Discussion:Form 1099 reporting - Cash basis or Accrual
From TaxAlmanac, A Free Online Resource for Tax Professionals
Note: You are using this website at your own risk, subject to our Disclaimer and Website Use and Contribution Terms.
From TaxAlmanac
(Difference between revisions)
| Revision as of 23:58, 5 October 2006 Jdugancpa (Talk | contribs) (1099's are repor) ← Previous diff |
Revision as of 00:45, 6 October 2006 Scot1 (Talk | contribs) (Absolutely cash) Next diff → |
||
| Line 16: | Line 16: | ||
| {{ForumReplyPost|UserID=Jdugancpa|Date=5 October 2006|Text=1099's are reportable on cash basis, i.e., amounts paid. The payor's accounting method has nothing to do with it, since the object is to report income to the IRS relative to the payee. No different than W-2's. Bonuses accrued in year 1 paid in year 2 do not get reported on the W-2 until year 2, regardless of whether or not they have been expensed in year 1 by the employer.}} | {{ForumReplyPost|UserID=Jdugancpa|Date=5 October 2006|Text=1099's are reportable on cash basis, i.e., amounts paid. The payor's accounting method has nothing to do with it, since the object is to report income to the IRS relative to the payee. No different than W-2's. Bonuses accrued in year 1 paid in year 2 do not get reported on the W-2 until year 2, regardless of whether or not they have been expensed in year 1 by the employer.}} | ||
| + | |||
| + | {{ForumReplyPost|UserID=Scot1|Date=6 October 2006|Text=Absolutely cash basis reporting for 1099's is proper method, regardless of payer or payees method of accounting.}} | ||
Revision as of 00:45, 6 October 2006
Discussion Forum Index --> Tax Questions --> Form 1099 reporting - Cash basis or Accrual
Michaelstar (talk|edits) said: | 5 October 2006 |
| I have just had a client receive a 2005 Form 1099-MISC for rents and the reporting corporation is reporting rents on the accrual method. I believe the instructions are very clear that Form 1099 reporting is to be done on the cash method and NOT on the accrual method. Is the required reporting method for 1099's on the cash basis of accounting or accrual or does it matter? | |
Death&Taxes (talk|edits) said: | 5 October 2006 |
| "File Form 1099-MISC, Miscellaneous Income, for each person to whom you have paid during the year:" is from the instructions for Form 1099-MISC. It does not say "to whom you have accrued." To me this sounds like one of those "Print a report to see who gets a 1099" but they did not change the accounting basis to cash to create this report. | |
Michaelstar (talk|edits) said: | 5 October 2006 |
| Death&Taxes - you are correct on the reporting corp and how they determined what amounts were to be included on the 1099's. They have told me - they are correct and it should be on the accrual method because that is their method of accounting and they (as of now) have no intentions of correcting the 1099 because it is not wrong - thus the reason for my post. In my mind - they have issued an incorrect 1099 and should file a corrected one - for all of their vendors. I was also told "it would be to expensive for them as a corporation to change their reporting method to cash basis when preparing 1099's". It is my desire to use this post as an educational tool. Thanks Death&Taxes
| |
| 5 October 2006 | |
| My understanding is that you report actual payments made, NOT accrued amounts. There is an example on page 53 of the IRS Publication - Instructions for Form 1099 - which clearly states that you include only actual payments made NOT amounts accrued. Here is a link to the publication (the link may not go to page 53 - please scroll down). | |
| 5 October 2006 | |
| 1099's are reportable on cash basis, i.e., amounts paid. The payor's accounting method has nothing to do with it, since the object is to report income to the IRS relative to the payee. No different than W-2's. Bonuses accrued in year 1 paid in year 2 do not get reported on the W-2 until year 2, regardless of whether or not they have been expensed in year 1 by the employer. | |
| 6 October 2006 | |
| Absolutely cash basis reporting for 1099's is proper method, regardless of payer or payees method of accounting. | |
