As the end of January approaches, it is important for all the employers to prepare and issue 1099s to the recipients, and file them to IRS responsibly without any delay.
1099 tax form, referred to as “Information Returns,” should be send by the company to the independent contractors if it paid more than $600 to them in 2016. Since there are many types of 1099 forms, the common forms are 1099-MISC, 1099-INT, 1099-S, 1099-C, 1099 B, 1099-R and 1099-DIV.
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Form W2 is a multi-part standard tax form that an employer must send to the employees as well as Internal Revenue Service (IRS) at year end. The form contains employee’s annual wages, Social Security earnings, Medicare earnings, and federal and state taxes withheld from the employee’s paycheck.
Capitalization of costs is the usual practice that any business has to follow when they buy an asset which is supposed to render service for more than a year (usually for fixed assets). In simple terms, that means the cost of the asset is written off in the balance sheet over a number of years. There are rules and laws of depreciation & amortization in place on how to do this actually and it depends on the type of asset acquired.
With the Protecting Americans from Tax Hikes (PATH) Act of 2016 from Congress, small businesses will experience some relief regarding tax rules and their fluctuations. This PATH Act is applicable for taxes of 2015 and 2016.