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tax questions - a poll

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  • tax questions - a poll

    Trying to gather some information on horse businesses and taxes.

    If your horse operation is set up as a business (whether breeding, boarding, training, sales, etc.), do you file 1099s on folks who provide equine services for you (vets, chiropractors, massage therapists, farriers, trainers, working students, etc.)?

    PLEASE do not respond to the poll if you are NOT set up as a business!
    29
    Yes
    41.38%
    12
    No
    58.62%
    17

    The poll is expired.

    Last edited by DownYonder; Jan. 18, 2013, 04:02 PM. Reason: clarification

  • #2
    You have to, legally. I am a sole proprietor with just a small, part-time lesson/training business - and I definintely have to issue 1099-MISC to any service provider that I paid $600+ to in the year. My tax guy always makes suere I've done those when we file - and I have to mail the forms out before Jan 31st each year. I only have a few that I have to do (whose payment totals are $600+/yr) and those are: farrier, vet(s), facility (boarding), insurance, chiro. My gelding was considered a "school horse" for the business (as I used him for lessons periodically and he was always part-leased out) - so his care was considered business expenses.

    Since I'm small, most of my business expenses end up being "write offs" to my personal taxes (I do not have an Inc / LLC / etc) - my husband and I both have full-time, non-horsie paying jobs - but regardless I still have to run the business, from a financial aspect, as a separate entity (separate business bank account, insurance, etc).

    I'm not a tax professional, but if anyone answers "no" I think they are putting themselves at a serious legal/tax risk.

    Comment


    • #3
      No one should rely on the "anonymity" of an online bulletin board to confess to tax evasion.
      "Against stupidity the gods themselves contend in vain" ~Friedrich Schiller

      Comment

      • Original Poster

        #4
        Originally posted by Eclectic Horseman View Post
        No one should rely on the "anonymity" of an online bulletin board to confess to tax evasion.
        Uh - it is an anonymous poll. No one's name is displayed...

        Comment


        • #5
          Can someone explain what that is and why it would be necessary? Is it not up to the individual to report all their income? For example why do I need to give my vet a form to fill out for their taxes? Never heard of this and apparently neither has my H&R block farm specialist!
          http://www.facebook.com/pages/Fentre...24774504235082

          http://fentressfieldsequestriancenter.com/

          Comment


          • #6
            Originally posted by mpsbarnmanager View Post
            Can someone explain what that is and why it would be necessary? Is it not up to the individual to report all their income? For example why do I need to give my vet a form to fill out for their taxes? Never heard of this and apparently neither has my H&R block farm specialist!
            It only applies if you are the business proprietor.
            "Against stupidity the gods themselves contend in vain" ~Friedrich Schiller

            Comment

            • Original Poster

              #7
              Originally posted by mpsbarnmanager View Post
              Can someone explain what that is and why it would be necessary? Is it not up to the individual to report all their income? For example why do I need to give my vet a form to fill out for their taxes? Never heard of this and apparently neither has my H&R block farm specialist!
              There is some basic info about IRS Form 1099-MISC here:

              http://taxes.about.com/od/businessta...s-Payments.htm

              Comment


              • #8
                Originally posted by DownYonder View Post
                Uh - it is an anonymous poll. No one's name is displayed...
                Information about criminal activities can be subpoenaed. If COTH's computers can identify the computer from which the key strokes are made, then the authorities can find you.
                "Against stupidity the gods themselves contend in vain" ~Friedrich Schiller

                Comment

                • Original Poster

                  #9
                  Originally posted by Eclectic Horseman View Post
                  Information about criminal activities can be subpoenaed. If COTH's computers can identify the computer from which the key strokes are made, then the authorities can find you.
                  Probably a bit far-fetched that IRS would be watching this forum, looking for tax evaders. Esp. when it is an anonymous poll, and they would have to go to the trouble of getting subpoenas to ferret out the folks who responded.

                  Comment


                  • #10
                    Originally posted by Eclectic Horseman View Post
                    No one should rely on the "anonymity" of an online bulletin board to confess to tax evasion.
                    OMG, this is my laugh of the day!

                    And yes, EH is absolutely right - they are required by law. If you are running a horse business (trainer, breeder, boarding facility, etc), then you must report payments for contracted services (i.e. any services) that exceed $600 for the year. We issue them to farrier, vet, trainer, etc. There are some exceptions - if the service provider is incorporated, you don't have to issue a 1099.

                    And MPS, yes, it is the individual's responsibility to report their income, but IRS doesn't trust the individual to do it without some outside reporting from the person who paid for the service.

                    Compare it to a W-2 from an employer - although it is the employee's responsibility to file their income tax return each year, the employer also reports employee's income to IRS.

                    Comment

                    • Original Poster

                      #11
                      My understanding from my CPA is this:

                      If you are operating as a business, you are legally required to file a 1099-MISC for each vendor, service provider, etc. NOT set up as a corporation, and that you paid $600 or more to during the calendar year. That includes - as stated above - vets, farriers, chiropractors, massage therapists, trainers, etc.

                      You submit the form to both IRS and the person/entity you paid for the services. This serves two purposes:

                      - It notifies IRS that you made those payments (which helps justify your claimed business expenses).

                      - It notifies the recipient you have reported those payments to IRS (and said recipient can be in deep doo-doo with IRS if they don’t report the income).

                      Comment


                      • #12
                        It is my understanding that you only need to file 1099s for businesses/individuals that are registered as 1099s NOT corperations, etc. It's not up to you as the customer or vendor to make that designation, but the business/individual itself. If you yourself are a 1099, you would have to let your customers know and they would send you 1099s based they had paid you in the past year. If your vet/farrier/whatever is a 1099, they should have informed you of this when you started doing business with them and then yes, you would send them a 1099.

                        Comment

                        • Original Poster

                          #13
                          Yes, but if the provider's invoice says "..... LLC", that is a pretty good indication they are not exempt from 1099 status.

                          Comment


                          • #14
                            Originally posted by DownYonder View Post
                            Yes, but if the provider's invoice says "..... LLC", that is a pretty good indication they are not exempt from 1099 status.
                            This is why you always get a W-9 from a new vendor. That would answer the question.

                            Comment

                            • Original Poster

                              #15
                              Originally posted by DangerHorse View Post
                              This is why you always get a W-9 from a new vendor. That would answer the question.
                              Right - and I wanted to include that as part of the poll, but it would only let me ask one question.

                              Comment


                              • #16
                                Originally posted by DownYonder View Post
                                Right - and I wanted to include that as part of the poll, but it would only let me ask one question.

                                Comment


                                • #17
                                  You are NOT required to file 1099s for those from whom you purchased >$600 in merchandise (NOT each vendor). You file for those who provided services and are not a corporation.


                                  "Exceptions.
                                  Some payments do not have to be reported on Form 1099-MISC, although they may be taxable to the recipient. Payments for which a Form 1099-MISC is not required include all of the following.

                                  Generally, payments to a corporation. But see Reportable payments to corporations, later.
                                  Payments for merchandise, telegrams, telephone, freight, storage, and similar items."
                                  http://www.google.com/url?sa=t&rct=j...41248874,d.eWU

                                  I have lost track of the number of idiots who have sent me W9s in order to collect my tax ID # so that they can file a 1099. I am a Corporation and all I do is sell merchandise.



                                  Originally posted by DownYonder View Post
                                  My understanding from my CPA is this:

                                  If you are operating as a business, you are legally required to file a 1099-MISC for each vendor, service provider, etc. NOT set up as a corporation, and that you paid $600 or more to during the calendar year. That includes - as stated above - vets, farriers, chiropractors, massage therapists, trainers, etc.

                                  You submit the form to both IRS and the person/entity you paid for the services. This serves two purposes:

                                  - It notifies IRS that you made those payments (which helps justify your claimed business expenses).

                                  - It notifies the recipient you have reported those payments to IRS (and said recipient can be in deep doo-doo with IRS if they don’t report the income).
                                  Last edited by Equibrit; Jan. 18, 2013, 08:37 PM.
                                  ... _. ._ .._. .._

                                  Comment


                                  • #18
                                    1099 are for people hired (cleaning stalls, judges for shows). Farriers/vets are independent contractors, they file (report) for themselves (they are billing you).
                                    I.D.E.A. yoda

                                    Comment


                                    • #19
                                      Originally posted by ideayoda View Post
                                      1099 are for people hired (cleaning stalls, judges for shows). Farriers/vets are independent contractors, they file (report) for themselves (they are billing you).
                                      NO.
                                      You file if you paid "Non employee Compensation".
                                       

                                      "What is nonemployee compensation?
                                      If the following four conditions are met, you must generally report a payment as nonemployee compensation.
                                      You made the payment to someone who is not your employee;
                                      You made the payment for services in the course of your trade or business (including government agencies and nonprofit organizations);
                                      You made the payment to an individual, partnership, estate, or, in some cases, a corporation; and
                                      You made payments to the payee of at least $600 during the year. "

                                      from the link provided above.
                                      ... _. ._ .._. .._

                                      Comment


                                      • #20
                                        How would you do the 1099 then? You would have to break out the farrier (cost of shoes from service) or vet (cost of services vs meds/travel). Have had both a tax attorney and a CPA do otherwise.
                                        I.D.E.A. yoda

                                        Comment

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