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About Information Returns

An information return is a document that must be filed to update the IRS about wage and non-wage related business transactions and income for individuals, businesses, families, estates, partnerships and trusts. It does not specifically determine a tax liability, but allows for the assessment of earnings that might be relevant to such a liability.

Information listed on the return could include such earnings as interest payments and dividends, payments to subcontractors and changes in tax status, such as alterations in the makeup of a household (a marriage, the addition of new dependents, etc.). Copies of the return must be sent to the recipient of the income. Failure to file an information return can result in penalties and a higher tax liability down the road.

Information returns are necessary for a wide variety of additional transactions and earnings, including accelerated death benefits, broker transactions, advance earned income credit, fish purchases, agriculture payments, golden parachutes, allocated tips, annuities, attorney fees, employee awards, bonuses, awards, barter exchange income, employee car expenses, charitable gift annuities, crop insurance proceeds, education loan interest, insurance services, and many more.

Forms must be filed to report contributions of motor vehicles, boats, and airplanes, tuition related expenses reimbursements and government payments such as unemployment compensation, and tax refunds. Changes in corporate control and capital tax structure for a company also bears filing an information return.

IRS rules for information returns stipulate minimum proceeds necessary to mandate filing for a variety of transactions. For example, mortgage interest, student loan interest, and cancellation must be filed at a rate of $600 or more. Dividends and distributions, interest income, unemployment insurance and payments must be filed at $10 or more. Death benefits, health coverage tax credit payments, exercise of stock options, acquisition of abandoned property, and cancellation of debt, must be filed at all amounts.

Each type of transaction has its own form associated with it, and they are due at different times. This makes organizing and tracking information return filings a complex task. Most companies use an automated system to arrange returns and, where possible, file electronically. This can be done using our software at http://www.1099fire.com

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Erich J. Ruth

Erich J. Ruth provides technical support for National Software which is the parent company for 1099FIRE. 1099FIRE develops and markets a comprehensive range of products that enables any size of business or institution to effectively manage and comply with year-end filing requirements. 1099FIRE is an employee-owned company located in Phoenix, Arizona.

If you have any questions or comments about our software, feel free to contact us at any time.

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