Forms W-2 are due to employees and Forms 1099-MISC are due to independent contractors by January 31, 2019.
The due date for filing 2018 Forms W-2 with the Social Security Administration (SSA) is January 31, 2019, regardless of whether you file using paper forms or electronically. An extension of time to file Form W-2 with the SSA will only be granted if Form 8809 is filed and the extension is due to extraordinary circumstances or a catastrophe. You are required to file Forms W-2 when you are an employer engaged in a trade or business and pay more than $600 in wages for the year. You are required to electronically file Forms W-2 if you have 250 or more forms.
The due date for filing 2018 Forms 1099-MISC that report nonemployee compensation in Box 7 is also January 31, 2019. The due date for Forms 1099-MISC that do not report nonemployee compensation is February 28 (April 1 if filing electronically).
The general rules for issuing Form 1099-MISC are as follows:
- Individuals and entities are subject to filing requirements for payments that are made in the course of their trade or business. Payments made by an individual for personal services are not reportable.
- You are engaged in a trade or business when you operate an activity with some continuity and regularity for gain or profit. Nonprofit organizations are considered to be engaged in a trade or business for 1099 reporting purposes.
- If you rent real or personal property to others, you may be subject to reporting requirements if the operations are deemed a trade or business. Unfortunately, the IRS has not provided clear guidance in this area, making it difficult to assess whether specific rental properties are required to file Forms 1099-MISC. In general, triple net leases are not a trade or business. Rental activities with a more than de minimis amount of repairs and maintenance are more likely to be a trade or business subject to the 1099 reporting requirements. The requirement to file is determined by analyzing your individual facts. Please call us if you have any questions.
- Form 1099-MISC is required for annual payments (other than credit card payments) of $600 or more for services or rent paid to individuals or unincorporated entities that are not taxed like corporations (this includes limited liability companies taxed as sole proprietorships or partnerships, like SFW Partners, LLC) and all attorneys including those that are incorporated. Payments made by credit card are not required to be reported.
- Electronic filing of Forms 1099 are required if you have 250 or more information returns. If you are required to file electronically but fail to do so, you may be subject to a penalty of $270 per return.
The IRS requires those subject to Form 1099 reporting to confirm on their income tax returns that they have complied with the requirements. Penalties for noncompliance with Forms W-2 and 1099 reporting can be as high as $270 per form ($540 for intentional disregard).
SFW Partners, LLC can assist you in complying with Form W-2 and 1099 filing requirements. Please contact us at 314-569-3333 if you would like assistance or have any questions.