New Regulations for 2011 Tax Form 1099 MISC

The IRS has issued notification on a policy revision for reporting requirements on the tax form 1099 MISC for the 2011 tax year.

The 1099 tax form is used to record the annual payment to vendors for services over $600 per year by a business. The adjustment to the policy requires you to track the way in which you made payments to your vendors. Payments made through third party processors using credit cards, debit cards or payment services, such as Pay-Pal, are now to be excluded by the business when completing their 1099 MISC tax form.

Those transactions will now be recorded by third party processors on a Form 1099-K. Business owners do not file the 1099-K form.

For example, if you paid your blacksmith by check or cash, but also paid online through Pay-Pal, you only record the amount you paid by check or cash when creating your 1099 MISC form for 2011. The balance you paid to the blacksmith through Pay-Pay will now be recorded by Pay-Pay on the 1099-K tax form.

The difficult part to this new ruling is that if you didn't record your method of payment for the year in your software system, you'll have to manually go through your records for 2011 and classify your payments to be able to comply with this new regulation. You'll need to find the non reportable payments and take them out when you create your 1099 MISC form.

If you use the software system QuickBooks, they have created a downloadable app for 2009, 2010, and 2011 versions. If you upgrade to 2012, they have a 1099 Wizard that will help in creating the 1099 MISC for 2011 correctly.

If you use a billing service, make sure they are aware of the new regulations when creating the 1099 MISC form for your 2011 taxes.

If you have any questions regarding how this new regulation affects your specific business, you may wish to speak to a Tax Accountant for additional information.  This article is for general information only.

About The Author
Pam Saul operates Farm & Equine Business Services, LLC, a company that provides accounting and bookkeeping services to the equestrian and agricultural industries. Pam has 30+ years of experience with her own family's Rolling Acres Farm, a hunter/jumper boarding and training facility. She is also deeply involved in the agricultural industry having served for many years on boards and industry organizations. She currently is the Chair of the Maryland Farm Bureau PAC and Treasurer of MARBIDCO, as well as a member of other agricultural industry boards. Pam is also a member of the American Institute of Professional Bookkeepers (AIPB) and a QuickBooks Pro Advisor. If you would like to contact Pam, visit her website at www.farmandequinebusiness.com or e-mail her at pam@farmandequinebusiness.com