Filing An Information Return
While most people are familiar with standard income tax returns, many are unaware of the existence of information returns. These returns must be completed by any taxpayers who are engaged in a business, including partnerships, estates, and trusts and who make reportable transactions during the year. There are a number of rules in place when it comes to filing information returns. In addition to filing a copy with the IRS, for instance, taxpayers who are required to file information returns also need to submit a statement to the other party involved in the transactions. Recipients of a business’s income, for example, would be entitled to a report of the transaction. Failing to comply with these rules can have significant tax-related repercussions, so if you need to file an information return, you should consider reaching out to an experienced Florida tax return preparation lawyer for help.
Commonly Reported Payments
The types of payments that need to be reported on information returns vary depending on the kind of business in which a person is involved. Lenders, for instance, must report information about the acquisition or abandonment of any property that is used for security for a debt. Businesses that receive mortgage interest, on the other hand, will need to submit information returns on any mortgage interest they collect. Businesses, including nonprofit organizations, must also report any interest payments made during the year. Other commonly reported payments include:
- Gross proceeds from the sale or exchange of real estate;
- Royalty payments;
- Third party network transactions;
- Employee health coverage premiums;
- Transfers of employee stocks;
- Distributions from retirement plans, IRAs, and insurance contracts;
- Payments from qualified tuition programs;
- Scholarships, grants, and tuition reimbursements and refunds; and
- Student loan interest.
The amount of funds involved in the transaction will also affect whether a taxpayer needs to file an information return. For instance, while lenders have to report all amounts involved in the acquisition of secured property, individuals that collect mortgage interest need only do so if the amount exceeds $600.
Most information returns must be filed by February 28th. This is not, however, always true. Certain education-related contributions, for instance, need to be reported by May 31st, while payments to an attorney should be submitted by the much earlier date of January 31st. In some cases, the date of submission will be dictated by the form of that submission. Payments that have been reported electronically, for example, must be filed by March 31st. Some taxpayers are actually required to file electronically, including those who are submitting more than 250 information returns.
Call Today for Help with Your Tax-Related Legal Questions
If you think that you may be required to file an information return with the IRS as a part of your business dealings, but have questions about the filing process, please don’t hesitate to reach out to experienced tax return preparation lawyer Ronald Cutler, P.A. for help. Please call dedicated tax & IRS lawyer, CPA, and Former Special Agent FBI, Ronald Cutler at Ronald Cutler, P.A. at 386-490-9949 today.