Employee taxes not filed

I would say he should certainly file the late 1099 on the $4600 sub-contractor. He'll have to pay a penalty for a late 1099 (same penalty as not doing a 1099 that you're supposed to do), but yes, he should then deduct the $4600.

I'm not sure what he's supposed to do about people who have no SSN, aren't supposed to work, etc. He should probably not deduct what he paid them. I don't even know if 1099's should be done for such people, the idea being that they probably should not have been paid to work in the first place anyway, at least according to laws (laws that may be counter-productive, but that's another issue).

I saw your response to the late filing 1099 and have another question, can you use lacerte to file this 1099? I have a client who failed to file a 1099 and needs to do so now. I don't see that lacerte has the option. Can you advise?

Lacerte doesn't have a 1099 preparation module, no.

One can either get 1099 forms from IRS, or buy them from an office supply store. If you have a payroll program like CFS, the program can print the 1099's on special blanks you have to buy (the most sensible ones being the ones from the same outfit, where everything will print nearly perfectly without a lot of adjusting on your part). It can also print Copy B and Copy C on blank paper or on "3-part" blank forms you can buy from them. It will also add up all the 1099's you've inputted, and create a 1096 with the total.

I have some leftover blanks for Copy A, from the '07 year and the '06 year (and 1096's as well). If you need a few, you can e-mail me privately at Amy7323@hotmail.com. I don't have blanks for Copy B but you could xerox Copy A a few times and use it as Copy B, Copy C, etc., if you had to.

You can use filetaxes.com to prepare 1099s. Quickbooks can print 1099s (but you need the red and black forms).

If he paid them then he should definitely deduct it. Create records that show who was paid, when, and for how much. I suggest having the workers sign for cash receipts. Do this for each and every cash payment so that you can rely on the "business practices" rule for evidence in an audit.The issues of 1099's and SUI taxes are separate.