My son Nicholas told his mom, “Mom, you never know. It might have been just a smile or a wave at someone that changed their whole day. Sometimes something as small as that makes a big difference. So, you never know what little thing might make a big impact.”
Even though some of the more onerous 1099 reporting requirements were repealed or at least pushed off for a while, this past tax season practitioners and clients were faced with a couple of new questions that a caused more than a little pain. Not much has changed for the up coming season. Many are still in denial on this one….
The Schedules C and F and the business return forms have a couple of ‘gotcha’ questions – 1) Did you make any payments that would require you to file Form(s) 1099 and 2) If so, did you or will you file the required forms? It is the second question causing all the problems.
So clients who made contract labor or other payments over the $600, but who didn’t issue 1099’s are in a bit of a bind. If the say no to question number one, then the contract labor, legal or other fees will be easy pickings for a computer audit heuristic. Or, it is possible they are making a false statement on the return. If they say yes – which is likely the truthful response, then we hope they actually prepared and filed the 1099s. Unfortunately, a significant number did not.
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