Showing posts from August, 2015

5 Tips for Electronic Delivery of 1099 or W-2 Forms

Utility bills, pay stubs, bank statements, insurance notifications ... these used to be delivered to you via USPS. Many of these forms are now e-delivered.

In contrast, many tax forms are still delivered by mail. Some larger companies use employee portals to deliver 1099 and W-2 forms. What options do smaller companies have for secure electronic delivery? Initiating an electronic delivery system is easier than you might think. Here are a few tips:
1. Collect e-delivery opt-in permissions from vendors.
IRS publication 1179 provides specific instructions to request consent from recipients. The deadline for delivering forms to recipients is January 31st. The deadline is the same, whether you delivery via mail or through e-delivery. Make sure you have records of which vendors do not opt-in to the e-delivery. You will need to make arrangements for those vendors to receive their forms via mail.
2. Have a paper delivery system available as a backup. If a recipient does not opt-in to e-deliver…

Hiring a 1099 Worker? Be Aware of the Updated Guidelines for Determining Employee/Contractor Status

You're starting a new small business. As with any new business, you face uncertainty and want to keep costs down. You hire someone to design your website and help with Search Engine Optimization. You don't pay overtime. No social security and medicare taxes. No unemployment or worker's compensation insurance. You start to file the 1099-MISC form for non-employee compensation. And then...

You find out that you should have classified the worker as an employee, rather than as a contractor. In that case you owe taxes, extra wages, and more. Ouch!

How can you tell if a person you hire is a contractor or an employee? While there are some guidelines, the rules are not hard-and-fast. Many factors contribute to the determination. The IRS can make a determination for you if you complete Form SS-8. It's free – but you have 6 months for the results. 

Your alternative is to make the best decision you can with the facts you have. Here are some guidelines that may help you determine if…

Higher IRS Penalties for Information Returns

It’s summertime, so many of us are not on top of tax news. What better time for a new law to increase penalties on a variety of information returns?

The information below summarizes the updates made to the penalties. We once had a client who faced a penalty of more than $65,000 for filing incorrect 1099-MISC returns. In 2016 that amount would be over $165,000. Sticker shock! (Don’t worry. We helped them get the penalty reduced to zero. They are still in business, and still a client.)
Why Now? Congress passed the higher penalties in June. They included the penalty revision in the Trade Preferences Extension Act (TPEA). The Affordable Care Act (ACA) established penalties for the reporting it requires. The amendments included on the TPEA apply to those forms (1094-B and C and 1095-B and C) as well as W-2s and 1099s.

2015 is the first year companies must file the 1094/1095 series. It makes sense to outline specific penalties for those forms. The 1099 penalties have increased several times…