Forms W-2, 1099-NEC and 1099-MISC Due Dates and Compliance Requirements

//Forms W-2, 1099-NEC and 1099-MISC Due Dates and Compliance Requirements

Forms W-2, 1099-NEC and 1099-MISC Due Dates and Compliance Requirements

Happy New Year!

 

As 2022 begins, it is time to begin preparing Forms W-2 and Forms 1099. 

 

2021 Forms W-2 are due to employees and to the Social Security Administration (SSA) by January 31, 2022, regardless of whether you file using paper forms or electronically. You are required to file Forms W-2 when you are an employer engaged in a trade or business and pay any wages to a person for the year. There is a limited exception to filing a Form W-2 if you pay less than $600, but that only applies if you are not required to withhold any payroll taxes. You must electronically file Forms W-2 if you have 250 or more forms.

 

Last year, the IRS significantly changed the Form 1099 reporting, introducing a new Form 1099-NEC to report nonemployee compensation that was previously reported on Form 1099-MISC. 

 

2021 Forms 1099-NEC are due to recipients and to the IRS by January 31, 2022. 

 

2021 Forms 1099-MISC are due to recipients by January 31, 2022. They are due to the IRS by February 28, 2022 if filed by paper and March 31, 2022 if filed electronically.

 

A 30 day extension of time to file Forms W-2 with the SSA or Forms 1099-NEC and Forms 1099-MISC with the IRS will only be granted if Form 8809 is filed and the extension is due to extraordinary circumstances or a catastrophe.

 

The rules for issuing Form 1099-MISC and 1099-NEC can be confusing. The following is a summary of the general requirements:

 

·     Individuals and entities are subject to 1099 filing requirements for payments that are made in the course of their trade or business. Payments made by an individual for personal services are not reportable.

·     You are engaged in a trade or business when you operate an activity with some continuity and regularity for gain or profit. Nonprofit organizations are considered to be engaged in a trade or business for 1099 reporting purposes. 

·     If you rent real or personal property to others, you may be subject to reporting requirements if the operations are deemed a trade or business. Unfortunately, the IRS has not provided clear guidance in this area, making it difficult to assess whether specific rental properties are required to file Form 1099. In general, triple net leases are not a trade or business. Rental activities with more than a de minimis amount of repairs and maintenance are more likely to be a trade or business subject to the 1099 reporting requirements. The requirement to file is determined by analyzing your individual facts. Please call us if you have any questions.

·     Forms 1099-MISC and 1099-NEC are required for annual payments (other than credit card payments) of $600 or more for services, rent or miscellaneous income paid to individuals or unincorporated entities that are not taxed as corporations (this includes limited liability companies taxed as sole proprietorships or partnerships, such as SFW Partners, LLC) and all attorneys, including attorneys that are incorporated. Payments made by credit card are not required to be reported.

·     Issue Form 1099-NEC to report nonemployee compensation for services provided, including payments made to independent contractors, gig workers and self-employed individuals who previously had their payments reported on box 7 of a 1099-MISC. Also use Form 1099-NEC to report payments to attorneys for legal services.

·     Issue Form 1099-MISC to report miscellaneous income, such as rent, health care payments or legal settlements.

·     Electronic filing of Forms 1099 is required if you have 250 or more information returns. If you are required to file electronically but fail to do so, you may be subject to a penalty of $280 per return.

 

The IRS requires those subject to Form 1099 reporting to confirm on their income tax returns that they have complied with the requirements. Penalties for noncompliance with Forms W-2 and 1099 reporting can be as high as $280 per form ($570 for intentional disregard). 

 

Happy New Year!

 

As 2022 begins, it is time to begin preparing Forms W-2 and Forms 1099. 

 

2021 Forms W-2 are due to employees and to the Social Security Administration (SSA) by January 31, 2022, regardless of whether you file using paper forms or electronically. You are required to file Forms W-2 when you are an employer engaged in a trade or business and pay any wages to a person for the year. There is a limited exception to filing a Form W-2 if you pay less than $600, but that only applies if you are not required to withhold any payroll taxes. You must electronically file Forms W-2 if you have 250 or more forms.

 

Last year, the IRS significantly changed the Form 1099 reporting, introducing a new Form 1099-NEC to report nonemployee compensation that was previously reported on Form 1099-MISC. 

 

2021 Forms 1099-NEC are due to recipients and to the IRS by January 31, 2022. 

 

2021 Forms 1099-MISC are due to recipients by January 31, 2022. They are due to the IRS by February 28, 2022 if filed by paper and March 31, 2022 if filed electronically.

 

A 30 day extension of time to file Forms W-2 with the SSA or Forms 1099-NEC and Forms 1099-MISC with the IRS will only be granted if Form 8809 is filed and the extension is due to extraordinary circumstances or a catastrophe.

 

The rules for issuing Form 1099-MISC and 1099-NEC can be confusing. The following is a summary of the general requirements:

 

·     Individuals and entities are subject to 1099 filing requirements for payments that are made in the course of their trade or business. Payments made by an individual for personal services are not reportable.

·     You are engaged in a trade or business when you operate an activity with some continuity and regularity for gain or profit. Nonprofit organizations are considered to be engaged in a trade or business for 1099 reporting purposes. 

·     If you rent real or personal property to others, you may be subject to reporting requirements if the operations are deemed a trade or business. Unfortunately, the IRS has not provided clear guidance in this area, making it difficult to assess whether specific rental properties are required to file Form 1099. In general, triple net leases are not a trade or business. Rental activities with more than a de minimis amount of repairs and maintenance are more likely to be a trade or business subject to the 1099 reporting requirements. The requirement to file is determined by analyzing your individual facts. Please call us if you have any questions.

·     Forms 1099-MISC and 1099-NEC are required for annual payments (other than credit card payments) of $600 or more for services, rent or miscellaneous income paid to individuals or unincorporated entities that are not taxed as corporations (this includes limited liability companies taxed as sole proprietorships or partnerships, such as SFW Partners, LLC) and all attorneys, including attorneys that are incorporated. Payments made by credit card are not required to be reported.

·     Issue Form 1099-NEC to report nonemployee compensation for services provided, including payments made to independent contractors, gig workers and self-employed individuals who previously had their payments reported on box 7 of a 1099-MISC. Also use Form 1099-NEC to report payments to attorneys for legal services.

·     Issue Form 1099-MISC to report miscellaneous income, such as rent, health care payments or legal settlements.

·     Electronic filing of Forms 1099 is required if you have 250 or more information returns. If you are required to file electronically but fail to do so, you may be subject to a penalty of $280 per return.

 

The IRS requires those subject to Form 1099 reporting to confirm on their income tax returns that they have complied with the requirements. Penalties for noncompliance with Forms W-2 and 1099 reporting can be as high as $280 per form ($570 for intentional disregard). 

 

SFW Partners, LLC can assist you in complying with Form W-2 and 1099 filing requirements. Please contact us at 314-569-3333 if you would like assistance or have any questions.

 

 


2022-01-14T13:02:48-06:00 January 14th, 2022|Uncategorized|