Year-End Reporting Reminder for Businesses
It is more important than ever to make sure you are meeting your reporting obligations. If you need assistance with these important year-end reminders, please contact your partner.
Form 1099-MISC: Whether you prepare Forms 1099-MISC yourself or request WellsColeman to prepare them for you, there are several items to keep in mind that will make all the process much easier!
- Review your vendor lists and mark which vendors should receive a Form 1099-MISC. Generally, any payee (other than a corporation) who is engaged in a trade or business and receives $600 or more in rents, services, or other income from you during the year should receive a Form 1099-MISC. One common exception are payments made to attorneys. Attorneys should receive a Form 1099 for services in excess of $600 regardless of whether or not they are incorporated.
- Make sure all vendor setups are complete with name, address, and identification number. Many errors occur in this area and if the information does not match what the IRS has on record, a letter will be mailed requesting you to begin backup withholding from the payee. All vendors should complete a Form W-9 before any payment is made to ensure you have the correct information.
- If an error is discovered, determine if the government copy has been filed with the IRS. If not, no correction is necessary and you can just reissue the correct Form 1099-MISC to the vendor. If the government copy has been filed, then a corrected Form 1099-MISC and Form 1096 must be filed.
- Forms 1099-MISC are due to recipients and the IRS by January 31, 2019. If WellsColeman prepares your Forms 1099-MISC and Form 1096, we need your information in our office no later than January18, 2019.
- Watch those penalties! Failing to file information returns timely, failing to include all required information on the return, filing incorrect information such as an incorrect TIN or failing to report a TIN can result in huge penalties. The amount of the penalties is based on how late the information return is filed:
- $50 per information return if you correctly file within 30 days after the due date; maximum penalty $547,000 per year ($191,000 for small businesses).
- $100 per information return if you correctly file more than 30 days after the due date but by August 1; maximum penalty $1,641,000 per year ($547,000 for small businesses).
- $270 per information return if you file after August 1 or you do not file required information returns; maximum penalty $3,282,500 per year ($1,094,000 for small businesses).
- Small businesses are defined as having average annual gross receipts for the 3 most recent tax years ending before the calendar year in which the information returns were due of $5 million or less.
S-Corporation Health Insurance Reporting on Form W-2: More than 2% shareholders of S-Corporations must include health insurance premiums for the shareholder and his/her family on the shareholder’s annual W-2. The premium amount is included in Box 1 Federal Wages and Box 14 Other but is not included in Social Security or Medicare wages. Please contact your payroll service provider and provide them with this information no later than December 28, 2018.
Personal Use of Employer-Provided Vehicle Reporting on Form W-2: Employer’s must report this taxable non-cash fringe benefit on the employee’s annual W-2, is subject to federal income tax, social security and Medicare tax, and FUTA tax. The value is based on the FMV of the vehicle and calculated using one of the following three methods: Annual Lease Value Rule, Cents-per-Mile Rule, or Commuting Rule. Please contact your payroll service provider and provide them with this information no later than December 28, 2018.