Internal revenue service department says that Income tax filing season is underway and the last date to file your returns is April 15th 2013. Although the filing deadline is 3 months away, still taxpayers should gear themselves up for an early start to make the tax filing season easier for them.
"The first thing you'll want to do is to gather your records and round up any documents you'll need when filing your taxes," said Clay Sanford, an IRS spokesman in Dallas. "Get into the habit of keeping good records every year — saving receipts, canceled checks and other documents that support income or deductions you're claiming on your return."
He said Form W-2s and/or Form 1099s will be needed to file a tax return. He said those who do not receive their Form W-2 or 1099 by Jan. 31, or whose information is incorrect, should contact their employer or payer.
1099 misc. forms are filed by businesses or individuals who hired the services of independent contractors for year 2012-2013. In other words, 1099 misc forms are used to report the income ($600 and above) earned by freelancers, independent contractors and any self-employed person hired on contract basis. Last date to send 1099 misc. forms to recipients is January 31st 2013.
1099 Misc form is necessary for independent contractors as the form is required for the income tax filing purpose. Independent contractors will have to report to IRS any income they earn as freelancers through 1099 misc form. There is no way you can try to escape from reporting the income because your payer will also provide a copy of your 1099 misc. form to the IRS. However, independent contractors can get certain tax relief from 1099 tax deductions:
Here is a list of 1099 tax deductions for independent contractors:
- eBay fees
- PayPal fees or shopping cart fees
- Shipping fees and supplies
- Office supplies
- Mileage - use your car for business purposes
- Phone - cell phone or second line
- Bank charges - business checking account
- Accounting and legal fees
- Computer and software
- Internet, website and faxing services
- Contract labor - VA, coaches, web designer
- Furniture and office equipment
- Membership fees and dues
- Continuing education
- Home office expenses
Few names have been provided above. To find out the complete list or 1099 tax deductions which you are eligible for; kindly contact your tax professional or IRS.
Moreover, if you hired the services of a contractor and paid him income via PayPal, cash card or any third party payment network, then you do not need to issue him/her a 1099 misc. form. The third party payment network will issue him/her form 1099-K (form for credit card and third party payment processors)
All about form 1099-K
From tax year 2011 onwards, credit card merchants and third party payment networks such as e-bay, PayPal, Amazon and etc. will have to start sending 1099 K forms to sellers who meet their criteria. If you earn money online by selling products, freelance writers and etc. then be ready to receive 1099-K for year 2012-2013.
Although the form has been in the making since a long time, however it will be implemented from tax year 2012 -2013 onwards. The original bill proposed that credit card processors be required to file 1099s for each seller that had at least $10,000 in gross sales and 200 transactions. However, the original proposal has been a little modified where you must have at least $20,000 gross sales and 200 transactions before you are required to receive 1099-K form from third party network companies. Hence, less people are now affected by the 1099-K form filing.
How to file 1099 forms?
There are 2 methods to file 1099 forms. One is paper filing method and other is efile method.
Electronic filing method is the most preferred method among tax filers because of its easy and efficiency. You can either file 1099 forms through IRS website or avail expertise support of an IRS approved efile service provider. Although there are many service providers who claim to be leaders and provide the best services, however one such service provider who has never let down its clients is 1099online.com. You can efile 1099 forms on their website easily, swiftly and efficiently for as low as $0.55 per filing. They offer the lowest pricing in industry with top class and secure services.