W2 forms are used to report income for your employees including Social Security and Medicare. A W2 form shows total income as well as how much has been withheld from an employee’s pay for federal, state, and local taxes. At the end of each tax year W2’s must be created for all employees for that tax year and mailed along with a W3 form to the Social Security Administration by January 31st of the following year. Copies must also be given to each employee by January 31, of the following year, and a copy kept on file.
1099-MISC forms, on the other hand, are used to report income for individuals who do work for your company but are not employees – independent contractors. Taxes are not to be withheld from independent contractors as they are responsible for their own taxes. At the end of the tax year form 1099-MISC must be mailed along with a 1096 form to the Internal Revenue Service (IRS) by January 31st of the following year. A copy must also be given to the independent contractors by January 31st of the following year, and a copy kept on file.
Related: 1099: Keeping a Tab and Ensuring Compliance
Business owners save more with an independent contractor than with an employee, as they will not be liable for matching the Social Security and Medicare as they are required to do with an employee; however, there is a clear definition of who should be classified as employee vs independent contractor and steep penalties are in place if employees are treated as independent contractors by your organization.
We are W2’s and 1099’s specialists! Schedule a phone consultation with us, or call us at 718-257-4535 to set up an appointment so we can get started on your W2’s and 1099’s. If you are behind on your bookkeeping and need help catching up with backlogged work, complete our Backed Up Bookkeeping Help Form.
SHORTCUT TO USEFUL FORMS:
Backed Up on Your Bookkeeping? Let us help you get back on track by completing our Backed Up Bookkeeping Help Form
(We will respond within 24 hours)
Got a Quick QuickBooks Question? Let us answer it for you by completing our Quick QuickBooks Question Form
(We will respond within 8 hours)
Having Some Issues With Your QuickBooks and Could Use a Zoom or Phone Session? Let us help you sort it out by scheduling a QuickBooks Consult Session with us.
Having Some Issues With Your QuickBooks but Prefer In Person Help (& You Are In NYC)? Let us help you sort it out by scheduling an in-person QuickBooks Consultation with us.
Having issues finding paperwork and need an efficient filing system setup? Let us help you get it in order by completing our Filing System Setup Form if you are located in NYC.
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