IRS Reporting Form 1099-MISC Raffles Civil Air Patrol 2009 National Conference Learning Lab FM02 Stacy Jackson

Introduction Wing Responsibilities for 1099-MISC Reporting Wing Responsibilities for 1099-MISC Reporting 1099-MISC 1099-MISC Prizes and Awards Prizes and Awards Rent and Royalty Payments Rent and Royalty Payments Services Services Attorney Payments Attorney Payments Scenarios for Volunteers Scenarios for Volunteers Raffles Raffles Wrap Up Wrap Up Questions Questions

Wing Responsibilities Be diligent with Accounts Payable postings. The first step is having correct information. Be diligent with Accounts Payable postings. The first step is having correct information. Have only one vendor card for each vendor. Have only one vendor card for each vendor. Your WFA can merge vendor cards if more than one card exists for a vendor. Your WFA can merge vendor cards if more than one card exists for a vendor. Verify that transactions posted are accurate. Verify that transactions posted are accurate. Indicate 1099 Eligible Vendors in QuickBooks Indicate 1099 Eligible Vendors in QuickBooks Done by editing the vendor and checking the 1099 option under the “Additional Info” tab. Done by editing the vendor and checking the 1099 option under the “Additional Info” tab. Add the vendor Taxpayer ID information to QuickBooks Add the vendor Taxpayer ID information to QuickBooks

Vendor Edit Screen Enter vendor Tax ID from W9 here Check this box if vendor is eligible for 1099 reporting

Wing Responsibilities Decide which vendors should receive a MISC Decide which vendors should receive a MISC Obtain Form W-9 from vendors Obtain Form W-9 from vendors The Form W-9 is used as a tool to obtain the necessary information from vendors. It will help determine if payments to vendors are reportable. The Form W-9 is used as a tool to obtain the necessary information from vendors. It will help determine if payments to vendors are reportable. A Form W-9 should be obtained from all vendors and kept on file at wing headquarters. A Form W-9 should be obtained from all vendors and kept on file at wing headquarters.

W-9 Example Vendor should choose one business type. Vendor should enter one TIN number. This number should match their annual tax returns. Vendor must sign!

Wing Responsibilities Determine the amount to be reported on each 1099-MISC Determine the amount to be reported on each 1099-MISC Provide all information needed to file your 1099-MISC Forms to your WFA. A spreadsheet will be provided that will aid in consolidating the information. Provide all information needed to file your 1099-MISC Forms to your WFA. A spreadsheet will be provided that will aid in consolidating the information. All information must be provided no later than Jan 15 th for the preceding calendar year. All information must be provided no later than Jan 15 th for the preceding calendar year. NHQ will file all 1099-MISC Forms with the IRS, state tax authority, and recipients NHQ will file all 1099-MISC Forms with the IRS, state tax authority, and recipients

1099-MISC Required for the following Required for the following Prizes and Awards Prizes and Awards Rent and Royalty Payments Rent and Royalty Payments Services performed by individuals who are not employees and are not incorporated Services performed by individuals who are not employees and are not incorporated Gross Proceeds paid to Attorneys Gross Proceeds paid to Attorneys

1099-MISC Example All of the information for the recipient must match their annual income tax return

Prizes and Awards Reportable amount: Reportable amount: $600 per calendar year $600 per calendar year Information needed: Information needed: Individual’s name and address Individual’s name and address Individual’s Social Security Number Individual’s Social Security Number Total amount of all prizes and awards paid to the individual or on the individual’s behalf during the year Total amount of all prizes and awards paid to the individual or on the individual’s behalf during the year Example: Example: Flight scholarships or any cash awards to members Flight scholarships or any cash awards to members Scholarships are considered awards unless paid to a candidate to attend an educational institution for a degree Scholarships are considered awards unless paid to a candidate to attend an educational institution for a degree

Rent and Royalty Payments Payments made to corporations and governments are not required to be reported Payments made to corporations and governments are not required to be reported 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 their annual tax return Name and address that the vendor uses to file their annual tax return Taxpayer Identification Number that the vendor uses to file their annual tax return Taxpayer Identification Number that the vendor uses to file their annual tax return Total amount of all rent or royalty payments paid to the vendor during the year. Total amount of all rent or royalty payments paid to the vendor during the year. Example: Example: Hangar rental, office rental, or storage rental Hangar rental, office rental, or storage rental

Services Payments made to corporations are not required to be reported. Payments made to corporations are not 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 their annual tax return Name and address that the vendor uses to file their annual tax return Taxpayer Identification Number that the vendor uses to file their annual tax return Taxpayer Identification Number that the vendor uses to file their annual tax return Total amount of all payments made for services to the vendor during the year. Total amount of all payments made for services to the vendor during the year. Example: Example: Catering, facility cleaning, lawn care, or pest control Catering, facility cleaning, lawn care, or pest control

Attorney Payments Payments made to corporations must still be reported. Payments made to corporations must still be reported. Reportable amount: Reportable amount: Reportable for any amount paid per calendar year Reportable for any amount paid per calendar year Information needed: Information needed: Name and address that the vendor uses to file their annual tax return Name and address that the vendor uses to file their annual tax return Taxpayer Identification Number that the vendor uses to file their annual tax return Taxpayer Identification Number that the vendor uses to file their annual tax return Total amount of all payments made to the vendor during the year Total amount of all payments made to the vendor during the year Example: Example: Retainers and legal fees paid to law firms Retainers and legal fees paid to law firms

Scenarios for Volunteers There are several instances when a 1099-MISC is required to be sent to volunteers. There are several instances when a 1099-MISC is required to be sent to volunteers. A volunteer receives a flight scholarship or activity scholarship from a CAP entity. A volunteer receives a flight scholarship or activity scholarship from a CAP entity. A volunteer receives a cash award from a CAP entity. A volunteer receives a cash award from a CAP entity. A volunteer rents out hangar, office, or storage space to a CAP entity. A volunteer rents out hangar, office, or storage space to a CAP entity. A volunteer provides cleaning or lawn care services to a CAP entity and receives compensation. A volunteer provides cleaning or lawn care services to a CAP entity and receives compensation.

Raffles All raffles must be reported to NHQ/FM prior to the raffle taking place. All raffles must be reported to NHQ/FM prior to the raffle taking place. All required information must be obtained by the Wing or Unit. All required information must be obtained by the Wing or Unit. IRS Form 5754 must be completed by each winner. IRS Form 5754 must be completed by each winner. All prizes with a fair market value of $600 or more must be reported to the IRS. All prizes with a fair market value of $600 or more must be reported to the IRS. IRS Form W-2G IRS Form W-2G

Raffles All prizes with a fair market value of $5000 or more are taxable. All prizes with a fair market value of $5000 or more are taxable. Winner will pay 25% withholding tax on the fair market value less the initial wager. This must be collected from the winner when they collect the prize. Winner will pay 25% withholding tax on the fair market value less the initial wager. This must be collected from the winner when they collect the prize.OR Wing or Unit sponsor will pay 33.33% withholding tax on the fair market value less the initial wager. Wing or Unit sponsor will pay 33.33% withholding tax on the fair market value less the initial wager. NHQ/FM will complete all IRS Forms and filing requirements. NHQ/FM will complete all IRS Forms and filing requirements. Taxes will be drafted from the Wing or Unit bank account and submitted to the IRS Taxes will be drafted from the Wing or Unit bank account and submitted to the IRS

Form 5754 Example All information must be completed by the winner. Part I = all winners Part II = only taxable winners

W-2G Example

Some Final Notes All forms must be filed with the same information as the individual or business uses to file their income taxes each year All forms must be filed with the same information as the individual or business uses to file their income taxes each year Sole Proprietorships should be sent in the individual’s name, not the business name Sole Proprietorships should be sent in the individual’s name, not the business name Forms sent to individuals should contain their social security number, not an employer identification number. Forms sent to individuals should contain their social security number, not an employer identification number. All information should be reported by calendar year, not fiscal year All information should be reported by calendar year, not fiscal year

Some Final Notes The Wing is responsible for obtaining all information via Form W-9 or Form The Wing is responsible for obtaining all information via Form W-9 or Form The IRS penalizes $50 per form for incorrect information filed on 1099 Forms or W-2G Forms that are not supported by the required back up. The IRS penalizes $50 per form for incorrect information filed on 1099 Forms or W-2G Forms that are not supported by the required back up.

If You Get Stuck or Need Help Contact your Wing Financial Analyst Contact your Wing Financial Analyst Contact National Headquarters Contact National Headquarters Stacy Jackson, WFA Stacy Jackson, WFA , Ext. 427 Cell – Cell –

Questions?