Form 1099 & W-2

The New Year brings your business fresh opportunities. It also demands annual compliance and information reporting. January requires your accounting department to prepare a handful of reports that affect your employees, vendors, and your friends at the IRS.

Here is a recap of the 2021 calendar year information reporting that you may be responsible for issuing soon.

Forms W-2 to Employees

Employers need to issue Forms W-2 to all employees receiving wages during the tax year. In addition, the fourth quarter and annual payroll tax returns are due. These are prepared by the person or company who processes your payroll during the year. The recipients must receive their W-2’s by January 31. The IRS requires filing by Jan 31 as well.

Forms 1099 to Vendors and Independent Contractors

Forms 1099-MISC or forms 1099-NEC are required for certain payments made to other individuals or companies in connection with a trade or business.

Payments made directly by credit card, through payment service providers such as Venmo, or a credit card processor such as Square, are not to be included.

Forms 1099-MISC are issued for certain payments and/or bartering transactions of at least $600.

1. Paid to individuals or entities not taxed as corporations, including:

• Rents
• Prizes and awards
• Other income

2. Paid to individuals or any entities including those taxed as corporations, including:

• Medical and healthcare payments (NOT health insurance premiums)
• Payments to an attorney

3. Direct sales of at least $5,000 of consumer products for resale

Due dates:

• The recipients must receive the Form 1099-MISC by February 15.
• The IRS requires filing by March 1 if filed by mail, March 31 if filed electronically.

Forms 1099-NEC are issued for certain payments and/or bartering transactions of at least $600, paid to individuals or entities not taxed as corporations, for services performed by non-employees with no exclusion for parts and materials.

Due dates:

• The recipients must receive the Form 1099-NEC February 1.
• The IRS requires filing by February 1 regardless of how delivered.

Forms 1099K are issued by credit card processors and payment service providers, such as Square and Venmo. These credit card processors and service providers are responsible for the reporting compliance. Do not report these payments on forms 1099-MISC or 1099-NEC.

Planning Opportunity: Consider paying vendors and Independent contractor by credit card or through payment service providers to reduce your business’s Form 1099 filing requirements.

Note: The IRS General Instructions for Forms 1099 compliance is thirty-one pages. What we have presented here is the most common uses that effect the Motorcoach Operator. We recommend that you clear the final preparation with your CPA before submitting your Forms 1099.

BUSBooks wishes you the best in 2022. 

Let BUSBooks put your accounting in order! Together we can make YOUR accounting MORE meaningful. 

Written by Tracy Fickett, CPA and Peter Shelbo, Veteran Bus Operator

BUSBooks is a unique CPA accounting firm dedicated to the ground transportation industry.

The information contained in this communication is general in nature and is not intended, and should not be considered, as legal, accounting, or tax advice provided by BUSBooks, LLC to the reader. The reader is also notified that this material may not apply to or be suitable for the reader’s specific circumstances or needs, and may require consideration of additional factors including other tax and non-tax facts and circumstances. BUSBooks, LLC recommends that the reader should contact his/her tax professional before taking any action based on this information. BUSBooks, LLC assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

On the tax front, January brings the beginning of the year-end close out of the 2019 calendar tax year. We wind up the accounting for 2019 and businesses are required to issue certain tax forms to individuals or companies to whom certain payments have been made during 2019.  Employees are to receive forms W-2 and others may need to have forms 1099-MISC issued to them.

Employers need to issue Forms W-2 to all employees receiving wages during the tax year. In addition, the fourth quarter and annual payroll tax returns are due. These are generally prepared by the person or company who processes your payroll during the year. The filing deadline is January 31.

For certain payments made to other individuals or companies in connection with a trade or business, forms 1099-MISC may be required. These payments include:

Payments of at least $600, paid to individuals or entities not taxed as corporations, for:

• Rents
• Services performed by non-employees (including parts and materials)
• Prizes and awards
• Other income
• Crop insurance proceeds
• Any fishing boat proceeds                       

Payments of at least $600, paid to individuals or any entities including those taxed as corporations, for:

• Medical and healthcare payments (NOT health insurance premiums)
• Cash payments for fish or other aquatic life
• Payments to an attorney

Direct sales of at least $5,000 of consumer products for resale

Payments of at least $10 in royalties

When do these forms need to be issued? Forms reporting non-employee compensation are due on or before January 31. Forms reporting other types of income are due on or before February 28.

Let us know if you would like help determining which payments require 1099 reporting. BUSBooks can assist with the preparation and processing as well.

Let us at BUSBooks help get your accounting in order! Together we can make YOUR accounting MORE meaningful. 

Written by Tracy Fickett, CPA and Peter Shelbo, Veteran Bus Operator

BUSBooks is a unique CPA accounting firm dedicated to the ground transportation industry.