2015 Pension Plan Limitations

The Internal Revenue Service today announced cost‑of‑living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2015. Many of the pension plan limitations will change for 2015 because the increase in the cost-of-living index met the statutory thresholds that trigger their adjustment. However, other limitations will remain unchanged because the increase in the index did not meet the statutory thresholds that trigger their adjustment. Highlights include the following:

  • The elective deferral (contribution) limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased from $17,500 to $18,000.
  • The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased from $5,500 to $6,000.
  • The limit on annual contributions to an Individual Retirement Arrangement (IRA) remains unchanged at $5,500. The additional catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000.
  • The deduction for taxpayers making contributions to a traditional IRA is phased out for singles and heads of household who are covered by a workplace retirement plan and have modified adjusted gross incomes (AGI) between $61,000 and $71,000, up from $60,000 and $70,000 in 2014. For married couples filing jointly, in which the spouse who makes the IRA contribution is covered by a workplace retirement plan, the income phase-out range is $98,000 to $118,000, up from $96,000 to $116,000. For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $183,000 and $193,000, up from $181,000 and $191,000. For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.
  • The AGI phase-out range for taxpayers making contributions to a Roth IRA is $183,000 to $193,000 for married couples filing jointly, up from $181,000 to $191,000 in 2014. For singles and heads of household, the income phase-out range is $116,000 to $131,000, up from $114,000 to $129,000. For a married individual filing a separate return, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.
  • The AGI limit for the saver’s credit (also known as the retirement savings contribution credit) for low- and moderate-income workers is $61,000 for married couples filing jointly, up from $60,000 in 2014; $45,750 for heads of household, up from $45,000; and $30,500 for married individuals filing separately and for singles, up from $30,000.

Below are details on both the adjusted and unchanged limitations.

Section 415 of the Internal Revenue Code provides for dollar limitations on benefits and contributions under qualified retirement plans. Section 415(d) requires that the Secretary of the Treasury annually adjust these limits for cost‑of‑living increases. Other limitations applicable to deferred compensation plans are also affected by these adjustments under Section 415. Under Section 415(d), the adjustments are to be made under adjustment procedures similar to those used to adjust benefit amounts under Section 215(i)(2)(A) of the Social Security Act.

Effective Jan. 1, 2015, the limitation on the annual benefit under a defined benefit plan under Section 415(b)(1)(A) remains unchanged at $210,000. For a participant who separated from service before January 1, 2015, the limitation for defined benefit plans under Section 415(b)(1)(B) is computed by multiplying the participant’s compensation limitation, as adjusted through 2014, by 1.0178.

The limitation for defined contribution plans under Section 415(c)(1)(A) is increased in 2015 from $52,000 to $53,000.

The Code provides that various other dollar amounts are to be adjusted at the same time and in the same manner as the dollar limitation of Section 415(b)(1)(A). After taking into account the applicable rounding rules, the amounts for 2015 are as follows:

The limitation under Section 402(g)(1) on the exclusion for elective deferrals described in Section 402(g)(3) is increased from $17,500 to $18,000.

The annual compensation limit under Sections 401(a)(17), 404(l), 408(k)(3)(C) and 408(k)(6)(D)(ii) is increased from $260,000 to $265,000.

The dollar limitation under Section 416(i)(1)(A)(i) concerning the definition of key employee in a top-heavy plan remains unchanged at $170,000.

The dollar amount under Section 409(o)(1)(C)(ii) for determining the maximum account balance in an employee stock ownership plan subject to a 5‑year distribution period is increased from $1,050,000 to $1,070,000, while the dollar amount used to determine the lengthening of the 5‑year distribution period remains unchanged at $210,000.

The limitation used in the definition of highly compensated employee under Section 414(q)(1)(B) is increased from $115,000 to $120,000.

The dollar limitation under Section 414(v)(2)(B)(i) for catch-up contributions to an applicable employer plan other than a plan described in Section 401(k)(11) or Section 408(p) for individuals aged 50 or over is increased from $5,500 to $6,000. The dollar limitation under Section 414(v)(2)(B)(ii) for catch-up contributions to an applicable employer plan described in Section 401(k)(11) or Section 408(p) for individuals aged 50 or over is increased from $2,500 to $3,000.

The annual compensation limitation under Section 401(a)(17) for eligible participants in certain governmental plans that, under the plan as in effect on July 1, 1993, allowed cost‑of‑living adjustments to the compensation limitation under the plan under Section 401(a)(17) to be taken into account, is increased from $385,000 to $395,000.

The compensation amount under Section 408(k)(2)(C) regarding simplified employee pensions (SEPs) is increased from $550 to $600.

The limitation under Section 408(p)(2)(E) regarding SIMPLE retirement accounts is increased from $12,000 to $12,500.

The limitation on deferrals under Section 457(e)(15) concerning deferred compensation plans of state and local governments and tax-exempt organizations is increased from $17,500 to $18,000.

The compensation amount under Section 1.61‑21(f)(5)(i) of the Income Tax Regulations concerning the definition of “control employee” for fringe benefit valuation remains unchanged at $105,000. The compensation amount under Section 1.61‑21(f)(5)(iii) is increased from $210,000 to $215,000.

The Code also provides that several retirement-related amounts are to be adjusted using the cost-of-living adjustment under Section 1(f)(3). After taking the applicable rounding rules into account, the amounts for 2015 are as follows:

The adjusted gross income limitation under Section 25B(b)(1)(A) for determining the retirement savings contribution credit for married taxpayers filing a joint return is increased from $36,000 to $36,500; the limitation under Section 25B(b)(1)(B) is increased from $39,000 to $39,500; and the limitation under Sections 25B(b)(1)(C) and 25B(b)(1)(D) is increased from $60,000 to $61,000.

The adjusted gross income limitation under Section 25B(b)(1)(A) for determining the retirement savings contribution credit for taxpayers filing as head of household is increased from $27,000 to $27,375; the limitation under Section 25B(b)(1)(B) is increased from $29,250 to $29,625; and the limitation under Sections 25B(b)(1)(C) and 25B(b)(1)(D) is increased from $45,000 to $45,750.

The adjusted gross income limitation under Section 25B(b)(1)(A) for determining the retirement savings contribution credit for all other taxpayers is increased from $18,000 to $18,250; the limitation under Section 25B(b)(1)(B) is increased from $19,500 to $19,750; and the limitation under Sections 25B(b)(1)(C) and 25B(b)(1)(D) is increased from $30,000 to $30,500.

The deductible amount under Section 219(b)(5)(A) for an individual making qualified retirement contributions remains unchanged at $5,500.

The applicable dollar amount under Section 219(g)(3)(B)(i) for determining the deductible amount of an IRA contribution for taxpayers who are active participants filing a joint return or as a qualifying widow(er) is increased from $96,000 to $98,000. The applicable dollar amount under Section 219(g)(3)(B)(ii) for all other taxpayers (other than married taxpayers filing separate returns) is increased from $60,000 to $61,000. The applicable dollar amount under Section 219(g)(3)(B)(iii) for a married individual filing a separate return is not subject to an annual cost-of-living adjustment and remains $0. The applicable dollar amount under Section 219(g)(7)(A) for a taxpayer who is not an active participant but whose spouse is an active participant is increased from $181,000 to $183,000.

The adjusted gross income limitation under Section 408A(c)(3)(B)(ii)(I) for determining the maximum Roth IRA contribution for married taxpayers filing a joint return or for taxpayers filing as a qualifying widow(er) is increased from $181,000 to $183,000. The adjusted gross income limitation under Section 408A(c)(3)(B)(ii)(II) for all other taxpayers (other than married taxpayers filing separate returns) is increased from $114,000 to $116,000. The applicable dollar amount under Section 408A(c)(3)(B)(ii)(III) for a married individual filing a separate return is not subject to an annual cost-of-living adjustment and remains $0.

The dollar amount under Section 430(c)(7)(D)(i)(II) used to determine excess employee compensation with respect to a single-employer defined benefit pension plan for which the special election under Section 430(c)(2)(D) has been made is increased from $1,084,000 to $1,101,000.

Source

2013 Individual Federal Income Tax Return Changes

Standard mileage rates. The 2013 rate for business use of your car is increased to 56½ cents a mile. The 2013 rate for use of your car to get medical care is increased to 24 cents a mile. The 2013 rate for use of your car to move is increased to 24 cents a mile.

Change in tax rates. The highest tax rate is 39.6%.

Net Investment Income Tax. Beginning in 2013, you may be subject to Net Investment Income Tax (NIIT). The NIIT is 3.8% of the smaller of (a) your net investment income or (b) the excess of your modified adjusted gross income over:

  • $125,000 if married filing separately,
  • $250,000 if married filing jointly or qualifying widow(er), or
  • $200,000 if any other filing status.

Tax rate on net capital gain and qualified dividends. The maximum tax rate of 15% on net capital gain and qualified dividends has increased to 20% for some taxpayers.

Medical and dental expenses. You can deduct only the part of your medical and dental expenses that is more than 10% of your adjusted gross income (7.5% if either you or your spouse is age 65 or older).

Personal exemption amount increased for certain taxpayers. Your personal exemption is increased to $3,900. But the amount is reduced if your adjusted gross income is more than:

  • $150,000 if married filing separately,
  • $250,000 if single,
  • $275,000 if head of household, or
  • $300,000 if any other filing status.

Limit on itemized deductions. You may not be able to deduct all of your itemized deductions if your adjusted gross income is more than:

  • $150,000 if married filing separately,
  • $250,000 if single,
  • $275,000 if head of household, or
  • $300,000 if any other filing status.

Same-sex marriages. If you have a same-sex spouse whom you legally married in a state (or foreign country) that recognizes same-sex marriage, you and your spouse generally must use the married filing jointly or married filing separately filing status on your 2013 return, even if you and your spouse now live in a state (or foreign country) that does not recognize same-sex marriage.

Health flexible spending arrangements (FSAs). You cannot have more than $2,500 in salary reduction contributions made to a health FSA for plan years beginning after 2012.

Expiring credits. The plug-in electric vehicle credit and the refundable part of the credit for prior year minimum tax have expired. You cannot claim either one on your 2013 return.

Pnzi-type investment schemes. There are new rules for how to claim a theft loss deduction on Form 4684 due to a Ponzi-type investment scheme.

Home office deduction simplified method. If you can take a home office deduction, you may be able to use a simplified method to figure it. See Publication 587.

Additional Medicare Tax. Beginning in 2013, a 0.9% Additional Medicare Tax applies to Medicare wages, railroad retirement (RRTA) compensation, and self-employment income that are more than:

  • $125,000 if married filing separately,
  • $250,000 if married filing jointly, or
  • $200,000 for any other filing status.

More

US Tax Court Decision – Shea Homes, Inc.

SHEA HOMES, INC. AND SUBSIDIARIES, ET AL.,1 Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket Nos. 29271-09, 1400-10,

Filed February 12, 2014.

Full text of court decision:

Shea Homes, Inc – U.S. Tax Court Decision full text in .pdf

Conclusion:
SHI, SHLP, and Vistancia are permitted to report income and loss from the
sales of homes in their planned developments using the completed contract
method of accounting as consistent with this Opinion.24

IRS Employment Tax Reporting and Deposit Due Dates in 2014

 

Reporting Due Dates

 

Generally, employers must report wages, tips and other compensation paid to an employee by filing the required form(s) to the IRS. You must also report on the taxes you deposit.

 

By January 31

 

 

By February 28

 

 

By March 31

 

File electronic Forms 1099 and 8027 with the IRS. File electronic Forms W-2 with the SSA. For information on reporting Form W-2 information to the SSA electronically, visit the Social Security Administration’s Employer W-3 Filing Instructions & Information web page. We have two publications about filing information returns electronically.

 

  • Publication 1220 (PDF), Specifications for Filing Forms 1097, 1098, 1099, 3921, 3922, 5498, 8935, and W-2G Electronically
  • Publication 1239 (PDF), Specifications for Filing Form 8027

 

By April 30, July 31, October 31, and January 31

 

 

Deposit Due Dates

 

In general, you must deposit federal income tax withheld and both the employer and employee social security and Medicare taxes.

 

There are two deposit schedules, monthly and semi-weekly. Before the beginning of each calendar year, you must determine which of the two deposit schedules you are required to use. The deposit schedule you must use is based on the total tax liability you reported on Form 941 during a lookback period. See special rules for Forms 944 and 945. Schedules for depositing and reporting taxes are not the same.

 

You must use electronic funds transfer (EFTPS) to make all federal tax deposits.

 

Monthly Depositor

 

Under the monthly deposit schedule, deposit employment taxes on payments made during a month by the 15th day of the following month. Employers who deposit monthly should only report their deposits quarterly or annually by filing Form 941 or Form 944.

 

Semi-weekly Depositor

 

Under the semiweekly deposit schedule, deposit employment taxes for payments made on Wednesday, Thursday, and/or Friday by the following Wednesday. Deposit taxes for payments made on Saturday, Sunday, Monday, and/or Tuesday by the following Friday. Report your deposits quarterly or annually only by filing Form 941 or Form 944.

 

FUTA Deposits

 

Deposit FUTA tax by the last day of the first month that follows the end of the quarter. If the due date for making your deposit falls on a Saturday, Sunday, or legal holiday, you may make your deposit on the next business day.

 

If your liability for the fourth quarter (plus any undeposited amount from any earlier quarter) is over $500, deposit the entire amount by the due date of Form 940 (January 31). If it is $500 or less, you can make a deposit, pay the tax with a credit or debit card, or pay the tax with your 2011 Form 940 by January 31.

Source

2013 Federal Individual Tax Return Forms, Instructions and News

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Form 1040, U.S. Individual Income Tax Return

Annual income tax return filed by citizens or residents of the United States.

Instructions for Form 1040

Forms and Schedules for Form 1040

2013 news
Change in tax rates.
The highest tax rate for 2013 is 39.6%.
Tax rate on net capital gain and quali­fied dividends.
The maximum tax rate
of 15% on net capital gain and qualified
dividends has increased to 20% for some
taxpayers. The Qualified Dividends and
Capital Gain Tax Worksheet in the
line 44 instructions reflects this new,
higher rate.
Additional Medicare Tax.
Beginningin 2013, a 0.9% Additional Medicare
Tax applies to Medicare wages, railroad
retirement (RRTA) compensation, and
self-employment income that are more
than:
$125,000 if married filing separately,
$250,000 if married filing jointly,
or
$200,000 if single, head of household, or qualifying widow(er).

 

Net Investment Income Tax.
Beginning in 2013, you may be subject to Net
Investment Income Tax (NIIT). The
NIIT is 3.8% of the smaller of (a) your
net investment income or (b) the excess
of your modified adjusted gross income
over:
$125,000 if married filing separately,
$250,000 if married filing jointly or qualifying widow(er), or
$200,000 if single or head ofhousehold.

 

Filing status for same­sex marriedcouples.
If you have a same-sex spouse
whom you legally married in a state (or
foreign country) that recognizes
same-sex marriage, you and your spouse
generally must use the married filing
jointly or married filing separately filing
status on your 2013 return, even if you
and your spouse now live in a state (or
foreign country) that does not recognize
same-sex marriage.
Medical and dental expenses.
You candeduct only the part of your medical and
dental expenses that is more than 10%
of your adjusted gross income (7.5% if
either you or your spouse was born be-
fore January 2, 1949).
Personal exemption amount increased
for certain taxpayers.
Your personalexemption is increased to $3,900. But
the amount is reduced if your adjusted
gross income is more than:
$150,000 if married filing separately,
$250,000 if single,
$275,000 if head of household, or
$300,000 if married filing jointly
or qualifying widow(er).
Limit on itemized deductions.
Youmay not be able to deduct all of your
itemized deductions if your adjusted
gross income is more than:
$150,000 if married filing separately,
$250,000 if single,
$275,000 if head of household, or
$300,000 if married filing jointly
or qualifying widow(er).

 

Credit for prior year minimum tax.
The credit for prior year minimum tax is
no longer partly refundable.
Standard mileage rates.
The 2013 ratefor business use of your vehicle is in-
creased to 56 cents a mile. The 2013rate for use of your vehicle to get medical care or to move is increased to 24cents a mile.
Identity Protection Personal Identifi­
cation Number (IP PIN).
If you are filing electronically and both you and

your spouse received an IP PIN.

Updated IRS Smartphone App IRS2Go Version 4.0

IRS2Go on iTunes

IRS2Go on Google play

The redesigned IRS2Go provides new features for taxpayers to access the latest information to help them in the preparation of their tax returns. In this version, IRS2Go highlights the addition of an innovative new refund status tracker, providing taxpayers an easy-to-use feature to follow their tax return throughout the process.

The newest version of the free mobile app offers a number of safe and secure ways for taxpayers to access other popular tools and the most up-to-date tax information, including:

  • Refund Status. Taxpayers can check the status of their federal tax refund through IRS2Go. People simply enter their Social Security number, which will be masked and encrypted for security purposes, then select their filing status and enter the amount of their anticipated refund for their 2013 tax return. A new refund status tracker has been added so that taxpayers can follow their tax return throughout the process. Users can check their refund status 24 hours after the IRS acknowledges receipt of an e-filed retus the tool is updated just once a day, usually overnight, so there is no reason to check more than once a day.
  • Free Tax Prep Providers. The IRS Volunteer Income Tax Assistance (VITA) and the Tax Counseling for the Elderly (TCE) Programs offer free tax help for taxpayers who qualify. This brand new tool on IRS2Go will help taxpayers find the nearest VITA site to their home by simply entering their zip code and selecting a mileage range. By clicking on the directions button within the results, the maps application on the device will load with the address, making it easy to navigate to your desired location.
  • Tax Records. Taxpayers can request their tax account or tax return transcript from IRS2Go. The transcript will be delivered via the U.S. Postal Service to their address of record.
  • Stay Connected. Taxpayers can interact with the IRS by following the IRS on Twitter, @IRSnews or @IRSenEspanol, watching helpful videos on YouTube, signing up for email updates or by using the Contact Us feature.

2014 Withholding Calculator (IRS)

Click here to enter 2014 IRS Withholding Calculator

This calculator have five steps . First you have to enter what filing status will you use on your 2014 Income Tax Return: will it be Single, Married filing joint return, Married filing separate return, Head of Household or Qualifying widow(er).

You will also have to enter info about Child and Dependent Care Credit and Child Tax Credit. In Income and Withholding section you will have to enter he total wages, salary, and tips (excluding bonuses) you expect to receive in 2014 , total 2014 contribution to a tax-deferred retirement plan, FSA or HSA, total Federal income tax withheld to date in 2013 (including amounts withheld from bonuses or which you expect to have withheld for bonuses),  Federal income tax withheld from your last salary payment etc.

There is also a video about Withholding Calculator provided by IRS.

Suspension of Tax Court Operations During Federal Government Shutdown

This notice describes the suspension of Tax Court operations because of the Federal
government shutdown beginning on October 1, 2013.
Trial Sessions Beginning After October 1, 2013
Notice of the cancellation of any trial session scheduled to begin after October 1, 2013,
will be posted on the Court’s Web site by 12 noon (Eastern time) on the preceding Friday.
Court Operations in Washington, DC, and eFiling
Because of the government shutdown beginning on Tuesday, October 1, 2013:
1. No documents will be received by the Court until the shutdown is concluded or the Court
posts other further notice on this Web site.
2. The Court will not receive submissions of documents for eFiling until further notice.
3. The Court will serve not serve any documents until further notice.
Information on the Court’s Web Site
Interested persons may visit the Court’s Web site at www.ustaxcourt.gov where notices
regarding the Court’s closure and resumption of operations will be posted and updated
throughout the period of any shutdown.
Due Dates Established by the Court
Because of the government shutdown beginning on Tuesday, October 1, 2013, due dates
previously set by Tax Court Rule or Order for filing a document or completing discovery or any
other act shall be extended. Specifically, all such due dates on or after October 1, 2013, shall be
extended by the number of days that Court operations are suspended, up to a maximum extension of 5 days from the date the Court resumes operations. If the extended due date falls on
a Saturday, Sunday, or a “legal holiday” (as defined in I.R.C. section 7503), the due date shall
then be the next succeeding day that is not a Saturday, Sunday, or a legal holiday. For example,
if before October 1, 2013, the Court has established a due date of Wednesday, October 9, 2013,
and Court operations are suspended for 3 days due to a Government shutdown, the due date will
be extended to Tuesday, October 15, 2013, since the extended due date otherwise would have
fallen on a Saturday or legal holiday.
Statutory Filing Deadlines
The Court lacks authority to extend statutory filing deadlines imposed in the Internal
Revenue Code (I.R.C.). For example, I.R.C. section 6213(a) provides that a taxpayer must file a
petition with the Court to redetermine a deficiency within 90 days after the mailing of a notice of
deficiency, and I.R.C. section 6330(d)(1) provides that a taxpayer must file a petition to review
a determination involving a proposed lien or levy within 30 days after the mailing of the notice
of determination. Hand-delivery to the Courthouse is not available during the period the Court is
closed due to a Government shutdown. Taxpayers must comply with the statutory deadlines by
timely mailing a petition to the Court. Timeliness of mailing of the petition is determined by the
United States Postal Service’s postmark or the delivery certificate of an approved private express
delivery company.

Source

Limited IRS Operations During Goverment Shutdown

Due to the current lapse in appropriations, IRS operations are limited. However, the underlying tax law remains in effect, and all taxpayers should continue to meet their tax obligations as normal.

Individuals and businesses should keep filing their tax returns and making deposits with the IRS, as they are required to do so by law. The IRS will accept and process all tax returns with payments, but will be unable to issue refunds during this time. Taxpayers are urged to file electronically, because most of these returns will be processed automatically.

No live telephone customer service assistance will be available, however most automated toll-free telephone applications will remain operational. IRS walk-in taxpayer assistance centers will be closed.

While the government is closed, people with appointments related to examinations (audits), collection, Appeals or Taxpayer Advocate cases should assume their meetings are cancelled. IRS personnel will reschedule those meetings at a later date.

Automated IRS notices will continue to be mailed.  The IRS will not be working any paper correspondence during this period. Here are some basic steps for taxpayers to follow during this period.

How does this affect me? 

  • You should continue to file and pay taxes as normal. Individuals who requested an extension of time to file should file their returns by Oct. 15, 2013.
  • All other tax deadlines remain in effect, including those covering individuals, corporations, partnerships and employers. The regular payroll tax deadlines remain in effect as well.
  • You can file your tax return electronically or on paper –– although the processing of paper returns will be delayed until full government operations resume. Payments accompanying paper tax returns will still be accepted as the IRS receives them.
  • Tax refunds will not be issued until normal government operations resume.
  • Tax software companies, tax practitioners and Free File will remain available to assist with taxes.

 

What IRS services will be available?

  • For taxpayers seeking assistance, only the automated applications on the regular 800-829-1040 telephone line will remain open.
  • The IRS website, www.IRS.gov, will remain available, although some interactive features may not be available.
  • The IRS Free File partners will continue to accept and file tax returns.
  • Tax software companies will continue to accept and file tax returns.

Source

Form 1099-MISC

File Form 1099-MISC, Miscellaneous Income, for each person to whom you have paid during the year:

  • At least $10 in royalties (see the instructions for box 2) or broker payments in lieu of dividends or tax-exempt interest (see the instructions for box 8);
  • At least $600 in rents, services (including parts and materials), prizes and awards, other income payments, medical and health care payments, crop insurance proceeds, cash payments for fish (or other aquatic life) you purchase from anyone engaged in the trade or business of catching fish, or, generally, the cash paid from a notional principal contract to an individual, partnership, or estate;
  • Any fishing boat proceeds; or
  • Gross proceeds of $600 or more paid to an attorney

Use Form 1099-MISC to report that you made direct sales of at least $5,000 of consumer products to a buyer for resale anywhere other than a permanent retail establishment. You must also file Form 1099-MISC for each person from whom you have withheld any federal income tax under the backup withholding rules regardless of the amount of the payment.

View sample Form 1099-MISC

Report on Form 1099-MISC only when payments are made in the course of your trade or business. Personal payments are not reportable. You are engaged in a trade or business if you operate for gain or profit. However, nonprofit organizations are considered to be engaged in a trade or business and are subject to these reporting requirements. Other organizations subject to these reporting requirements include trusts of qualified pension or profit-sharing plans of employers, certain organizations exempt from tax under section 501(c) or (d), farmers’ cooperatives that are exempt from tax under section 521, and widely held fixed investment trusts. Payments by federal, state, or local government agencies are also reportable.

Exceptions

Some payments do not have to be reported on Form 1099-MISC, although they may be taxable to the recipient. Payments for which a Form 1099-MISC is not required include all of the following.

  • Generally, payments to a corporation.
  • Payments for merchandise, telegrams, telephone, freight, storage, and similar items.
  • Payments of rent to real estate agents.
  • Wages paid to employees (report on Form W-2, Wage and Tax Statement).
  • Military differential wage payments made to employees while they are on active duty in the Armed Forces or other uniformed services (report on Form W-2)
  • Business travel allowances paid to employees (may be reportable on Form W-2).
  • Cost of current life insurance protection (report on Form W-2 or Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.).
  • Payments to a tax-exempt organization including tax-exempt trusts (IRAs, HSAs, Archer MSAs, and Coverdell ESAs), the United States, a state, the District of Columbia, a U.S. possession, or a foreign government.
  • Payments made to or for homeowners from the HFA Hardest Hit Fund or the Emergency Homeowners’ Loan Program or similar state program (report on Form 1098-MA).
  • Certain payment card transactions if a payment card organization has assigned a merchant/payee a Merchant Category Code (MCC) indicating that reporting is not required. A cardholder/payor may rely on the MCC assigned to a merchant/payee to determine if a payment card transaction with that merchant/payee is subject to reporting under section 6041 or section 6041A. For more information and a list of merchant types with corresponding MCCs, see Revenue Procedure 2004-43 available at www.irs.gov/irb/2004-31_IRB/ar17.html.

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