For Legacy Kevin P. Martin & Associates Clients: 1099 filings and year-end planning
As you manage your taxes at year-end, one important, constant goal should be to reduce your taxable income. Maximizing your deductions and exemptions, as well as taking advantage of any tax credits available to you, is a great way to start thinking about saving money on your next tax bill.
As you prepare for year-end planning, we wanted to remind you of the following tax issues:
Reporting of 1099 Information Returns
The general rules surrounding the types of income to be reported have remained the same. There are two (2) different forms to consider – Form 1099-MISC and Form 1099-NEC.
Taxpayers should use Form 1099-NEC to report payments of $600 or more for services of nonemployees and all payments made to attorneys. Payments made to attorneys should be reported on a Form 1099 even if they are a corporation.
Form 1099-MISC is required for individuals and unincorporated businesses to whom you have paid at least $600 during the year for rent, prizes and awards, gross proceeds to attorneys, certain medical and health care payments and royalties over $10.
You may also be required to prepare a different 1099 if you made payments of $600 or more of interest on business debt (1099-INT) or dividends or other distribution of $10 or more to a shareholder of a corporation (Form 1099-DIV).
There are several items to keep in mind that will streamline this process:
- Review your vendor lists and mark which vendors should receive Form 1099.
- Make sure you have obtained a complete name, address and federal identification number. All vendors should complete a Form W-9 before any payment is made to ensure you have the correct information. You can download a W-9 here. We recommend obtaining a W-9 prior to issuing any payments to vendors.
- Forms 1099-NEC are due to recipients and the IRS by January 31, 2022 (regardless of filing method); Forms 1099-MISC are also due to recipients by January 31, 2022 and are due to the IRS by February 28, 2022 (if paper filing) or March 31, 2022 (if electronic filing)
- Beware of penalties! Failure to file information returns timely, failure to include all required information on the return, and filing incorrect information can result in penalties.
If you would like us to prepare your 1099 forms, please contact a member of your engagement team.
Personal Use of Employer-Provided Vehicle Reporting on Form W-2
Personal use of a company vehicle occurs when an employee uses a company vehicle for any purpose that is unrelated to the employer’s trade or business. Examples of personal use of a company vehicle includes your employee’s commute between home and work, use of vehicle on a vacation or on the weekend or trips unrelated to the organizations purpose, work, trade, etc. The value of personal use of a company vehicle must be reported as income on the employee’s W-2.
Please contact your payroll service provider and provide them with this information prior to your last payroll run of calendar year 2021.
S-Corporation Medical, Dental and Long-term Care Insurance Reporting on Form W-2
More than 2% shareholders of S-corporations must include health, dental and long-term care insurance premiums that are paid by the Company on behalf of the shareholder and his/her family on the shareholder’s annual W-2. The premium amount are additional wages reportable on Form W-2, Box 1 (Wages) and Box 16 (State Wages) and are subject to Federal and State income taxes, but are not subject to Social Security, Medicare (FICA), or Unemployment taxes. The health insurance premiums are also reported on Form W-2, Box 14S. Please contact your payroll service provider and provide them with this information prior to your last payroll run of calendar year 2021.
Our firm is committed to helping you through the tax and financial planning process from start to finish, year after year.
If you have any tax, accounting, or financial questions, please do not hesitate to reach out to:
We look forward to working with you.
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