2011-2012 brings new 1099 filing tax laws for Farmers
For year 2011-2012, it is compulsory that even farmers report 1099 forms if any payment of $600 and above is made. Find out the various services that farmers have to file 1099 form for and exceptions to 1099 form filing for them
2011 form 1099 filing instructions for Farmers
A 1099 tax form is an informational reporting form which is required to be filed with the IRS if any payment of $600 and above has been made by businesses or individuals to independent contractors in year 2011. The type of payments that are legible to be filed on form 1099 are: Rent, health care payments, services offered by freelancers, attorneys, royalties, Payments to crew members by owners or operators of fishing boats and etc.
In the case of agricultural sector, a farmer would have to file tax form 1099 for year 2011 if they want to write off the cost of the custom hay baling they had done this year. Services that require a farmer to file a 1099 form include: painting the barn, hoof trimmers or certified crop consultants.
Services that exempt you from filing 1099 forms include hauling freight which means livestock hauling or grain hauling is not required to be reported on 1099 form. Moreover, 1099 filing is not required to be reported for the purchase of equipment parts, seeds or fertilizers. Also a farmer is not supposed to file a 1099 form is he spends less than $600.
It is very necessary that farmers maintain their books on the payments they have made for year 2011-2012 because if they fail they file 1099 forms with the correct information then it can cost them huge penalties and losses.
Failure to file a 1099 form, could cost a farmer fine of $100 per form. If the internal revenue finds out that it was a willful neglect on the part of the farmer to file the 1099 form, then it can result in greater costs for the farmer in the form of $250 per filing. Sadly, small farmers who are unaware of such information fail to file the 1099 forms and thus have to face great adversities.
If business is not incorporated, then a 1099 form is required for all service providers. If the farmers are not incorporated, then they need to ask the business doing the service for their social security number (SSN)
Moreover, if a farm owner acquired above $600 as rent, then it is mandatory to file a 1099 form. Farmers have to talk to their landlords in order to get their 1099 forms.
1099 forms were started by the IRS as a step to fill the tax gap. Most of the income earned by non employees/freelancers was being unreported and hence resulting in huge tax gap for thee government. In order to narrow the gap, Congress came up with the 1099 forms.
For year 2011-2012, a 1099 form has to be sent to the recipient no later than January 30st 2012. There are 3 copies of the 1099 form. One is kept by the payer, one is sent to the recipient and the other copy is filed with internal revenue service. Businesses are supposed to file the 1099 form with the IRS no later than February 28th 2012. However if you efile 1099 form which obviously is a better choice, then the due date would be April 2nd 2012
Electronically filing a 2011 form 1099 is a very easy and effortless method as compared to the paper filing method. Nowadays IRS has made it compulsory for businesses who have to file 250 1099 forms to electronically file them. If you fail to do so, then penalties are imposed on you. Also if you are filing less than 250 1099 forms, still you are encouraged to efile as it is cost effective, quick, and secure and provide IRS confirmation in less time than anticipated.