to use a spreadsheet that I set up to total as we go. I then had a part time secratary that I paid a decent wage too. She had a few health issues, so I purchased a Q-books software package.

I kind of think that the time I spent explaining stuff to my secratary was as much as doing the books myself now. There are some downfalls however. Support is all from India, and apparently english is not the language they were taught as a child....hummmmmmm. No, you will NOT talk to a American regardless what you do or try..the answer is still.... I sepka anglisha.

Support should be a support, but instead it is a hig pressure ...sell you a support package for $80.00 when having problems, even regestring their product. If this happens your answer is...freakin no way in ......, I will pay a attorney ten times that amount to sue your company. (So you understand) You will have to repeat this several times on each phone call you make to them.

Set up is very simple, probably a hour if you have all your accounts up to date, and in front of you as you set up. They have preset accounts for contractors, doctors, etc. I tell everyone to simply make NEW accounts that match their existing books for the first year till they relax and understand how simple it works, and so it does not confuse anyone.

I ain't had much schoolhousin, and all, but it is very simple to do this. I no longer have a secratary, as she was dealing with the big problem we all face...lots of birthdays.

The software is simpler than what you first let it be, because of being afraid to do something. The only issue I have is one time, I clicked --make a auditors copy, or send to auditor......Once you do that, you can not correct a error in your data. This is a must for a business with a dishonest secratary, but for myself, I try not to cheat myself.

I would guess the software sells for about three hundred dollars now, when I update, (every five to ten years) I purchase last years software, for less than half price. Actualy if you do not care, you could still use the software dated twenty years ago. On line banking etc. probably was not on that one, but the general accounting was about all it had. I think I started Q-books around 1990 or so.

The thing that shocked me was..you can compare each month, each quarter, or year to year with just a click or two. Also place all these costs etc in a pie graph, bar graph etc. at a touch of the mouse. So once you actualy see the percentage you pay for insurance...well lets just say it opens your eyes enough to read the directions on your blood pressure pill box.

Once you write a check to someone, they are there forever unless you make them inactive (yet still on the computer). SO say for instance your utility bill is always in the same account...You simply click on the date---plus or minus key if it needs to be changed....then type (most times) the fist three letters of the vendor. Then enter the actual amount (it will pop up the last transaction) if it is the same you hit enter, otherwise you overtype the amount etc.

If you want to check any or all expences a few clicks on the report center, and it lists every transaction to each vendor, with a total at the bottom. If you want to check a certian check as to see what it was for? Just place your mouse over the transaction and left click---the check will be in front of you........

At the end of the year you want 1099 information? Just click on it, and print it if you like...every total of $600.00 or more will be listed along with the mailing address. If you placed the complete address on the first check. The same two or three clicks brings up everything your tax man needs in a VERY acurate, and professional report. Like totals are in bold print, any transaction is in smaller print, the exact date and time the report was made, your business logo, etc.

You can order checks if you like, and print them on your computer, and simply sign them, and drop into a double view envelope, place a stamp and you are done. Your return address, and their mailing address is already taken care of. Anything can be changed if their address is changet etc. The same applies for invoices.

I could go on for hours, it will invoice, make statments, and everything for you also......you enter the information once.....It will keep the accounting in order.

You can back up your files etc with a CD, flash drive etc. I backup with a flash drive, then I also e-mail myself a full report---a simple click again---just in case my house burns down etc. with my flash drive inside the house.

Agreed, the law gains nothing and costs us billions. Maybe its a scheme to keep the post office afloat.

This will probably be repealed- Business people hate it, it will do little to prevent fraud (is my sending a 1099 to Staples going to finally convince them they should file a tax return? I've got a feeling they've been reporting their income all along), and IRS is so screwed up they won't be able to make any use of it anyhow. Repeal is likely because it has become the poster child of bureaucratic foolishness, and it is something the nnalert can do to show they're "business friendly".

It has always been the case that you're supposed to 1099 anyone who has performed labor for you- but the new part is goods as well. The linkage between sale of goods and taxation of profits is much less direct than labor income.

Calculate if you paid $600 or more during the tax year in the course of your trade or business to an individual or partnership. Professional fees to an attorney, doctor or other professional are included. Payments to corporations are included only if they are for medical, health care, legal or fishing activities.

Read more: How to Know When to Issue a 1099-MISC eHow.com http://www.ehow.com/how_13664_know-issue-1099.html#ixzz1Al4vq31f

This is the law the way it stands in 2011.

In 2012 it will be as follows: Section 9006 of the health care bill -- just a few lines buried in the 2,409-page document -- mandates that beginning in 2012 all companies will have to issue 1099 tax forms not just to contract workers but to any individual or corporation from which they buy more than $600 in goods or services in a tax year......so the new rules are not in affect until 2012 and may be changed by then.

From what little I know the 1099 is between business to business transactions. I don't think it is between business to individual unless you employ the individual, which is nothing new. Could be wrong.