- Our Team
December 13, 2020
Prior to 2020, nonemployee compensation was reported on 1099-MISC in Box 7. The IRS has now reinstated Form 1099-NEC to report nonemployee compensation separately from other types of income reported on Form 1099-MISC. Some of you may remember this form was last used in the early 1980’s! The new 1099-NEC impacts many businesses, with filers ranging from small businesses to large companies. Businesses are required to file the form for each person from whom they have withheld any federal income tax regardless of the amount of the payment. Businesses must also file the new form for each person whom they have paid at least $600 in:
Change is coming for the upcoming tax season – the new 1099-NEC. To help ensure compliance and avoid any penalties, it is important to understand the new form, filing deadlines, and who must file.
To avoid any delays and penalties, it is important to file on time and with the correct information. The due date for filing Form 1099-NEC is January 31. However, since January 31, 2021 falls on a Sunday, the form must be filed on or before February 1, 2021 by either paper or electronic filing procedures. Unlike prior years, no automatic 30-day extension to file will be available. The IRS will allow an extension if the filer meets one of the criteria outlined on Form 8809 Application for Extension of Time to File Information Returns. Some of the criteria include death, serious illness, fire, casualty, and other catastrophic events.
It is important to note that e-filed Form 1099-NEC’s will not be included in the IRS 1099 Combined Federal/State Filing Program (CF/SF). Under this program, the IRS automatically forwards data to appropriate states, but it will not do so with Form 1099-NEC. This could cause businesses to miss key state filing deadlines so filers will need to be conscious of state filing obligations.
There are many 1099 filing programs available for businesses. These reporting platforms have the capability to file to the IRS, Social Security Administration, and directly to state agencies, ensuring compliance. As we enter into a new season with tax filing changes, it is inevitable that there may be confusion in navigating these changes. Please do not hesitate to contact our office if you need assistance navigating these changes.
March 21, 2023
n alignment with IRS requirements, there are certain businesses that must file Schedule K-2 and Schedule K-3. Ultimately, any pass-through entities that have relevant international income, deductions, credits or other miscellaneous items must submit completed Schedule K-2 and Schedule K-3 forms. What is Schedule K-2 and Schedule K-3? Schedule K-2 is associated with Partner’s Distributive Share […]
March 7, 2023
A health savings account (HSA) is a type of savings account that lets individuals put aside pretax money to pay for qualified health care expenses. Studies show that HSA asset growth has been steadily rising since 2016. However, HSAs are often underutilized by employees because they either do not understand how HSAs work or they […]