Sunny Bhola

Sunny Bhola

Biographical Information:

Sunny Bhola, a Staff Accountant, has been with the firm since February of 2021. Prior to joining, Sunny worked on sales tax, personal property tax, and corporate income tax in the automotive and medical device industries. 

Sunny primarily works on tax compliance and tax planning for individuals and businesses.  He assists with sales tax, including audits and state nexus considerations.  He also provides registration & formation services for new & current businesses. 

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Cassandra Bartole

Cassandra Bartole

Biographical Information:

Cassandra Bartole, a Tax Intern, has been with the firm since 2020. Cassandra is currently a full-time student at Rider University who hopes to receive her Bachelor’s Degree in Accounting in May of 2022 and her Master’s Degree in Accounting in May of 2023. Her main areas of focus include the preparation of federal and state income tax returns for individuals. 

Prior to joining Lear & Pannepacker, she was a former employee at Mercadien Group as a lottery intern and was also a supervisor for a few years in a small business.

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Steven J. Gamboa

Steven J. Gamboa

Biographical Information:

Steven, a Staff Accountant, has been with the firm since 2020. His work primarily focuses on preparation of federal and state tax returns for individuals and businesses, as well as support tasks specific to public accounting.


Prior to joining Lear & Pannepacker, Steven worked as a Tax Intern for a firm in Princeton, NJ providing accounting and tax preparation services for individuals.

 

Steven is a motivated young individual looking to enhance his level of expertise within the accounting profession particularly in the areas of tax services and business advisory. He will be seeking his CPA License in the State of New Jersey in the foreseeable future.

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Mary Jo Sutton

Mary Jo Sutton

Biographical Information:

Mary Jo Sutton returned to Lear & Pannepacker in August 2021 after several years as the Director of Operations.  She is primarily responsible for the daily business operations of the company, working closely with the partners and senior management to support the day-to-day activity of employees.  Mary Jo assists in the development of performance goals and long-term operational strategies, working closely with senior management to meet company objectives.   Mary Jo analyzes current operational processes to ensure that consistent, efficient workflows are followed, yielding optimal productivity and performance.

Mary Jo has over 20 years of experience specializing in finance, operations, and contract negotiations.  She has extensive knowledge in budgetary planning, cash flow forecasting, vendor relationships, risk and opportunity analysis and team management.  Mary Jo has successfully managed all aspects of a company, including finance, human resources/payroll, IT, and quality, while exceeding goals and deadlines in a dynamic environment.

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Elizabeth Harvell

Elizabeth Harvell

Biographical Information:

Elizabeth, a Staff Accountant, has been with the firm since 2021. Her areas of focus include preparing federal and state income tax returns for individual and business clients, audits, reviews, compilations, and general bookkeeping for businesses. Prior to joining L&P Elizabeth work for a small restaurant accounting firm for 2 years. 

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Sharon Houseman

Sharon Houseman

Biographical Information:

Sharon, an Administrative Assistant, works with the Newtown team to provide support as needed. Prior to working at Lear & Pannepacker, she has worked in several business environments including office management and various small business ventures. She has 16 years of administration experience.

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Dolly Rajani

Dolly Rajani

Biographical Information:

Dolly Rajani, a Tax Supervisor, has been with the firm since January of 2021. Dolly has over 13 years of experience in public accounting and specializes in tax and accounting.  Her areas of focus include individual taxation with a focus on high-net-worth individuals and expats returns. She also has extensive experience in the preparation of trusts, estates, partnerships, corporations, and tax-exempt organizations. Her areas of interest and key strengths lie in tax research and tax planning, providing guidance regarding new tax laws/changes that impact individual taxation and help with planning for business taxes. She also undertakes federal and state tax audits.

Prior to joining Lear & Pannepacker, Dolly Rajani worked as a Tax Supervisor for a boutique CPA Firm in New York City, providing tax and accounting services to a diverse client base.

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What You Need To Know About 1099 Forms

what-you-need-to-know-about-form-1099

By Steven Gamboa and Pavan Rajput 

Remaining compliant with IRS guidelines and regulations is essential for any individual and business. Forms 1099 play a major role during tax preparation since they are a resource for the IRS to verify the accuracy of income being reported. It is important to have proper guidance regarding 1099 filing requirements and deadlines since it could potentially impact your own tax filings and those of others within your business network. The summary below outlines the purpose of a Form 1099, how to recognize if any 1099s required to be filed on your behalf, and the necessary steps to report income if you receive a 1099.

Form 1099 Overview 

Form 1099 is an informational tax document which reports certain financial transactions that occurred during the year. Under federal law, individuals and businesses are required to issue a 1099 to any independent contractor to whom they have paid more than $600 throughout the year. In general, you are required to issue 1099-NEC and/or 1099-MISC forms to non-employees (independent contractors, partnerships, LLCs, etc.) who were paid $600 or more for services they provided to your business (like cleaning services, IT support, repairs and maintenance, accounting, consulting, etc., and also rent and royalties).

General exceptions:

You would not issue form 1099-MISC to (a) corporations, including LLC’s treated as an S-Corp. or C-Corp., with the exception of payments for legal services; or (b) to vendors for payments for merchandise, freight, storage, and similar items. Payment made with a credit card will also be excluded from form 1099-NEC and 1099-MISC.

Independent contractors, who are usually paid on a per-job basis, normally do not have any taxes withheld throughout the year. Therefore, using the compensation reported on the Form 1099 they are able calculate how much tax they owe when preparing their tax returns

Do I Need to File a 1099?

It is very important to keep in mind that 1099s are only used to report compensation paid to independent contractors who perform services that are exclusively for a trade or business. A 1099 is not required for personal/household services such as gardening and babysitting.

If a 1099 is required to be filed on your behalf, it is your responsibility to gather the independent contractor’s personal tax information to accurately complete the Form 1099. 

Form W-9, Request for Taxpayer Identification Number and Certification, needs to be completed by the independent contractor who is being compensated. Form W-9 will include all the necessary tax information to report a payment on a Form 1099 including the name of the independent contractor and their Social Security Number (SSN) or Employer Identification Number (EIN). 

1099-NEC vs 1099-MISC

Beginning with the 2020 tax year, Form 1099-NEC is strictly used to report compensation over $600 paid to independent contractors. NEC is an abbreviation for non-employee compensation. 

In previous years, non-employee compensation was reported on Form 1099-MISC. Form 1099-MISC is typically used to report rent payments, royalties, and awards/prizes received. 

Form 1099-NEC, which must be filed by January 31st, was introduced to provide more transparency in relation to the due dates for 1099s. Prior to the introduction of the new 1099 form, businesses who filed Form 1099-MISC reporting non-employee compensation were required to issue them by January 31st. The remaining Forms 1099-MISC, which did not include non-employee compensation, were not due until February 28th which often created confusion. The due date for the new Form 1099-NEC was selected to match the due date for W-2s, which report wages and tax withholdings for employees on a company payroll and are typically also due on January 31st.  

What Happens if I Receive a 1099? 

Since the IRS receives a copy of every filed 1099, in the event a 1099 is issued with your SSN or EIN in the recipient’s TIN box, it is extremely important for the income to be reported on your tax return for the corresponding year indicated on the top right of the form.

Tax Treatment of 1099 Income 

In most cases if you receive 1099-NEC you are considered to be self-employed and will be required to pay self-employment taxes. Currently, the self-employment tax rate is 15.3% and is made up of Social Security and Medicare taxes. Self-employed individuals are required to report their 1099 income using Schedule C, Profit or Loss from Business, when filing their income tax return. However, be mindful that although you may receive a 1099-NEC, you are not necessarily required to pay self-employment taxes on the entire amount reported on the form. Business expenses can also be included on Schedule C to offset the reported income and to compute total self-employment net earnings. This is important to consider since self-employment taxes are only paid on self-employment net earnings of $400 or more. 

With the implementation of Form 1099-NEC, which as previously mentioned is exclusively used to report non-employee compensation, income reported on Form 1099-MISC is likely not subject to self-employment taxes. Nonetheless, this income is still required to be reported and taxed as ordinary income. 1099-MISC income such as rents and royalties should be reported using Schedule E, Supplemental Income and Loss, when filing your tax return. Similar to the 1099-NEC, you are not necessarily required to pay taxes on the entire amount reported on the form since expenses can be utilized to reduce the net profit and amount of taxes paid. 

Late Filing Penalties

Failure to file 1099-NECs by January 31st and 1099-MISCs by March 1st can lead to penalties ranging from $50 to $280 per form. The following penalties apply can be imposed for failure to file by the corresponding deadline:

Penalty Amount Late Period Maximum Penalty
$50 per 1099 Within 30 days of due date $197,5000
$110 per 1099 More than 30 days after due date but before August 1st $565,000
$280 per 1099 Any time after August 1st $1,130,500

Form 1096 Overview

Form 1096, Annual Summary and Transmittal of U.S. Information Returns is a summary document submitted to the IRS when filing informational returns such as 1099s. This summary provides details about the 1099s being filed and allows for information including the total number of forms filed and total amounts reported to be learned by just looking at a one-page document. 

A separate Form 1096 is required for each type of informational return being filed. Therefore, if you are issuing both a 1099-NEC and 1099-MISC, then you are required to file two separate Forms 1096 – one for each type of return.