The deadline for furnishing employees and independent contractors with their annual information returns and submit copies to the Social Security Administration (for W-2s) and IRS (for 1099-MISCs) is fast approaching.
To complete these tasks, you must get your data ready. Form preparation using an e-file provider such as eFile4biz takes only minutes, but it may take longer to gather the needed information for form completion. Get started now!
Your company information required to be reported on Forms W-2 is simply the business name, address, and employer identification number (EIN). You may also need to include an additional state ID for state income tax purposes.
Then gather information about your employee:
- Worker’s name, address, and Social Security number or other tax ID number. This information should be readily available in your payroll records. If any information is missing, check the employee’s Form W-4, which you are required to keep on file.
- Amounts paid. These can include tips, bonuses, commissions, and other taxable compensation. Be sure to break down compensation subject to federal income tax, Social Security wages, and Medicare wages. For example, if you have a 401(k) plan to which an employee made elective deferrals, this employee contribution is not part of compensation subject to federal income tax, but is treated as Social Security wages and Medicare wages.
- Taxes withheld: These include federal, state, and local income taxes, Social Security taxes, and Medicare taxes (including the additional Medicare tax for a worker with taxable compensation over $200,000).
- Fringe benefits. You may need to report fringe benefits whether they are taxable or tax free. For example, if you paid for health coverage under a qualified small employer health reimbursement arrangement (QSEHRA) in 2017, there is a new code (box 12 Code FF) for reporting the benefit on the employee’s W-2, even though the benefit is not taxable to the employee or subject to payroll taxes. You can find more about which fringe benefits must be reported in the General Instructions for Forms W-2 and W-3.
Information for independent contractors
As with W-2s, you need basic information about your company, including the business name, address, and your taxpayer identification number (TIN).
You also need contractor information, including the recipient’s name, address, and tax identification number. This may be the contractor’s Social Security number or other tax ID. Refer to Form W-9 that you had the contractor complete when starting work to perform for you.
Gather information about total nonemployee compensation paid to an independent contractor for the year. This includes payments for services (including parts or materials used to perform the services), fees, commissions, prizes and awards for services performed as a nonemployee, and other forms of nonemployee compensation. If you use eFile4biz for form preparation and filing, you can easily import this information from certain accounting solutions (e.g., QuickBooks Online; Xero).
Remember that you are required to file Form 1099-MISC if you paid a contractor total compensation of $600 or more. But you can choose to file the form even if payments are less.
You can physically provide workers with their information returns, or you can mail W-2s or 1099-MISCs to them. Another option: email copies to them. This option requires that you first obtain their permission, so take this step if you plan to use this delivery method. This can save you time and effort, especially if you use an e-file provider such as eFile4biz.
As you begin your data collection for your W-2s and 1099-MISCs, there are some other matters to address:
- Be sure that you’ve properly classified your workers. Classification should be done correctly at the time you engage the worker.
- Review your payroll tax deposits for the year. If you’ve fallen behind, be sure to remedy the shortfall.
- Get ready to file your employment tax returns. For example, Form 941, Employer’s Quarterly Federal Tax Return, for the final quarter of 2017 and the annual Form 940 for FUTA taxes are due on January 31, 2018. Also check for state filing requirements.
Don’t delay; the clock is ticking.
This post was created in collaboration with efile4Biz, a leading IRS-authorized e-file provider committed to helping employers process and file 1099s, W-2s and ACA forms easily and conveniently. All opinions expressed in this post are my own and not those of efile4biz.