Money Talks: Tsunami of 1099's
Wed, 16 Jun 2010 17:05:35 GMT —
The recently enacted health care reform bill makes major changes to our nation's health care system.
But as it turns out, it's going to make major changes in other, seemingly unrelated businesses as well.
Example? If you own a small business, starting in 2012, you're going to be dealing with a veritable tsunami of additional paperwork.
I'm talking about this form: it's a 1099.
Maybe you've gotten one in the past: It's a form that shows how much you've been paid when you work as an independent contractor or freelancer.
Currently, any business paying someone more than $600 a year is required to file one with the IRS.
But starting in 2012, all businesses, from General Motors to the eBay business you're running out of your garage, will need to file this form anytime you spend more $600 a year on anything at all.
Spend $600 at Hilton? You need to get their tax ID number and send them a 1099.
Spend $600 at Office Depot? 1099.
Buy new software? Send Microsoft a 1099.
Why the new paperwork? The IRS estimates the government loses more than $300 billion every year in taxes on unreported income.
Filing these 1099s with the IRS will encourage businesses to report their income.
And what does this have to do with health care reform?
It TMs simple: Congress figured this is a way to help pay for it.
The Bottom line? Uncle Sam might get richer, but businesses both big and small are going to be doing a lot more paperwork to make it happen.
If you own or work for a small business, get more information at www.MoneyTalksNews.com.