Deadlines for IRS Form 1099-MISC and the W-2

On the tax front, January brings the beginning of the year-end close out of the 2019 calendar tax year. We wind up the accounting for 2019 and businesses are required to issue certain tax forms to individuals or companies to whom certain payments have been made during 2019.  Employees are to receive forms W-2 and others may need to have forms 1099-MISC issued to them.

Employers need to issue Forms W-2 to all employees receiving wages during the tax year. In addition, the fourth quarter and annual payroll tax returns are due. These are generally prepared by the person or company who processes your payroll during the year. The filing deadline is January 31.

For certain payments made to other individuals or companies in connection with a trade or business, forms 1099-MISC may be required. These payments include:

Payments of at least $600, paid to individuals or entities not taxed as corporations, for:

  • Rents
  • Services performed by non-employees (including parts and materials)
  • Prizes and awards
  • Other income
  • Crop insurance proceeds
  • Any fishing boat proceeds                       

Payments of at least $600, paid to individuals or any entities including those taxed as corporations, for:

  • Medical and healthcare payments (NOT health insurance premiums)
  • Cash payments for fish or other aquatic life
  • Payments to an attorney

Direct sales of at least $5,000 of consumer products for resale

Payments of at least $10 in royalties

When do these forms need to be issued? Forms reporting non-employee compensation are due on or before January 31. Forms reporting other types of income are due on or before February 28.

Let us know if you would like help determining which payments require 1099 reporting. BUSBooks can assist with the preparation and processing as well.

Let us at BUSBooks help get your accounting in order! Together we can make YOUR accounting MORE meaningful. 

Written by Tracy Fickett, CPA and Peter Shelbo, Veteran Bus Operator

BUSBooks is a unique CPA accounting firm dedicated to the ground transportation industry.

What Ever Happened to the Two Martini Lunch?

A long, long, time ago I worked in food service hustling drinks and huge plates of food to luncheon guests. I was always amazed at how much these guys could consume and continue working the afternoon! Who knows if any really did?

At that time business meals where 100% deductible as a taxable business expense. Under President Reagan the Tax Reform Act of 1986 changed that and the deductible percentage dropped to 80%. The food service industry went into a tizzy believing that their business would drop accordingly with the change in tax law. (That year I abandoned the food and beverage industry, purchased a 12-year-old Model 5 Eagle, and went into the bus business!) The Revenue Reconciliation Act of 1993 under President Clinton brought the deduction to 50% as of January 1, 1994. Not much has changed since then until President Trump passed the Tax Cut and Jobs Act of 2018.

So, what happened to the Martini Lunch? It most likely became the Craft Beer or Cabernet Lunch as tastes have changed. However, while assisting industry bookkeepers with their work a question still is asked, “Can we expense that pepperoni pizza?” I will let the Nerd fill you in on how this recent Act has changed what business meal, travel and entertainment expenses are tax deductible and what bookkeeping procedures you should put in place to properly record them.

Thank you, Mr. Bus Guy. The good news is that business meals are still partially deductible. Meals in which one conducts business with current clients, potential clients, networking sources, and meals while traveling for business are all still 50% deductible*. The IRS cautions these costs should not be “lavish” or “extravagant.” However, entertainment such as baseball games, concerts, and similar types of events are no longer deductible. Those are now reported for income tax purposes as “non-deductible expenses” and do not decrease the taxable income of the entity**.

Let me make another distinction here. Sometimes when food is provided, the entire expense can be written off. Meals provided as a part of an employee training event or meeting are fully deductible***. Additionally, meals and food provided for the convenience of the employer are also fully deductible. Do you keep beverages and snacks in the office for employees? Do you buy pizza for the staff when they are working late? Fully deductible!

To keep from having to look at this in detail at year end, I recommend tracking the three types of expenses separately during the year. Generally, this means having three different accounts:

  1. *Entertainment – not deductible for tax purposes
  2. **Meals – 50% deductible for tax purposes
  3. ***Meeting Meals (or just include with general meeting costs) – 100% deductible for tax purposes

This will have your books in order and ready for reporting Meal and Entertainment expenses properly to the IRS.

Let us at BUSBooks help you set up your books, giving you the peace of mind to manage your business! Together we can make your accounting more meaningful.

Written by Tracy Fickett, CPA and Peter Shelbo, Veteran Bus Operator

BUSBooks is a unique CPA accounting firm dedicated to the motorcoach industry.

Fuel and Excise Taxes

Eureka! What a revelation this was way back when my hair wasn’t so grey. I have pictures to prove that, the not-grey thing. Anyway…the day I learned that the IRS was prepared to return me money was a Eureka moment. You see, 33 years ago I was unaware of such things. I was also unaware that I needed an MC number to operate, or gear oil in my wheel hubs. Imagine that!

The fact is we hear that some new operators entering our industry are unaware as well. No worries, we can fix that.

You are eligible for a federal diesel fuel tax credit if any part of your bus operations includes intercity or local transportation, or the transportation of students or school employees. These credits are based on the number of gallons of diesel fuel your company uses for these nontaxable uses. The rates are 17 cents or 24.3 cents per gallon of diesel, depending what the fuel is used for. In other words, you are due at least 17 cents per gallon of diesel fuel pumped into your buses and motorcoaches. And if you have not filed for such credits, you are eligible to go back three years and file for the credits. These are credits, dollars back to you, not expense deductions.

Your company can file for this credit either quarterly or annually.  If filed quarterly, use IRS Form 720 (https://www.irs.gov/pub/irs-pdf/f720.pdf).  If you choose to file annually or you are late filing the quarterlies, use Form 4136 and file it with your annual income tax return. This form can be located at https://www.irs.gov/pub/irs-pdf/f4136.pdf.

Make sure you track the school purposed miles so you can use your average MPG to determine the gallons used for school runs which has the higher credit rate of 24.3 cents per gallon. The school runs are not limited to yellow bus mileage. Your motorcoaches used for school activity are include as well. Contact BUSBooks for assistance.

Your national and regional bus and motorcoach associations work hard to keep this industry benefit from extinction. Contact your association for information for what you can do to help.

How about tires? Are you paying the federal excise tax on tires used for intercity, local or school buses?  You do not need to! Apply for a federal excise tax exemption number from the IRS. Once received, providing that information to your tire retailer will allow you to purchase and lease those tires without paying the federal excise tax. There is no reason to pay that tax if you are exempt from it! Save over $50 on a typical bus tire, or $400 on a full set. Receive more information from your tire retailer who will be happy to assist.

Let us at BUSBooks guide you in obtaining tax benefits that are available to your company right now!

Written by Tracy Fickett, CPA and Peter Shelbo, Veteran Bus Operator

BUSBooks is a unique CPA accounting firm dedicated to the motorcoach industry.