If you make or receive payments in your business, you may have to report them to the IRS on information returns. The IRS compares the payments shown on the information returns with each person's income tax return to see if the payments were included in income. You must give a copy of each information return you are required to file to the recipient or payer. In addition to the forms described below, you may have to use other returns to report certain kinds of payments or transactions.
Information returns must be filed by specific due dates. Failure to file, or filing late can result in very significant penalties.
Form 1099-MISC. Use Form 1099-MISC, Miscellaneous Income, to report certain payments you make in your trade or business. These payments include the following.
You also use Form 1099-MISC to report sales by you of $5,000 or more of consumer goods to a person for resale anywhere other than in a permanent retail establishment.
Form 8300. You must file Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, if you receive more than $10,000 in cash in one transaction, or two or more related business transactions. Cash includes U.S. and foreign coin and currency. It also includes certain monetary instruments such as certain cashier's and traveler's checks and money orders. The form you complete for the bank is NOT sufficient.
Form W-2. You must file Form W-2, Wage and Tax Statement, to report payments to your employees, such as wages, tips, and other compensation, withheld income, social security, and Medicare taxes, and advance earned income credit payments.
Other Information Returns. There are many other types of information returns that may have to be filed with the IRS depending on the specifics of your particular business. Contact us to set up an appointment to discuss your possible liability for information returns.
Related items:
Payroll Tax Setup
Setup New Corporations
© Copyright 2000 Raymond S. Kulzick. All rights reserved. 001029.
This publication provides business, financial planning, and/or tax information to our clients. All material is for general information only and should not be acted upon without seeking appropriate professional assistance.