Business Reporting Reminders
With the new tax season just around the corner, it’s important to remember that Forms 1099-NEC and 1099-MISC are due to recipients by January 31. Furthermore, these forms must be filed with the IRS no later than February 28 if filing on paper or March 31 for those opting for electronic submission.
The IRS introduced new filing rules in 2020 regarding how payments to vendors should be reported. Form 1099-MISC reports rents and royalties, and form 1099-NEC reports nonemployee compensation. Business should review their vendor lists and mark anyone that should receive a 1099-NEC or 1099-MISC.
General Rules for 1099s
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- Independent contractors and other non-corporate businesses that generate $600 or more in rent, royalties, prizes, or awards from you are required to receive a 1099-MISC form.
- Individuals who provide services and are not a corporation totaling $600 or more to you may now be issued a Form 1099-NEC instead of the traditional Form 1099-MISC. Ensure that all payments over this amount are reported using the new form!
- If you pay an attorney more than $600 for services, they are due to receive a Form 1099-NEC. Even if the lawyer is incorporated, this law still applies.
S Corp Health Insurance
If you are a shareholder owning more than 2% of an S-Corporation, make sure to include your health insurance premiums for yourself and family on this year’s W-2. Remember that the premium amount should be included in Box 1 (Federal Wages) and Box 14 (Other), but not Social Security or Medicare wages. If you’re working with a payroll service provider, make sure they know the due date, so everything arrives on time!
Personal Use of Employer-Provided Vehicle Reporting on Form W-2
Employers are responsible for including a taxable non-cash fringe benefit on their employees’ W-2 forms every year, which is subject to both federal and state taxes. To calculate this value, three methods must be considered: the Annual Lease Value Rule, Cents-per-Mile Rule, or Commuting Rule. Notify your payroll provider as soon as possible so they can advise you of their due dates for required information.
Personal Property Tax and Business License Returns
Failing to keep up with the local regulations for your business can cause serious financial consequences, so make sure you are prepared! Get ahead of any compliance issues by obtaining and renewing a business license each year based on annual gross receipts. Additionally, ensure that property tax payments reflect the current value of all assets located in that jurisdiction at yearend – falling behind could result in expensive penalties or interest fees.
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