Filing and filling out tax forms can be overwhelming and confusing at times especially at year-end with all of the other deadlines and all we really want is to enjoy the holiday cheer! Today, we provided a few best practices that can be applied now to help when filing 1099-Miscellaneous forms and the 2019 Forms W-2.
1099-Misc: Nonemployee Compensation Best Practices
1099 Miscellaneous (1099-Misc) forms need to be filed for a multitude of reasons. The 1099-Misc we most commonly file for clients is for rents paid (box 1) and nonemployee compensation (box 7). Nonemployee compensation is services performed for your business by someone that is not an employee. Such services include attorney fees, advertising, consulting, independent contractors, and contract labor, just to name a few.
If you have paid at least $600 to one vendor for any of the above listed items, you have met the 1099-Misc threshold and must file the form with the Internal Revenue Service (IRS). If you have withheld any federal income tax from a vendor, you must file the 1099-Misc with the government even if the total paid to the vendor is less than $600. 1099s must be electronically filed with the Iowa Department of Revenue if there is any Iowa income tax withheld from the earnings.
1099-Misc reporting nonemployee compensation must be filed on or before January 31, 2020 with the IRS to avoid late penalties. All other reported payments on the 1099-Misc must be filed by February 28, 2020 if paper filing or by March 31, 2020 if electronically filing If any of your 1099-Misc reporting nonemployee compensation will be filed after the January 31st deadline, you must file them in a separate transmission from all other amounts on the 1099-Misc to reduce late penalties. The deadline to file 1099s with the Iowa Department of Revenue is February 15, 2020.
Here are a few best practices that can be applied now to help make your year-end filings easier:
- Create a list of vendors that you will meet the $600 threshold for the year and will need a 1099 issued to them
- From that list, make sure you have a W-9 on file for each vendor. The W-9 form can be found here: https://www.irs.gov/pub/irs-pdf/fw9.pdf)
- If you do not have W-9s on file, make sure you request them from the vendors
- If you are using QuickBooks, make sure the W-9 information is in the system and the vendor is marked as a 1099 vendor
The IRS 1099 instructions can be found here: https://www.irs.gov/pub/irs-pdf/i1099msc.pdf.
2019 W-2 Filing Best Practices
Following is a summary of the filing requirements for 2019 Forms W-2:
- Employers must file Form(s) W-2 if they have one or more employees they paid for services performed during 2019. An employer required to file Form(s) W-2 must also file Form W-3 to transmit Copy A of Form(s) W-2. W-3 and W-2 forms are required to be filed with Social Security Administration (SSA) via regular mail or electronically (e-file) by January 31, 2020. SSA encourages all employers to e-file their Forms W-2; however, they must e-file if they are filing 250 or more Forms W-2. If forms are filed late, or failed to be e-filed when required, penalties will be assessed.
If you choose to mail the forms via standard courier, be sure to get a receipt to prove the forms were mailed timely, and keep this receipt with your copies of Forms W-3 and W-2. Certified mail is recommended for proof of delivery.
- Employers must provide Form(s) W-2 to each employee by January 31, 2020. These may be hand delivered or mailed to the employee.
- New for 2020, the Iowa filing deadline for form(s) W-2 is February 15, 2020. Employers that issued Form(s) W-2 that include Iowa withholding must e-file those documents with the Iowa Department of Revenue. Employers that have NO Iowa withholding, are not required to e-file those Form(s) W-2. If an employer has both forms with Iowa withholding and without, we suggest all forms be e-filed for simplicity.
If your payroll software does not allow you to e-file the Iowa Form(s) W-2, there is an alternative method. New this year is the Iowa Department of Revenue W-2 Key & Send program. Employers can go to the Iowa Department of Revenue website, click on eFile & Pay, login to eFile & Pay using your Business eFile Number (BEN), and enter your User ID and Password. Click W-2 Key & Send from the main menu. From here, employers now have the option to manually enter their W-2 information in the Iowa Department of Revenue system.
A little more about us:
Located in West Des Moines, Iowa with a branch office in Winterset, Iowa, McGowen Hurst Clark Smith (MHCS) celebrates 70 years of extending excellent service to our clients, providing them with accounting, auditing, consulting and financial planning expertise.
Established in 1946, our staff has grown from 3 to 60 employees, making us large enough to provide our clients with a broad base of experience and resources, yet small enough to offer very personalized service—which we feel makes us stand apart from other CPA firms. In addition to the traditional services of Accounting, Tax Preparation, Audit and Business Consulting, MHC&S offers our clients specialized services including Estate Planning, Business Valuations, Cost Segregation Studies, Retirement Planning, QuickBooks Training, Financial Advisory Services, Fraud Detection and Deterrence, Business Succession Planning, Litigation Support and more.
MHCS is a member of CPAmerica International, Inc., a national association of accounting firms offering membership to only 90 firms throughout the United States. This association offers a wide pool of additional technical expertise to the members firms, as well as continuing professional education necessary to maintain the degree of excellence which MHCS feels is vital in today’s business environment.