The recently passed Tax Cuts and Jobs Act eliminated many deductions for employees. If your employees have been incurring out-of-pocket expenses for such things as uniforms, tools and equipment or professional dues and licenses that you require, consider reimbursing them for these expenses.
THE INFO YOU’LL NEED TO FILE FORM 1099-MISC
When non-employees perform work for you in your trade or business, it’s important to obtain a Form W-9, Request for Taxpayer Identification Number (TIN) and Certification, before paying them. Taxpayers use a Form W-9 to provide their correct TIN to the person who is required to file an information return with the IRS to report income paid to the taxpayer.
If you pay someone who is not your employee $600 or more, you are required to issue a Form 1099-MISC, Miscellaneous Income. You are not required to issue this form for payments made to a corporation. To accurately complete 1099-MISC, you’ll need to collect the information contained on the taxpayer’s W-9.
It’s best to obtain a W-9 before paying the individual. If you wait until after the fact, he or she might refuse to give you one, causing you to have to file an incomplete Form 1099-MISC to the IRS, which can result in you owing back-up withholding. If you plan to pay someone who is not an employee, you may want to consult me to ensure that you are taking proper precautions.
To claim a deduction for the business use of your home, you must qualify under one of the following circumstances:
You use a portion of your home regularly and exclusively (1) as the principal place of business for a trade or business; (2) as a place to meet with clients, patients or customers in the course of the trade or business; or (3) in connection with your trade or business, if the location is in a separate structure not attached to the home.
If you have employees, you can reimburse or give them an advance or allowance for business expenses, including but not limited to ordinary and necessary transportation, business entertainment, travel, meals and lodging expenses. These types of payments can either be treated under an accountable or nonaccountable plan. Below, are the requirements for both types of plans.
Do you throw a holiday party, summer outing or a similar type of event for your employees? The expense of providing recreational, social or similar activities (including the use of a facility) for your employees is deductible and isn’t subject to the 50% limit. However, the benefit must be primarily for employees who aren’t highly compensated.