You will need to file Form 1099-MISC if any of the following applies. Note there are also certain incomes you must report as well.
• $600 or more in services, lodging, and other income expenses.
• Each worker you’ve withheld federal income tax from under the backup withholding rules.
• Paid $10 or more in royalties or broker payments instead of tax-exempt interest dividends.
• All gross proceeds to attorneys and other legal consultants.
• Any direct sales of consumer products resulting in an income of $5,000 or more made anywhere that isn’t a permanent retail establishment.
Expenses NOT reported on IRS Form 1099-MISC include:
• All non-reportable payments made to corporations, excluding attorneys and legal consultants. They must receive a Form 1099 – MISC regardless of their corporate status.
• Payments made to foreign governments or tax-exempt organizations in the United States, the District of Columbia, and U.S. possessions.
Income paid to official employees (This is where the From W-2 comes in).
IRS Form W-2 – What You Need to Know
First of all, what is a W-2? IRS Form W-2 is an annual statement that you must file with the SSA and issue recipient copies to employees. You, the employer, will then use these to report salaries and other payments made during the previous tax year. You will also need to file Form W-2 for each official employee with the SSA (Social Security Administration). This is very important considering your employees use this form to file their personal tax returns. On their recipient copies they will find wages earned, taxes withheld, and additional information needed to complete their yearly tax returns.
Filing late or not filing at all can cost you and your business big time. If you don’t file Form W-2s by the deadline, you must pay a $30 fine
for each. After 30 days, this penalty raises to $60 per form with a top fine of $500. That’s in addition to the pressure you will receive from your employees and contractors when they can’t file for their refunds.If you do make a mistake, you can use a W-2 Correction Form W-2c
. It would be best if you did this as soon as you discover a form error
. You also need to send copies of your corrected W-2 Forms to each employee.
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