IRS IRS ReportingReporting

Form 1099-MISCForm 1099-MISCRafflesRaffles

Civil Air PatrolCivil Air Patrol2009 National Conference2009 National Conference

Learning Lab FM02Learning Lab FM02Stacy JacksonStacy Jackson

IntroductionIntroduction

Wing Responsibilities for 1099-MISC Wing Responsibilities for 1099-MISC ReportingReporting

1099-MISC1099-MISC Prizes and AwardsPrizes and Awards Rent and Royalty PaymentsRent and Royalty Payments ServicesServices Attorney PaymentsAttorney Payments Scenarios for VolunteersScenarios for Volunteers

RafflesRaffles Wrap UpWrap Up QuestionsQuestions

Wing ResponsibilitiesWing Responsibilities

Be diligent with Accounts Payable Be diligent with Accounts Payable postings. The first step is having correct postings. The first step is having correct information.information. Have only Have only oneone vendor card for each vendor. vendor card for each vendor.

Your WFA can merge vendor cards if more than Your WFA can merge vendor cards if more than one card exists for a vendor.one card exists for a vendor.

Verify that transactions posted are accurate.Verify that transactions posted are accurate. Indicate 1099 Eligible Vendors in Indicate 1099 Eligible Vendors in

QuickBooksQuickBooks Done by editing the vendor and checking the Done by editing the vendor and checking the

1099 option under the “Additional Info” tab.1099 option under the “Additional Info” tab. Add the vendor Taxpayer ID information to Add the vendor Taxpayer ID information to

QuickBooksQuickBooks

Vendor Edit ScreenVendor Edit Screen

Enter vendor Tax ID

from W9 here

Check this box if

vendor is eligible for

1099 reporting

Wing ResponsibilitiesWing Responsibilities

Decide which vendors should receive Decide which vendors should receive a 1099-MISCa 1099-MISC Obtain Form W-9 from vendorsObtain Form W-9 from vendors

The Form W-9 is used as a tool to obtain the The Form W-9 is used as a tool to obtain the necessary information from vendors. It will necessary information from vendors. It will help determine if payments to vendors are help determine if payments to vendors are reportable.reportable.

A Form W-9 should be obtained from all A Form W-9 should be obtained from all vendors and kept on file at wing vendors and kept on file at wing headquarters.headquarters.

W-9 ExampleW-9 ExampleVendor should

choose one business

type.

Vendor should enter one TIN number. This

number should match their annual tax returns.

Vendor must sign!

Wing ResponsibilitiesWing Responsibilities

Determine the amount to be reported Determine the amount to be reported on each 1099-MISCon each 1099-MISC

Provide all information needed to file Provide all information needed to file your 1099-MISC Forms to your WFA. A your 1099-MISC Forms to your WFA. A spreadsheet will be provided that will spreadsheet will be provided that will aid in consolidating the information.aid in consolidating the information. All information must be provided no later All information must be provided no later

than Jan 15than Jan 15thth for the preceding calendar for the preceding calendar year.year.

NHQ will file all 1099-MISC Forms with NHQ will file all 1099-MISC Forms with the IRS, state tax authority, and recipientsthe IRS, state tax authority, and recipients

1099-MISC1099-MISC

Required for the followingRequired for the following Prizes and Awards Prizes and Awards Rent and Royalty Payments Rent and Royalty Payments Services performed by individuals Services performed by individuals

who are not employees and are not who are not employees and are not incorporated incorporated

Gross Proceeds paid to AttorneysGross Proceeds paid to Attorneys

1099-MISC Example1099-MISC Example

All of the information for the recipient must match their annual income tax return

Prizes and AwardsPrizes and Awards

Reportable amount:Reportable amount: $600 per calendar year$600 per calendar year

Information needed:Information needed: Individual’s name and addressIndividual’s name and address Individual’s Social Security NumberIndividual’s Social Security Number Total amount of all prizes and awards paid to the Total amount of all prizes and awards paid to the

individual or on the individual’s behalf during the individual or on the individual’s behalf during the yearyear

Example:Example: Flight scholarships or any cash awards to Flight scholarships or any cash awards to

membersmembers Scholarships are considered awards unless paid to a Scholarships are considered awards unless paid to a

candidate to attend an educational institution for a candidate to attend an educational institution for a degreedegree

Rent and Royalty Rent and Royalty PaymentsPayments

Payments made to corporations and Payments made to corporations and governments are not required to be governments are not required to be reportedreported

Reportable amount:Reportable amount: $600 per calendar year for Rent $600 per calendar year for Rent $10 per calendar year for Royalties$10 per calendar year for Royalties

Information needed:Information needed: Name and address that the vendor uses to file Name and address that the vendor uses to file

their annual tax returntheir annual tax return Taxpayer Identification Number that the vendor Taxpayer Identification Number that the vendor

uses to file their annual tax returnuses to file their annual tax return Total amount of all rent or royalty payments Total amount of all rent or royalty payments

paid to the vendor during the year.paid to the vendor during the year. Example:Example:

Hangar rental, office rental, or storage rentalHangar rental, office rental, or storage rental

ServicesServices Payments made to corporations are not Payments made to corporations are not

required to be reported.required to be reported. Reportable amount:Reportable amount:

$600 per calendar year$600 per calendar year Information needed:Information needed:

Name and address that the vendor uses to file Name and address that the vendor uses to file their annual tax returntheir annual tax return

Taxpayer Identification Number that the Taxpayer Identification Number that the vendor uses to file their annual tax returnvendor uses to file their annual tax return

Total amount of all payments made for Total amount of all payments made for services to the vendor during the year.services to the vendor during the year.

Example:Example: Catering, facility cleaning, lawn care, or pest Catering, facility cleaning, lawn care, or pest

controlcontrol

Attorney PaymentsAttorney Payments Payments made to corporations Payments made to corporations must still must still

be reportedbe reported.. Reportable amount:Reportable amount:

• Reportable for any amount paid per calendar Reportable for any amount paid per calendar yearyear

Information needed:Information needed:• Name and address that the vendor uses to file Name and address that the vendor uses to file

their annual tax returntheir annual tax return• Taxpayer Identification Number that the vendor Taxpayer Identification Number that the vendor

uses to file their annual tax returnuses to file their annual tax return• Total amount of all payments made to the Total amount of all payments made to the

vendor during the yearvendor during the year Example:Example:

• Retainers and legal fees paid to law firmsRetainers and legal fees paid to law firms

Scenarios for VolunteersScenarios for Volunteers

There are several instances when a There are several instances when a 1099-MISC is required to be sent to 1099-MISC is required to be sent to volunteers. volunteers. A volunteer receives a flight scholarship or A volunteer receives a flight scholarship or

activity scholarship from a CAP entity. activity scholarship from a CAP entity. A volunteer receives a cash award from a A volunteer receives a cash award from a

CAP entity.CAP entity. A volunteer rents out hangar, office, or A volunteer rents out hangar, office, or

storage space to a CAP entity.storage space to a CAP entity. A volunteer provides cleaning or lawn care A volunteer provides cleaning or lawn care

services to a CAP entity and receives services to a CAP entity and receives compensation.compensation.

RafflesRaffles

All raffles must be reported to All raffles must be reported to NHQ/FM prior to the raffle taking NHQ/FM prior to the raffle taking place.place.

All required information must be All required information must be obtained by the Wing or Unit.obtained by the Wing or Unit. IRS Form 5754 must be completed by IRS Form 5754 must be completed by

each winner.each winner. All prizes with a fair market value of All prizes with a fair market value of

$600 or more must be reported to the $600 or more must be reported to the IRS.IRS. IRS Form W-2GIRS Form W-2G

RafflesRaffles

All prizes with a fair market value of $5000 All prizes with a fair market value of $5000 or more are taxable.or more are taxable. Winner will pay 25% withholding tax on the fair Winner will pay 25% withholding tax on the fair

market value less the initial wager. This must be market value less the initial wager. This must be collected from the winner when they collect the collected from the winner when they collect the prize. prize.

OROR Wing or Unit sponsor will pay 33.33% withholding Wing or Unit sponsor will pay 33.33% withholding

tax on the fair market value less the initial wager.tax on the fair market value less the initial wager. NHQ/FM will complete all IRS Forms and NHQ/FM will complete all IRS Forms and

filing requirements.filing requirements. Taxes will be drafted from the Wing or Unit bank Taxes will be drafted from the Wing or Unit bank

account and submitted to the IRSaccount and submitted to the IRS

Form 5754 ExampleForm 5754 Example

All information

must be completed by the winner.

All information

must be completed by the winner.

All information

must be completed by the winner.

All information

must be completed by the winner.

All information must be

completed by the winner.

Part I = all winners

Part II = only taxable winners

W-2G ExampleW-2G Example

Some Final NotesSome Final Notes

All forms must be filed with the same All forms must be filed with the same information as the individual or information as the individual or business uses to file their income business uses to file their income taxes each yeartaxes each year Sole Proprietorships should be sent in the Sole Proprietorships should be sent in the

individual’s name, not the business nameindividual’s name, not the business name Forms sent to individuals should contain Forms sent to individuals should contain

their social security number, not an their social security number, not an employer identification number. employer identification number.

All information should be reported by All information should be reported by calendar year, not fiscal yearcalendar year, not fiscal year

Some Final NotesSome Final Notes

The Wing is responsible for The Wing is responsible for obtaining all information via Form obtaining all information via Form W-9 or Form 5754.W-9 or Form 5754. The IRS penalizes $50 per form for The IRS penalizes $50 per form for

incorrect information filed on 1099 incorrect information filed on 1099 Forms or W-2G Forms that are not Forms or W-2G Forms that are not supported by the required back up.supported by the required back up.

If You Get Stuck or Need If You Get Stuck or Need HelpHelp

Contact your Wing Financial AnalystContact your Wing Financial Analyst Contact National HeadquartersContact National Headquarters

Stacy Jackson, WFAStacy Jackson, WFA sajackson@capnhq.govsajackson@capnhq.gov

877-227-9142, Ext. 427877-227-9142, Ext. 427

Cell – 334-224-7657Cell – 334-224-7657

Questions?Questions?