Category: blog&news

blog&news

1099-NEC, NONEMPLOYEE COMPENSATION

Introducing New From

1099-NEC is used by payers to report payments of $600 or more made in the course of a trade or business to others for services. Prior to the creation of this form, these payments were reported in box 7 on Form 1099-MISC. Payers must provide a copy of 1099-NEC to the independent contractor by January 31 of the year following payment.

Characteristics of Nonemployee compensation (NEC)

  • The payments made during the year totaled $600 or more.
  • The payee was not an employee of the payer.
  • The payment was made in the course of a trade or business
  • The payment was made to an individual, a partnership, or an estate; or, payment was made to a corporation

Due to the creation of 1099-NEC, IRS revised the Form 1099-Misc and rearranged the box number for reporting certain income.

  • Payer made direct sales of $5,000 or more (checkbox) in box 7.
  • Crop insurance proceeds are reported in box 9.
  • Gross proceeds to an attorney are reported in box 10.
  • Section 409A deferrals are reported in box 12.
  • Nonqualified deferred compensation income is reported in box 14.
  • Boxes 15, 16, and 17 report state taxes withheld, state identification number, and amount of income earned in the state, respectively.

blog&news

E-FILE AMENDED RETURNS (1040-X)

Now you can E-file 1040-X. This is a major milestone in tax administration, the Internal Revenue Service announced today that taxpayers can now submit Form 1040-X electronically. This will help Taxpayers correct tax returns with ease and speed up processing tremendously.

E-filing as a whole has consistently grown each year and the 1040-X, Amended U.S. Individual Income Tax Return, has been one of the major individual tax forms that needed to be paper-filed. Today’s announcement follows years of effort by the IRS, and this enhancement allows taxpayers to quickly electronically file corrected, previously filed tax returns. Each year around 3 million 1040-X are filed by the taxpayers and so the ability to file Form 1040-X electronically has been an important long-term goal of the IRS. Click Here to read the full article.

Taxpayers still have the option to submit a paper version of the Form 1040-X and should follow the instructions for preparing and submitting the paper form. Those filing Form 1040-X electronically and on paper can use Where’s My Amended Return? online tool to check the status of their amended return.

We will be rolling out E-filing for the 1040-X over the next several weeks. We anticipate enabling the ability in the software by end of October. We will post updates as we roll out the product.

blog&news

PTIN FEES ARE BACK 😮

The IRS set $21 fee per PTIN application or renewal (plus $14.95 fee payable to contractor)

The Internal Revenue Service announced today the annual fee for 2021. Tax return preparers will have to pay to obtain or renew their Preparer Tax Identification Number (PTIN) for the 2021 tax season. Anyone who prepares or substantially helps prepare any federal tax return or claim a refund for compensation must have a valid PTIN from the IRS. Failure to have and use a valid PTIN may result in penalties. The IRS estimates that more than 800,000 tax return preparers will apply for or renew a PTIN this year.

IRS determined that the full cost to administer the PTIN program going forward is $21 per application or renewal. This amount includes costs relating to PTIN misuse and maintaining the integrity of PTINs. The third-party contractor fee, $14.95, pays for several functions including processing applications, renewals, and operating a call center. PTINs expire on December 31 of the year for which they are issued. PTINs generally can be renewed beginning in mid-October and are valid for the following calendar year. Click Here to read the full article.

blog&news

PAYCHECK PROTECTION PROGRAM (PPP)

The Paycheck Protection Program is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll. SBA will forgive loans if all employees are kept on the payroll for eight weeks, and the money is used for payroll, rent, mortgage interest, or utilities.

Loans from the Paycheck Protection Program will be available for amounts equaling 2.5 times the average monthly payroll for a business, up to $10 million.

Who can apply for PPP?

If your business is any of the following, you can apply for PPP.

Sole Proprietorship, Independent Contractor, Self-employed, Single-member LLC

Corporation, Professional Corporation, General Partnership, LLC, Nonprofit

Which Documents will you need to apply for the PPP loan application?

Most of our businesses will fall under the first category, and so if your business is Sole Proprietorship, Independent Contractor, Self-employed, Single-member LLC, you will need the following.

If you have employeesNo Employees
Government Issued ID (Front and Back)Government Issued ID (Front and Back)
2019 1040 Schedule C**2019 1040 Schedule C**
2019 IRSForm W-31099-MISC for Independent Contractors
2019 IRS Form 9402020 invoice, bank statement or
book of record to establish you were operating effective
2/15/2020
W2s for any employees earning more than $100,000
Payroll statement covering 2/15/2020

Your most recent statement from your outstanding Economic Injury Disaster Loan, if you have received or been approved for an EIDL loan.

Most importantly, to apply for PPP, you should contact the bank that you are currently banking with; this will make the process lot faster, but in case you do not have that option, we suggest that you apply with KABBAGE. 

To apply for Paycheck Protection Program with Kabbage (CLICK HERE)