1099s, 1095s and Year End Payroll

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1 1099s, 1095s and Year End Payroll DENNIS MUYSKENS HOGAN - HANSEN P.C. Agenda 1099s What are they? Who receives them? Types of 1099s Procedures Filing 1099s 1095s What are they? Types of 1095s Procedures Filing 1095s End of Year Payroll Best Practices Depositing and Reporting Questions??? 1

2 1099 What is a 1099? The 1099 form is a series of documents the Internal Revenue Service (IRS) refers to as information returns. There are a number of different 1099 forms that report various types of income someone may receive throughout the year other than salary that an employer may pay 2

3 Who Should Receive a 1099? In general, a Form 1099-MISC should be filed for each person to whom an employer has paid one or more of the following: At least $600 in services, rents, prizes or awards and other income payments At least $10 in royalties or broker payments in lieu of dividends of tax-exempt interest Is a Form 1099 the same as a W-2? While a W-2 reports wages, salaries and tips, a 1099 reports other kinds of income. There are many varieties of a 1099 form, and each one is used to report different types of income 3

4 Contract Employee vs. Non-Contract Employee For an employee - you must withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid For an independent contractors - you do not have to withhold or pay any taxes on payments Types of 1099s Form Description Minimum Amount Reported Due Date 1099-A Acquisition or Abandonment of Secured Property Any amount January B Proceeds From Broker and Barter Exchange Any amount February 15 Transactions 1099-C Cancelation of Debt $600 January CAP Changes in Corporate Control and Capital Structure $100 million January DIV Dividends and Distributions $10 ($600 for liquidations) January G Certain Government Payments $10 January H Health Coverage Tax Credit (HCTC) Advance Any amount January 31 Payments 1099-INT Interest Income $10 ($600 for some businessrelated January 31 interest) 1099-K Merchant Card and Third Party Network Payments $20,000 January LTC Long-Term Care and Accelerated Death Benefits Any amount January MISC Miscellaneous Income $600 for non-employee January 31 compensation ($10 for royalties and most other sources) 1099-OID Original Issue Discount $10 January PATR Taxable Distributions Received From Cooperatives $10 January Q Payments From Qualified Education Programs Any amount January R Distributions From Pensions, Annuities, Retirement or $10 January 31 Profit-Sharing Plans, IRAs, Insurance Contracts, etc S Proceeds From Real Estate Transactions $600 January SA Distributions From an HSA, Archer MSA, or Medicare Any amount January 31 Advantage MSA RRB-1099 Railroad Retirement Board Statement Any amount January 31 SSA Social Security Benefit Statement Any amount January 31 4

5 Procedures for Preparing a Check your work Before you start the 1099 process, make sure you have all of the correct information on your contractors 2. Collect your 1099s 3. Fill out the forms 4. Send out the forms January E-File or mail form 1096 to the IRS 6. Keep a record for your files 1099 Forms To order official IRS information returns, which include a scannable Copy A for filing with the IRS and all other applicable copies of the form, visit: 5

6 Forms to Turn in for a 1099 Copy A For Internal Revenue Service Center Copy 1 For the State Tax Department Copy B For Recipient Copy 2 To be filed with the recipient s state income tax return when required Copy C For Payer 6

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8 How does a 1099 get filed? Filing returns electronically you will need to register on these websites: Filing Date for 1099 JANUARY 31 Recipient copy due to the employee Paper or Electronic Filing due to IRS 8

9 Questions?

10 What is a 1095? Form 1095 C is - employer provided health insurance and coverage that is offered to an employee for the year What are the different 1095s? 1095 A - Health Insurance Marketplace Statement- is for people who have health insurance through the Health Insurance Marketplace, often called an exchange 1095 B - Health Coverage- is mailed to individuals by the insurer to report minimum essential coverage. The form details the type of coverage, the months of the year the coverage was provided and the names of those covered by the plan 1095 C - Employer Provided Health Insurance Offer and Coverage Insurance- is issued to employees by companies with 50 employees or more for FY This form states the health insurance coverage the employer offered and whether or not the employee took advantage of it 10

11 Who must file? An ALE Member must file one or more Forms 1094-C and must file a Form 1095-C for each employee who was a full-time employee of the ALE Member for any month of the calendar year Generally, the ALE Member is required to furnish a copy of the Form 1095-C to the employee Who is an ALE Member? ALE- Applicable Large Employer An ALE, which is defined in the text of the ACA, is an employer who averaged at least 50 full-time employees (including full-time equivalent employees) on business days during the preceding calendar year 11

12 Procedures to take when preparing a 1095 Know the correct codes Contribution amounts Start date for employee Effective start date of insurance eligibility Employee and dependent s date of birth and social security number Forms 1094-C and 1095-C IRS Forms 1094-C and 1095-C are filed by employers that are required to offer health insurance coverage to their employees under the Affordable Care Act 1095-C Provides information about health insurance and is sent to both employees and IRS 1094-C Acts as a cover sheet about the 1095-C and is sent only to the IRS 12

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14 When do you file 1094 and 1095? February 28 Paper Filing March 31 Electronic Filing Do you need an extension? You can get an automatic 30-day extension of time to file by completing Form

15 How to File a 1095 Or You will need to register to the following website to file: Go to Google and in the search bar enter: IRS Affordable Care Act Information Returns Program End of Year Payroll 15

16 Hint s and Best Practices Breathe Set up office hours for your colleagues and STICK TO THEM Send out an to all of your employees and vendors at the end of Quarter 3 Make sure that EVERY employee and contractor has a valid SS/TIN number Make sure you have vendor s business name, physical address, mailing address and telephone number Go over any year-end reports from previous year This will give you a fairly accurate guesstimate of what to expect in the coming year Hints and Best Practices Run an audit report Keep in mind any wage-base limits SS/Med and State Unemployment Insurance, along with common pre-tax deductions If you are unsure about information that you ve received from an employee or vendor, ASK QUESTIONS Set up deadlines for staff vendors to report information 16

17 Depositing Employment Taxes You must deposit federal income tax withheld and both the employer and employee social security and Medicare taxes You must use electronic funds transfer (EFTPS) to make all federal tax deposits Reporting Employment Taxes Federal Income Tax and Social Security and Medicare Tax Form 941,943,944,945 Federal Unemployment Tax Act (FUTA) Form 940 Preparing and Filing Form W-2 Must Complete Form W-2, Wage and Tax Statement Must complete Form W-3 Extension? Use Form 8809 to file an extension application by January 31 st 17

18 Year End Payroll Filing Date January 31, 2018 Questions? 18

19 Website Information 1099 Form and Instructions: ,1095 Forms and Instructions