The important date of January 31st is almost upon us, the day when the IRS requires all businesses in the US to mail W-2s and 1099s to their employees. To make sure you’re on time each year, follow these few simple rules:
1. Collect SSNs or EINs (Employer Identification Number) and current addresses from your employees and contractors.
2. Reconcile books and payments via cash, checks, and direct deposits.
3. W-2: In most cases, your payroll service provider should automatically create W-2s so you will just need to check them, print, and mail. Otherwise, you will need to use Intuit Forms and print them.
4. 1099: Instead of using pre-printed 1099 forms and wasting time on positioning them correctly in your printer, consider using one of these services:
• Intuit — $39 for an unlimited number of 1099 forms
• Wagefiling.com — $3.49/form
• If you search for 1099 on the IRS page of the recommended e-filers, you will find other options, most of which will be more expensive if you want to e-file in addition to printing the 1099s.
5. Be aware of Form 1099-K
Beginning with tax year 2011, the IRS requires businesses to exclude from Form 1099-MISC any payments made by credit card, debit card, gift card, or PayPal. For information about the IRS requirements, review the IRS Final Regulations on Payment Card Reporting.
This means the amount you record on Form 1099-MISC must equal the total amount you paid the contractor minus any portion you paid by credit card, debit card, gift card or PayPal.
Any amounts you paid using these other methods of payment must be reported to the IRS, not by you, but by the credit card company, the debit card company, gift card company or PayPal using Form 1099-K. You do not need to report these amounts on Form 1099-MISC.
The deadline for this year is only one day away so if you haven’t started yet, get going!