How to File 1099 MISC for Independent Contractor

how to file 1099 misc

Wondering how to file 1099 MISC? Filing 1099s is pretty straightforward if you know how to do it correctly i.e. according to the guidelines prescribed by the IRS. However, for your convenience, we have created this resourceful guide, which will show you exactly how to file 1099 MISC for independent contractors.

Table of Contents

What is Form 1099 MISC?
What are the Different 1099 Tax Forms?
Who is an Independent Contractor?
Do You Really Need to File 1099 MISC This Year?
Parts of 1099 MISC Forms
How to Fill Out 1099 Form?
Sample 1099 MISC Form
1099 MISC Form Filing Deadlines
Penalties for Late Filing
How to Save Time & Money Filing 1099 MISC?
What Not to Report on Form 1099 MISC?
1099 Tax Tips for Employers


What is Form 1099 MISC?

Form 1099 MISC is a tax form used by IRS to track all the miscellaneous income paid1099-MISC-Form to the non-employees (independent contractor) in the course of the trade or business. In a simple context, you must file 1099 MISC if you have paid any independent contractor a sum of $600 or more in a year for their services for your business or trade. The independent contractors need to report these payments on their tax returns as well.

For example, if you hire a website developer on a contract basis to develop a website for your business and paid $2000 for their services, then you must report the $2000 payment to website developer on Form 1099-MISC.


What are the Different 1099 Tax Forms?

Since there are many types of 1099s, which are used for different purposes, the 1099-MISC form is a catchall for all miscellaneous income. It is generally the most applicable and most used by many business owners to report contract services.

However, the other 1099 forms are 1099-A, 1099-B, 1099-C, 1099-CAP, 1099-DIV, 1099-G, 1099-H, 1099-INT, 1099-K, 1099-LTC, 1099-MISC, 1099-OID, 1099-PATR, 1099-Q, 1099-R, and 1099-SA.


Who is an Independent Contractor?

An independent contractor is an unincorporated entity suchindependent contractor as a sole proprietor or LLC or member of a partnership or limited liability or estate that provides services to another business under the terms specified in a contract or an agreement. Some of the examples of independent contractors are:

Carpenter AC Technician Interior Designer Travel Agent
Photographer Attorney Plumber CPA
Logo Designer Application Developer Accountant Web Developer

Do You Really Need to File 1099 MISC This Year?

If you, as an employer or business owner, paid $600 or more to independent contractors for their services during the tax year, then you must file 1099. Other than services, filing 1099 is applicable for:

  • Prizes
  • Awards
  • Rent
  • Royalties
  • Physicians
  • Suppliers of health and medical services

For more detailed information, log on to IRS detailed information.


Parts of 1099 MISC Forms

Copy A: Federal Copy for filing with the IRS

Copy B: Recipient Copy (Sent to Independent Contractor)

Copy C: Payer Copy (Retained by the Employer)

Copy D/1/2: State and local filing (Depends on States Tax Rules)


How to Fill Out 1099 Form?

The following steps will help you in filing Form 1099 MISC without any concerns.

Step 1: Collect Accurate Information Beforehand

Once you make a payment to independent contractors, ensure you make them complete Form W-9 in order to collect contractor’s legal name, address, and Taxpayer Identification Number (TIN). The Taxpayer Identification Number may be either a Social Security Number (SSN) or an Employer Identification Number (EIN). IRS recommends business owners and employers to store W-9 files for at least four years for the future reference.

1099 taxs tipPRO TIP: Always make the contractors fill out and return W-9 once you engage them for the services for your business.

 

Step 2: Buy Your 1099 MISC Forms

Once you collected the correct information about your independent contractor, then get IRS-approved 1099 Forms. You can order standard 1099 MISC Forms from CheckMark. You can also order the forms from IRS but it may take up to 4-6 weeks to reach you. You can even buy the forms at any office supply store like Staples or OfficeMax.

1099 taxs tipPRO TIP: Never use a downloaded PDF format of 1099 Form from the internet because they are just for sample view and cannot be read and processed by IRS scanner.

 

STEP 3: Prepare Your 1099 MISC Forms

Start preparing 1099 MISC forms for independent contractors, once you have bought the 1099 forms. Fill your Federal Tax ID number (SSN or EIN) and contractor’s information (SSN or EIN) accurately. Ensure you enter the same amount of money you paid to the contractor in Box 7 under the title “Non-employee compensation.”

Finally, fill the contact information forms. If you have to file 1099s for multiple contractors, then repeat the same process until all the forms are completed without any errors. In order to file the 1099s pretty accurately, it’s always better to use 1099 software, which can automatically generate and file the information to IRS without any errors and blunders.

1099 taxs tipPRO TIP: In case if you have withheld any amount from the contractor (backup withholding), then you need to fill that specific amount in the Box 4 or 11 in relation to any federal or state income tax you withheld.

 

STEP 4: Send Copy B of 1099 to Independent Contractor

Now, send the 1099 Copy B to independent contractors whether via postal mail or hand them personally. The deadline to send the 1099 MISC Forms to the independent contractors is no later than January 31, 2017. The due date is extended to February 16, 2017, if you are mentioning payments in boxes 8 Or 14.

1099 taxs tipPRO TIP: Never delay in sending the forms to the independent contractors because IRS may impose heavy penalties for late distribution if there is no genuine reason.

 

STEP 5: Submit Copy A of 1099 to the IRS

Copy A of each Form 1099 and Form 1096 () should be submitted to IRS by February 28, 2017, if you file by mail. If you are filing 1099s electronically, then the deadline is March 31, 2017, and you don’t need to eFile Form 1096. Form 1096 is an Annual Summary and Transmittal of U.S. Information Returns, which summarizes the totals from your returns from 1099s. This form is only needed if you are filing on paper.

Some states have different 1099 tax rules, so in order to stay compliant with the local 1099 filing requirements, sometimes you also need to file 1099 forms with your state. Visit the State Government Websites and find local 1099 filing requirements.

1099 taxs tipPRO TIP: NEVER submit downloaded 1096 form from the internet because they cannot be processed by IRS scanner. The fine for submitting the unscannable form to IRS is $50. Ensure you submit RED Scannable Form always.

 

STEP 6: Retain Copy C of 1099 MISC Form

Retain and store Copy C of 1099 MISC Forms for at least 3-4 years for future reference. It’s always better to create a separate record for storing all the forms in one safe place.


Watch The Video To Get More Information About Filing 1099 Misc…


SAMPLE 1099 MISC FORMS

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1099 MISC Form Filing Deadlines

1099 deadines

The following are the deadlines for sending 1099 forms to the contractors and for paper filing or e-filing them with the IRS. Always prepare and file 1099s before the deadline in order to get saved from heavy penalties for late submissions from IRS.

Form Due to Recipient Filing to IRS By Mail E-filing to IRS
1099-MISC Jan 31, 2017 February 28, 2017 Mar 31, 2017
1099-B
1099-S
1099-MISC boxes 8 or 14
Feb 15, 2017 February 28, 2017 Mar 31, 2017

Penalties for Late Filing

The penalties for late filing range from $30-$100 per missed 1099 tax form, depending on how late the forms were submitted.

Penalty per Form Length of Delay
$15 Within 30 days after deadline
$30 More than 30 days late but before August 1st, 2017
$50 Filing on or after August 1st, 2017
$250 Intentionally neglecting to file

The maximum penalty is a total of $1,500,000 for the large businesses and $100,000 for the small businesses.

1099 taxs tipPRO TIP: In case if you were unable to file 1099 on time, you always have the option to request a 30-day extension by filing IRS Form 8809 (Extension of Time to File Information Returns).You MUST have a valid reason for getting an extension from IRS.  However, this extension does not extend the February 1 deadline for submitting the Copy B of 1099 to the independent contractors.

 

How to Save Time & Money Filing 1099 MISC

Preparing and filing 1099 MISC Forms is always a tedious and time-consuming job. One small mistake can cost you dearly. The best way to save time and money is to consider an automatic option i.e. 1099 Software. There are many options available but CheckMark 1099 Software makes 1099 filing just like a breeze.

1099 Print Software1099 eFile Software

 

What Not to Report on Form 1099 MISC?

Not all payments come under 1099 MISC Form. Some of the payment, which you should not report on 1099-Misc are:

  • Payments to corporations
  • Payments to employees ( Never classify employees as independent contractors)
  • Payments for goods such as merchandise, telephone, freight, storage, and similar items
  • Payments of rent to property managers or real estate agents
  • Personal or household payments such as housekeeping, gardening, and babysitting
  • Payments for non-business related services
  • Payments to trusts

1099 Tax Tips for Employers

  1. Classify employee and independent contractor correctly.
  2. Make the contractors complete the Form W-9 when to pay them so that you can get hold of contractor’s legal name, address, and Taxpayer Identification Number (TIN).
  3. Never fail to send the forms to independent contractors before the deadline.
  4. If you are eFiling 1099s directly to IRS, then no need to prepare 1096 forms.
  5. Always keep the record of 1099 Forms for future use.
  6. Never use the free version of 1099 MISC Forms available on the internet. They are not accepted and processed by IRS.
  7. Always use software for eFiling 1099 MISC forms to IRS. It will save you time, money and resources.

If you are having problems in figuring out how to file 1099 MISC before the deadline, you can always reach us at any time. We’d be happy to ease out the pain in filing 1099 MISC Forms saving you time and reducing any potential for human error.

1099 Deadlines, Penalties & State Filing Requirements for 2017

1099 Deadlines

As the end of January approaches, it is important for all the employers to prepare and issue 1099s to the recipients, and file them to IRS responsibly without any delay.

1099 tax form, referred to as “Information Returns,” should be send by the company to the independent contractors if it paid more than $600 to them in 2016. Since there are many types of 1099 forms, the common forms are 1099-MISC, 1099-INT, 1099-S, 1099-C, 1099 B, 1099-R and 1099-DIV.

It’s important for the employers to prepare and file the appropriate 1099s to the IRS before deadline otherwise heavy penalties for late submissions or wrong information will be imposed. The following table will help you to remember all the dates for sending tax forms to the contractors and for paper filing or e-filing them with the IRS.

1099 Deadlines for 2017

Form Due to Recipient Filing to IRS By Mail E-filing to IRS
1099-MISC Jan 31, 2017 February 28, 2017 Mar 31, 2017
1099-B
1099-S
1099-MISC boxes 8 or 14
Feb 16, 2017 February 28, 2017 Mar 31, 2017

1099 deadines

Penalties for Late Filing

The penalties range from $50-$530 per missed 1099 tax form, depending on how late the forms were submitted.

Penalty per Form Length of Delay
$50 More than 30 days late
$100 More than 30 days late but before August 1st, 2017
$260 Filing on or after August 1st, 2017
$530 Intentionally neglecting to file

The maximum penalty is a total of $1,064,000* for small businesses. In all cases, the IRS considers you to be a small business if you’ve earned an average of $5 million or less in annual revenue for the past three tax years.

New State Filing Requirements

Combined State/Federal Program for 1099-series

Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Georgia, Hawaii, Idaho, Indiana, Kansas, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, South Carolina, Vermont, Virginia, Wisconsin.

States with no 1099-MISC filing requirement:

Alaska, Florida, Illinois, Nevada, New Hampshire, North Carolina, New York, South Dakota, Tennessee, Texas, Washington, Wyoming

States that require 1099-MISC filing, if you withheld:

Kentucky, Rhode Island, Utah, West Virginia

States that require a separate 1099-MISC filing or are unclear on their filing requirements:

Iowa, Massachusetts, Oklahoma, Oregon, Pennsylvania, Washington DC

We hope you will be feeling prepared, informed, and ready to file your 1099s. CheckMark’s 1099 tax software will help you in filing 1099s just like a breeze.  You can have 1099 Print or 1099 E-file version depending on your requirement i.e. if you are filing 250 or more information returns for the calendar year, then e-fling is a must. Else, you can paper file and mail to IRS for less than 250 information returns.

If you have any questions about the 1099 filing, you can reach us at any time. We’d be happy to help you out.

Form W2: Everything You Ever Wanted To Know

form w2

Image Credit: Flickr

Form W2 is a multi-part standard tax form that an employer must send to the employees as well as Internal Revenue Service (IRS) at year end. The form contains employee’s annual wages, Social Security earnings, Medicare earnings, and federal and state taxes withheld from the employee’s paycheck.

Employers should also submit W-3 forms to SSA along with W-2 forms summarizing all the information provided in the W-2 forms of all employees. Both the forms should have same and accurate information regarding total earnings, Social Security wages, Medicare wages and withholding for all employees for the previous year.

As an employer, you should prepare 6 copies of each W2 form per employee. All the six copies should be prepared and are equally important. The following table shows the exact departments, where the W-2 form should be send:

Copy A (Red Colored Form) –– Social Security Administration
Copy 1 –– City, state or locality
Copy B –– Filing the employee’s federal tax return
Copy C –– Employee’s records
Copy 2 –– City, state, or locality
Copy D –– Employer’s records

Employers should prepare W-2 forms and send them to their employees. Ensure you keep the Copy A i.e. red colored form.

Deadline Dates To File W-2s

Jan 31, 2017 Deadline to distribute Forms W-2 to employee
Feb 28, 2017 Deadline to file using paper Forms W-2
Mar 31, 2017 Deadline to file using Business Services Online

How to Submit W-2 Forms?

  1. Employers should prepare W-2 forms and send them to their employees. Ensure you keep the Copy A i.e. red colored form.
  2. Submit W-2 and W-3 form to Social Security Administration (SSA).
  3. Make sure you include all the copies of W-2 forms along with the W-3 form.
  4. Send all the forms to the following SSA address:
U. S. Postal Service

Social Security Administration
Data Operations Center
Wilkes-Barre, PA 18769-0001

 

Private Delivery Service (FedEx, UPS, etc.)

Social Security Administration
Data Operations Center
Attn: W-2 Process
1150 E. Mountain Drive
Wilkes-Barre, PA 18702-7997

* For Certified Mail, use ZIP code 18769-0002

  1. You can even e-file W-2 and W-3 forms online, directly to the Social Security Administration using CheckMark software. However, while e-filing W-2 forms, you may not need to submit W-3 forms because SSA automatically calculates the total from the submitted W-2 forms.

 Necessary Precautions

Before filing the forms, ensure all the company and employee information i.e. TINs, names, and money amounts are same and exact on both the forms. The total no. of W-2 forms should be precisely included in the W-3 forms. You have to submit the original red colored form to the SSA otherwise, they won’t accept photocopies.


 SSA Penalties for Late Submission

In case if you are late in submitting Form W-2, then you will be subjected to late filing penalties. Generally, the penalty is based upon the time delayed in filing and size of your business as well. However, if you intentionally delayed the filing, then the minimum penalty of $100 per form will be imposed. In case if you correctly filed the returns within the 30 days of due date, then the lowest penalty amount is $15.


 How to Correct an Error on Your W-2

If you make an error in the forms, then the period of one month before filing to SSA will be helpful for you to correct and rectify the mistake. If you have noticed the error after the submission to SSA, then you have to resubmit the corrected forms before the due date.


 Common Errors in Completing Form W-2

Always review and cross-check all the information on W-2 and W-3 Forms before submitting to the Social Security Administration so that you didn’t have to waste your precious time unnecessarily. However, the following are the common W-2 and W-3 form errors.

  • Missing the SSA deadlines
  • Submitting the form of the wrong year
  • Using unapproved forms (Always use IRS-approved forms)
  • Submitting W-2 forms without including W-3 Forms
  • Submitting only W-3 Forms to SSA
  • Dissimilar information on W-2 and W-3 Forms

 The Following is a Sample of Filled W-2 Form:

Understanding Various Boxes found on Form W-2

W-2 Tax Form – First Set

Box A: Employee’s Social Security Number: Fill the employee’s SSN number correctly in this box. If there is any error in the SSN number, then the employee should immediately report the mistake to the concerned department i.e. HR or tax or payroll department. They will correct and issue a new Form W-2 to the employee. If the employee failed to rectify the mistake, then the error will definitely slow the processing of their return.

Box B: Employer Identification Number (EIN): This box is for entering employer’s unique tax identification number.

Box C: Employer’s Information:  The box is to fill the employer’s name, address, city, state, and zip code. The address should be of company’s headquarters or actual workplace rather than the employer’s local or personal address.

Box D: Control Number: A control number is an internal number or code developed by the employer or company’s payroll department, which identifies this unique Form W2 document in their records. If the company didn’t assign any box number to the employee, then the box (d) should be left blank.

Box E: Employee’s Name:  This box should be filled with employee’s complete name i.e. first name, middle initial and last name. Additionally, it is important to note that the name should be same as mentioned in the employee’s Social Security card. If there is a mistake in the form, then the employee should report the matter to the concerned department so that they re-issue a new Form W-2 with the correct name. The employee should also provide photocopy of his or her Social Security card to the respective department so that they can update their records with the new name.

Box F: Employee’s Address: This box identifies the address, city, state, and zip code of the employee. Ensure it is correct and accurate because the employee’s refund might be posted to a different address. In case the address is incorrect, then the employee should immediately notify the HR department so that they can update their records with the employee’s new address.


W-2 Tax Form – Second Set

Box 1 – Wages, Tips, and Other Compensation: This box identifies total taxable wages or salary for the federal income tax purposes, which includes wages, salary, tips, bonuses, prizes, commissions, severance or dismissal pay, vacation pay and fringe benefits. The employee should not include any payroll deductions or pre-tax benefits such as savings contributions to a 401(k) plan, 403(b) plan, medical or dependent care reimbursement plan, dental and health insurance.

Box 2 – Federal Income Tax Withheld: This box identifies the total amount of federal income tax withheld from the employee’s pay based on their W-4 filings. If they do not file the W-4 yet, then the default will be “single and 0” regardless of their marital status.

Box 3 – Social Security Wages:  SSW is the total amount of wages subject to the Social Security tax. The Social Security tax in 2016 is assessed on wages up to $118,500, which is called Social Security wage base. If the amount is above the wage base, then the employees need to report to their employer to correct the W-2 forms.

Box 4 – Social Security Tax Withheld: This box shows the total amount of Social Security taxes withheld from employee’s pay. The Social Security tax is a flat tax rate of 6.2% on employee’s wage income, up to a maximum wage base of $118,500 (for 2016). The maximum yearly Society Security tax withholding amount in 2016 is $7,347.

Box 5 – Medicare Wages and Tips: This box shows the total amount of wages and tips, which are subjected to the Medicare taxes. Medicare wages includes any deferred compensation, 401(k) contributions, or other fringe benefits that are excluded from the federal income tax. Remember, there is no maximum wage base for Medicare taxes.

Box 6 – Medicare Tax Withheld: This box shows the amount of taxes withheld from employee’s pay for the Medicare tax, which is nothing but the flat tax rate of 1.45% on your total Medicare wage under $200,000. The Medicare wage percentile for self-employed is 2.9%.  However, due to Obamacare policy, employees are subjected to withhold Additional Medicare Tax at a rate of 0.9%.

Box 7 – Social Security Tips: This box shows the total amount of tips an employee has reported to the employer and subjected to social security tax.

Box 8 – Allocated Tips: Allocated tips are defined as the tips allocated by none other than the employer. This is not included in boxes 1,3,5, or 7.

Box 9 – Advance EIC Payments: This box is no being longer used because the reporting requirement’s i.e. advance of the earned income credit expired a few years. For some reason, it is not yet removed from the form but it is shaded so that the employees don’t get confused.

Box 10 – Dependent Care Benefits: This box reports the amount, which is reimbursed for dependent care expenses through a flexible spending account or the dollar value of dependent care services provided by the employer. If the amount is under $5,000, then it is considered as non-taxable benefits. However, if the amount reported is well over $5,000, then it is considered and reported as taxable wages in Boxes 1, 3, and 5.

Box 11 – Nonqualified Plans: This box reports either of the two amounts i.e.

  1. Amount distributed to the employee from employer’s non-qualified deferred compensation plan
  2. Amount distributed to the employee from employer’s non-government Section 457 pension plan

However, this amount is already included as taxable wages in Box 1.

Box 12 – Deferred Compensation and Other Compensation: In this box, several types of compensation and benefits are reported. The box reports a single letter or double letter code followed by a dollar amount. The following table helps you understand the codes easily, as the definitions are directly fetched from IRS website:

Code Explanation
Code AA Designated Roth contributions under a section 401(k) plan
Code A Uncollected social security or RRTA tax on tips
Code BB Designated Roth contributions under a section 403(b) plan
Code B Uncollected Medicare tax on tips
Code C Taxable cost of group-term life insurance over $50,000
Code DD Cost of employer-sponsored health coverage
Code D Elective deferrals under section 401(k) cash or deferred arrangement (plan)
Code EE Designated Roth contributions under a governmental section 457(b) plan
Code E Elective deferrals under a section 403(b) salary reduction agreement
Code F Elective deferrals under a section 408(k)(6) salary reduction SEP
Code G Elective deferrals and employer contributions (including nonelective deferrals) to any governmental or nongovernmental section 457(b) deferred compensation plan
Code H Elective deferrals under section 501(c)(18)(D) tax-exempt organization plan
Code J Nontaxable sick pay
Code K 20% excise tax on excess golden parachute payments
Code L Substantiated employee business expense reimbursements
Code M Uncollected social security or RRTA tax on taxable cost of group-term life insurance over $50,000 (for former employees)
Code N Uncollected Medicare tax on taxable cost of group-term life insurance over $50,000 (for former employees)
Code P Excludable moving expense reimbursements paid directly to employee
Code Q Nontaxable combat pay
Code R Employer contributions to an Archer MSA
Code S Employee salary reduction contributions under a section 408(p) SIMPLE plan
Code T Adoption benefits
Code V Income from the exercise of nonstatutory stock option(s)
Code W Employer contributions to a health savings account (HSA)
Code Y Deferrals under a section 409A nonqualified deferred compensation plan
Code Z Income under section 409A on a nonqualified deferred compensation plan

Box 13 – Check the Box: The three check boxes should be checked by the employer if the employee:

  1. is a statutory employee
  2. have participated in some retirement plan
  3. have received the third party sick pay

Box 14 – Other Tax Information: The employer needs to report any information that didn’t fit anywhere else in the form such as state disability insurance taxes withheld, union dues, after-tax contributions to a retirement plan, employer-paid tuition assistance, health insurance premiums deducted and nontaxable income.


Form W2 – Third Set

Box 15: State and State Employer’s Identification: This box is pretty straightforward, as it reports the employer’s state and state tax identification number. In case if the employee works in a state without a reporting requirement, then the employee should leave it blank along with other boxes i.e. box 16 and box 17. In addition, if the employee has several withholdings in a number of states, then the employee should fill more than one box provided in the box 25.

Box 16: State Wages: This box represents the total amount of employee’s taxable wages i.e. wages, tips, and compensation earned in that state. If the employee is subjected to the state income taxes, then the box 16 will represent the total amount of taxable wages for state tax purposes. If the employee lives and works in a state that doesn’t impose an income tax, then the employee should leave this box blank.

Box 17: State Income Tax Withheld: The box reports the total amount of state income taxes withheld from the employee’s paychecks for the wages reported in Box 16.

Box 18: Local wages: If the employee is subjected to local, city, or other state income taxes, then the total amount of taxes withheld from the employee’s paycheck for local income taxes should be reported in this box.

Box 19: Local income tax withheld: If the employee has reported wages regarding local income tax in the box 18, then the employee should report the withholding in the box 19.

Box 20: Locality name: The box 20 represents the name of the particular local, city, or other state tax being reported at box 19.


We hope the following guide solved your concerns related to form W2. If you have any further question, please feel free to comment below.

When to Switch Your Payroll Service Provider?

payroll service provider

At which point you would need a switch over to new payroll service provider?

More often companies reach crisis point before making a decision to change. This puts people, systems and relationships under pressure, which shadows the business growth and at times most valuable employees may under perform and this may result in business losses.

Here are the few important signs when you should consider a change in your payroll processing.

Multiple Payroll Frequencies

In multiple payroll frequency, employees receive payroll at different time cycles. they expect you to be prompt at all the times, viz., daily, weekly, or monthly payments regardless of whether you do it yourself or hire a payroll service provider. Particularly, in this situation, your payroll errors must be avoided and you don’t want to have to be under extreme pressure. Payroll error puts you in the high drama action with employee needless to mention their agony and your frustration. In order to avoid this, it is more advisable to choose a qualified payroll service provider like CheckMark.

Business Expansion

The business is growing and you are adding new employees to your business to handle your customers better, however, you’ve end up with on-boarding loads of new staff onto your existing payroll system. Can you handle it? If you’re not prepared or your system and procedures are not scalable you could be in trouble. This is also about your ability to add to strategy – a core value from payroll. Having a payroll specialist like CheckMark with a dedicated account manager to handle this critical part for you can be a great reliever so you can concentrate on your core business process.

On Top with New Rules

Staying on top of new rules, new procedures and implementation deadlines, as well as running your normal payroll, is difficult. Thousands of small businesses make mistake by not staying up-to-date and it is not an easy job too and by all means, you don’t want to be one of them. If you have a staff dedicated to doing this it may help you but what if this employee do not turn up on the crucial days, then you are asking for trouble. You can avoid penalties by hiring a payroll specialist who will do the job for you with guarantee and CheckMark does gives you the edge.

Losing Trust

If you’ve lost trust in your payroll provider or staff member doing your payroll it can be hard to get it back. If the communication is stalled and you can’t easily pick up the phone to quickly resolve anything, it’s time to change. Try CheckMark and experience the new way of doing payroll processing with trust and guarantee.

Time is Money

Small business owners are involved in many business activities and take more than one role to accomplish the business goal. Time plays a vital role and you can’t waste a minute to be at top of your competitors. If you think you are saving money by spending more time doing payroll processing then it is time for you to evaluate and take informed decision and look for payroll service provider who not only handles it better but also keep it low cost.

CheckMark has a team of dedicated professionals who have been handling payroll processing for clients spread across the US. Our clientele is pretty diversified and we take pride in having successfully delivered our promise of trust and quality since last 3 decades. For more info please feel free to get in touch with us at 800.444.9922 or you may drop in a line at salesinfo@checkmark.com.

Small Business 1099-MISC Guidelines and Requirement

Small Business Tax Filing

Form 1099-MISC primarily gives information about independent contractors to the IRS.

As per the guidelines from the IRS businesses are required to submit information returns. Form 1099 is used to report remuneration earned by an independent contractor. There are 17 types of 1099 forms, and IRS defines small businesses as the ones having gross revenues of $5 million or less. Form 1099-MISC is used by these small businesses.

What needs to be Reported
Form 1099-MISC is used to inform payments of services only that are related operating a company when the payments are equal to or in excess of $600 in a given year. The rules of eligibility to report are straight forward – small business owners who have paid to seek services from an unincorporated vendor which must be at least $600 in the accounting year are defined by the IRS to report Form 1099-MISC. It is mandatory that the reporting be done for services only and that to from unincorporated vendors – for instance seeking services for software installation from XYZ Computers needs to be reported in Form 1099-MISC.

Who needs to Report
Internal Revenue Services has laid clear guidelines for the 1099-MISC reporting – the four conditions that are to be met are – the payments should be made to a individual (not an employee), payments that are done to seek services that are essential for running the business, the payments that is atleast $600 for the accounting year. As an example – payments of atleast $600 for the year made in favor of architects, lawyers, contractors etc are liable to be reported in Form 1099-MISC. Also, payments made to the employee’s nominee after the employees death is to be reported using a 1099-MISC. Small business owners in order to file the 1099-MISC would need each individual’s taxpayer identification number. The Form with the IRS approved format can be printed using CheckMark’s 1099 Software, also the business owner may try the e-File version of 1099 software to fill in the values and post it directly to the IRS electronically.

How to File
The small business owner has to file one copy of the 1099-MISC with the IRS and the second copy has to be handed over to the person/individual whose services were used. As said earlier the business owner can e-File the same to the IRS. Forms downloaded from IRS website cannot be scanned and filing non-scannable forms can result in penalty. As already mentioned CheckMark’s 1099 software print version is capable to print out Form 1099 as per IRS directives after the values are placed. You may file the print version manually or try the CheckMark’s 1099 Software e-File version which has print and electronic submit feature.

IRS Penalties

As per the small business jobs act IRS has placed stringent rules to maintain accurate and timely submission of Form 1099-MISC for small businesses. Some of the broader penalties are mentioned below. Filing Form 1099-MISC late but within 30 days of the deadline incurs a penalty of $50 per 1099 submission to as high as $186,000. Filing with inaccurate data penalties depends upon when you have finally reported correct information and a minimum of $530* per 1099-MISC submission and is categorized under – intentional disregard to provide accurate information.

New Deadlines for Forms W-2 and 1099-MISC – Earlier Filing in 2017

2017 Deadlines

Tax filing dates for 2016 Forms W-2 and 1099 has changed. The latest notification from IRS states that the filing deadline for 2016 W-2 and 1099 forms (incl. Form 1099-MISC) is January 31st, 2017. Evidently, this is a month earlier than the filing date of last year.  But, this doesn’t change the deadline for furnishing W-2 forms to employees and 1099-MISC to other workers for 2016. Also, the dates for E-Filing and paper filing remain the same.

“Many states in the US are now using earlier filing dates to cut down on tax fraud and identity theft.” – Bloomberg BNA

IRS has also revised and increased the penalties associated –

  1. With late filing;
  2. Filing with incorrect forms by the due dates;
  3. Intentional disregard for filing requirements;
  4. Failing to furnish W-2s to the employees.

January 2017 –Month for Annual Payroll Tax Reports

All the related payroll tax reports viz; – Annual wage and tax reports, unemployment tax reports and Form 941 are due on January 31, 2017

Furnishing of W-2 Forms and 1099-MISC Forms to your Employees and Contractors

Employers are also supposed to hand-over annual wage and tax reports to their respective employees and contractors who have rendered their services in the year 2015. These tax reports are nothing but W-2s for employees and 1099-MISC for contractors.

W-2 Forms to SSA and 1099-MISC forms to IRS

  • Submit transmittal forms for W-2s to the Social Security Administration by January 31, 2017. That’s Form W-3, along with all W-2s and Form 1096, along with all 1099 forms. This deadline includes forms filed electronically.
  • Submit transmittal forms for 1099s to the IRS by January 31, 2017.

Automatic Social Security Extension?  Well, not anymore…

Formerly provision for extension of time with filing the Form W-2 with social security administration (SSA) was there, it has changed now. To get an extension now you have to explicitly fill out Form 8809 which is a request for an extension in filing time. The application requesting extension should also include a detailed explanation for the reasons of extension. The IRS is very selective in granting the extension and once granted it won’t be for more than a month. As per IRS guidelines extensions will only be granted under special circumstances and not to everyone.

Unemployment tax forms: 

  • The monthly payment on federal unemployment (FUTA) taxes is due January 31, 2017
  • Federal Unemployment Tax Report for 2016 is due January 31, 2017

Form 941 – Quarterly Federal Tax Form is due on or before January 31, 2017.

For a more detailed info, check  https://www.irs.gov/pub/irs-pdf/iw2w3.pdf.

Celebrate Colorado Day with CheckMark, Inc.

Colorado Day

On August 1, 1876, president Ulysses S. Grant signed a proclamation admitting Colorado as a state. Colorado Day was celebrated as a state holiday on August 1 for many years, and then was moved to the first Monday in August, most likely after the time the U.S. Congress passed the Uniform Holidays Bill in 1968. The day no longer became a public holiday, but rather an observance, when the state started observing Martin Luther King Jr. Day as a public holiday in 1985.

CheckMark celebrates Colorado Day, the commemoration of Colorado’s acceptance into statehood, with 10% discount on all the products. The coupon code is CODAY10, which is valid till 7th August 2016.

Here are some facts about Colorado:

  • Colorado is 6,034 square miles larger than Wyoming. Incidentally, Colorado and Wyoming are the only states having unbroken and almost straight-line boundaries on all sides.
  • Atmospheric conditions: Normal atmospheric pressure at sea level is 14.7 pounds to the square inch. That is the pressure exerted against the body by the weight, or density, of the atmosphere. The greater the altitude above sea level, the lighter the pressure. In Denver, the atmospheric pressure is 12.2 pounds to the square inch. Having less pressure against your body is like having a load lifted off your back, which is actually what takes place.
  • Famous memorial and cemetery: The Lincoln Memorial in Washington and the Tomb of the Unknown Soldier in Arlington Cemetery in Virginia. In Denver, the Federal Reserve Bank Building is a good example of Colorado Yule Marble.
  • This marble, mined on the Yule Creek near the town of Marble in Gunnison County, is white, medium-grained, generally banded with pale-brownish streaks and contains angular fragments of chert.
  • The Colorado state capitol building in Denver was completed one hundred years ago in 1896. What was placed in its cornerstone?
  • The cornerstone was laid on July 4, 1890, by the Masonic Lodge and contained a bible, American flag, Colorado and U.S. constitutions, a copy of the Declaration of Independence, census reports, speeches by government officials, newspapers of July 4th, 1890, and gold and silver coins of all denominations. Denver became the permanent capital of Colorado by territorial legislative law Dec.9, 1867.
  • The penalty for picking the state flower you have committed a MISDEMEANOR, and while you will not go to jail, if convicted, you will pay a fine of not less than $5 nor more than $50.
  • The columbine became the state flower in 1899 in a statute passed by the 12th General Assembly and signed into law by Gov. Charles Thomas on April 4, 1899. From 1899 until 1925, it was okay to pick the flower, but in 1925, the Colorado legislature passed the following:

“It is unlawful for any person to tear the state flower up by the roots when grown or growing upon any state, school, or other public lands or in any public highway or other public place or to pick or gather upon any such public lands or in any such public highway or place more than twenty-five stems, buds, or blossoms of such flower in any one day, and it is also unlawful for any person to pick or gather such flower upon private lands without the consent of the owner thereof first had or obtained.”

  • The penalty hasn’t been changed in 71 years. Five bucks was a lot of money in 1925. In some hotels today, it will buy you a cup of coffee and a roll.
    First time Colorado participated as a state in a presidential election and it was 1880, and Colorado voted Republican 27,450 to 24,647 for James A. Garfield. President Garfield died in office at age 49, having served from March 4 to Sept. 19, 1881. He was succeeded by Chester A. Arthur, Party dominated The Republicans in 1876. All of the following were Republicans: John L. Routt, first state governor; James B. Belford, first congressman; Henry M. Teller and Jerome B. Chaffee, first U.S. senators; William M. Clark, first secretary of state; George C. Corning, first state treasurer; David C. Crawford, first state auditor; and A.J.Sampson, first attorney general.
  • Lafayette Head? A Republican, Lafayette Head was the first lieutenant governor of the state of Colorado. Since 1876, no other state official ever elected in Colorado has had the first name, Lafayette.
  • Colorado Ute Indian Delegation, 1868:
    Major Lafayette Head, standing sixth from right, with the delegation of Colorado Ute Indians as well as government officials in Washington, DC, to discuss the Treaty of 1868.

10 Tips on how to Amend your Tax Returns and Fix Filing Errors

Amend your Tax Returns

Worried and Flummoxed over errors in filing your tax returns with the IRS. Don’t be. You can still go ahead and amend your returns. Below are top 10 tips from the IRS that you can do to amend your tax returns –

  1. Do you really need to amend and when? – You should amend your tax return if there were errors in the filing information: viz- Total earnings, income related information, information regarding non-earning members etc. Amendments should also be filed with the IRS to claim tax credits, deductions which the filer might have missed during original return filing. Refer Form 1040X from the IRS; it showcases many other reasons that are eligible for amendments. 
  1. You should not file an amendment – This is why? – If you have committed calculation mistake, in most cases don’t worry – IRS will take care of the incorrect math part. Also, if for filing you have used incorrect forms or time periods – IRS will send you the intimation with the correction required.
  1. Which Form should you use for filing? – You should use Form 1040X to make amendments on the federal tax return that you filed earlier. While doing so, be sure to mark the appropriate year at the very top of the Form denoting the year of the amendment. Also, please note that you cannot e-File 1040X amendments; you could fill in the Form paper and send it to IRS by mail. 
  1. Amendments for more than one year – If you are making amendments to more than one year of tax information filing, be sure to use separate Forms for each year and mail them individually to the IRS for processing. 
  1. Form 1040X – What is it anyways? – Form 1040X has three columns namely A, B, and C each serving specific purposes. While column A is used to mark the original return value that was incorrect, column B is used to denote clearly the net increase or decrease of the amount. And finally, column C is used to show the new/corrected amount. 
  1. What about other Forms and Schedules? – Simply put, if your changes involve other Forms and Schedules, please attach those Forms along with Form 1040X at the time of filing the amendments. If you miss out attaching, it would result in processing delays. 
  1. Waiting for the refund from original tax return? – This is what you should do – For all the cases of additional refund which is based on the amendment of the original returns filing, please wait till you receive the original refund. You may no doubt go ahead and cash the original refund check. 
  1. I have additional tax to pay – Post amendment – How to do it? – If you have additional taxes to pay to the IRS based on the original return amendments, it is highly advised that you file in Form 1040X and pay away the additional amount as soon as possible. It would wave off any accruing interests or penalty. 
  1. When is the best to file for a refund? – You should file Form 1040X within three years’ from the date of original tax filing if you want to claim a refund or within two years from the date of paying your taxes. 
  1. I did make amendments – But I don’t know what happened – For tracking information about your amended tax returns – you may use the tool from IRS (Where’s my Amended Return?) You may also call up at 866-464-2050 and know the status telephonically.

 You may also call 800.444.9922 (toll-free) or email us at support@checkmark.com if you have queries, we would be more than happy to help you.

IRS – ACA Information Returns May Continue To Be Filed After June 30, 2016

ACA Information Returns

As per the deadline given by the IRS – for all Applicable Large Employer (ALE) and Self-Insured Employer, the last date for e-filing ACA information returns is midnight June 30, 2016.

For all those who couldn’t submit the information by June 30, 2016, it is important for them to know the following –

  • The AIR system will continue to run as usual even after June 30, 2016, and the filer can still go ahead and file the ACA information returns. You may also carry out system testing after June 30, 2016 – if there was any legitimate error.
  • For all rejections in the process of filing information returns with the AIR, the submitter has 60 days from the day of rejection to resubmit and their rejected submission will be treated as timely filed. It means that there won’t be any penalties associated with resubmission of the information returns.
  • For all the submitters who received “Accepted with Errors” message, they can still go ahead and submit after June 30, 2016.

News release from IRS (June 30, 2016) –

The IRS is aware that some filers are still in the process of completing their 2015 tax year filings. As is the case for other information returns, penalties may be associated with the submission of the ACA information returns for failure to timely file required returns. As the IRS has publicly stated in various forums in recent months, filers of Forms 1094-B, 1095-B, 1094-C and 1095-C that miss the June 30, 2016, due date will not generally be assessed late filing penalties under section 6721 if the reporting entity has made legitimate efforts to register with the AIR system and to file its information returns, and it continues to make such efforts and completes the process as soon as possible. In addition, consistent with existing information reporting rules, filers that are assessed penalties may still meet the criteria for a reasonable cause waiver from the penalties.

It simply means that those who have missed filing ACA information returns by June 30, 2016, can still go ahead with their respective filing but would be liable for penalties.
Filers who genuinely tried to submit their information returns with the AIR system and it ended in “Accepted with Errors” will not be liable to any penalty. Additionally, filers with reasonable cause for failing to submit information returns within Jun 30, 2016, will get a waiver in their respective penalty.

IRS has also, on many of its forums and news channels, emphasized on paper filers who have missed May 31, 2016, for filing their returns and to complete their proceedings as soon as possible.

For more information and an expert voice on this, please feel free to write to us at support (at) checkmark.com or call us toll-free at 800.444.9922