IRS Audit, Tax Audit, Tax Audit Help

W2 Forms and 1099 Forms Due Now

January 24, 2013 - IRS Audit, Tax Audit, Tax Audit Help

W2 Forms and 1099 Forms are due by January 31st!   Are you ready to file these required forms? The LAST thing any employer wants is to be delinquent in his employer’s filing requirements. What is required and when?   December 31st marked the end of the fourth quarter of the calendar year. Not only do you have the fourth quarter employers reports due by January 31st. You also must give your employees their W2 forms by January 31st. You must also give any independent contractors their Forms 1099 Miscellaneous by January 31st. Caution: Do NOT make the costly mistake of treating an employee as an independent contractor! Attention Employees – the next blog is devoted to YOU!   In addition to the W2 forms given to the employee, you must also send a copy to Social Security Administration (SSA) with the transmittal Form W3. If you withheld state taxes for the benefit of your employee, you must also send a W2 copy to your state (with your state’s W3 equivalent). Form W3 must be filed with SSA by the last day of February. I tell my employer clients there is no penalty for filing early. If you file the W3 at the same time as you issue the W2 forms, you are more likely to file it on time.   Most employers file the quarterly report Form 941 to report the taxes withheld from the employees’ paychecks. The taxes withheld include the employees’ federal income taxes, Social Security taxes and Medicare taxes. PLUS the employer matches the Social Security and Medicare taxes. If you are self-employed you are considered both employer and employee and you pay the full 15.3 percent of earnings.   IMPORTANT NOTE: The 2% “Payroll Tax Holiday” that employees enjoyed these past two years expired on December 31st. Effective January 1, 2013 the employees’ responsibility for Social Security and Medicare taxes returns to 7.65 percent of their wages. Medicare taxes are withheld on every dollar of pay, but the 2013 maximum earnings subject to Social Security tax is $110,100 for both employees and self-employed people.   According to the IRS, “Employers should start using the revised withholding tables and correct the amount of Social Security tax withheld as soon as possible in 2013, but not later than February 15, 2013. For any Social Security tax under-withheld before that date, employers should make the appropriate adjustment in workers’ pay as soon as possible, but not later than March 31, 2013.” So we have a little grace period here to “catch up” on the proper amount that should be  withheld beginning January 1st.   You may be a small employer that has been given permission from the IRS to file an annual Form 944 instead of the quarterly Form 941. Form 944 is due by January 31st for the preceding calendar year wages paid.   In addition to Form 941 (or Form 944), Forms W2/W3 and state equivalent forms, you must also file (and pay) by January 31st, your 4th Quarter state income tax withholding report, file (and pay) your 4th Quarter state unemployment tax report, and file (and pay) your annual federal unemployment tax report Form 940. Unemployment tax is generally paid on the first $7000 of wages paid to a covered employee. Remember to take into account any deposits you made during the earlier quarters for federal unemployment taxes.   To recap:   By January 31, 2013:   1. File Form 941 for the 4th quarter 2012 OR Form 944 for the whole year 2012 2. File your state’s 4th Quarter 2012 income tax withholding tax reports 3. File your state’s 4th Quarter 2012 unemployment tax report 4. File Form 940 for the whole year 2012 federal unemployment tax report 5. Give Forms W2 to your employees 6. Give Forms 1099 to your independent contractors   By February 28, 2013 :   1. Send Form W3 with Copy A of all Forms W2 to Social Security Administration 2. DO not mail the W3/W2 to IRS, it goes to SSA 3. Mail Form 1096 with IRS copy of Forms 1099 to the Internal Revenue Service. 4. 1096 is the form that goes to IRS 5. I’s OKAY to file these transmittal forms in January. You don’t have to wait till February 28th.     Always to your lowest legal tax, Nellie T Williams, EA