The January 31st year-end filing deadline is only 4 business days away! That means it’s time to start filing your returns now and 123PayStubs is here to help!
W2s and 1099s must be filed by January 31st. These are tax forms used by employers to report wages and taxes withheld for different workers. W-2 and 1099 forms are crucial for businesses that have employees or hired independent contractors during the tax year 2021. However, determining which form you need to file for your workers can be a bit confusing.
If you need a quick reminder about the difference between W2s and 1099s and which form you need to file for your workers, look no further!
Employee classifications affect how both employers and employees/contractors are taxed.
Typically, a worker is classified as an employee if the company exercises sufficient control over when, where, and how the work is done. Employees receive regular payroll payments from their employer and have taxes withheld from their pay.
In contrast, independent contractors work for themselves and can control when and how their work is accomplished. Independent contractors will not appear regularly on your payroll. You will also typically not withhold or pay taxes on payments to an independent contractor.
Filing Form W-2
All employers that pay wages to their employees, even if the employee is a relative, are required to file Form W-2 with the Social Security Agency (SSA) on their behalf each year.
Form W-2 is a wage form used to report the wages an employee earned from their employer during the year with a breakdown of the taxes withheld. Employees need a copy of Form W-2 to file their own state and federal income taxes.
Filing Form 1099-NEC
If you have made a payment of $600 or more to any person or business organization that isn’t included on your payroll, you are required to file Form 1099-NEC.
IRS Form 1099-NEC is used to report nonemployee compensation. Non-employee compensation is defined as any payments made to independent contractors, freelancers, or any other non-employee that is performing services for a business. Previously, this was reported on box 7 of Form 1099-MISC. Now, the IRS has separated the reporting for nonemployee compensation by reintroduction Form 1099-NEC for the 2020 tax year.
Ready to start filing W2s and 1099s for your employees and contractors? 123PayStubs has you covered! With 123PayStubs, you will receive quick and secure online filing and instant updates on your returns filing status. With 123PayStubs, you can download, print, or email your form copies. The January 31st deadline is approaching quickly! Keep your business penalty-free and start e-filing now with 123PayStubs.