W-2s and 1099s

If you are an employer or business owner, the deadline for sending out W-2s and 1099s for work done in 2018 is January 31, 2019. Let’s take a look at these two forms and what the requirements are for employers and workers.

Employees vs. Contractors

If you’re unsure about the status of a particular person who performs work for your company, ask the following questions:

  •  Do you pay for benefits on behalf of this individual?
  •  Are they on the payroll, with taxes and social security deductions made?
  •  Do they work regular hours or a predetermined schedule?
  •  Are you their only employer?

Answering YES to these questions may help you distinguish them as employees.

  •  Does this person make their own schedule?
  •  Do they have other clients that they work for as well?
  •  Do they bill you for work performed?

This person you answered YES for is likely a contractor.

W-2s – Who Gets Them?

Each employee should be issued a W-2 at the end of January for payroll covered in the previous year. It’s a statement of wages earned, taxes paid, and other deductions from wages. All payroll figures will be listed on the W-2, including taxes withheld. An employee will use these figures to calculate any overpayment or underpayment of taxes when preparing their tax returns for filing.

1099s – Issued to Contractors

Contractors don’t receive a W-2. They are issued a 1099 Form for the work they perform throughout the year. This is required when you pay more than $600 to a person for contracted work, but some business owners prefer to issue them to all contractors. Taxpayers will identify their 1099 income as “other income” on their tax return when it’s time to file.

Filing Deadlines for W-2s and 1099 Forms

Typically, the business owner will prepare and issue all W-2s and 1099s by the end of January for the previous year. At that time, they will also submit copies to the Federal government to share the information with them, along with a W-3, which summarizes all the W-2s issued by the business.

When a taxpayer receives their form from an employer or business client, they should check it for accuracy right away. Any errors should be reported back to the person or office who issued them.

An Accountant Can Help with W-2s and 1099s

JStevens Accounting is a full-service bookkeeping and accounting firm. We are prepared to help you with all financial aspects of recording and reporting finances for your business.

Get the help you need by contacting us today so that we can assist with the preparation of your W-2s and 1099s.