Some, but not all of your Forms 1099-MISC, must be provided to payees and filed with the IRS by Jan. 31, 2017. Your goal: to file all of your 1099-MISC forms accurately the first time. Here are some last minute tips you might find useful.
Sift and separate
Forms 1099-MISC on which you’re reporting nonemployee compensation in Box 7 are the only forms that must be provided to payees and filed with the IRS by Jan. 31. The following forms must be provided to payees by Jan. 31, but filed with the IRS by Feb. 28 (paper filing) or March 31 (electronic filing):
* Forms on which you’re reporting payments to deceased employees’ estates or beneficiaries, compensatory damages for nonphysical injuries or sickness an employee received on account of an employment discrimination case or liquidated damages an employee received under the Age Discrimination in Employment Act, in Box 3
* Forms on which you’re reporting gross proceeds to any attorney in Box 14.
The Feb. 28/March 31 filing deadlines apply to all other information returns, such as Form 109-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.
Worry less about the amount reported in Box 7
Accurately reporting the amount in Box 7 is your goal, but if you’re running into an unexpected problem and you have to push on, you can take advantage of a new safe harbor for de minimis errors.
Under this new safe harbor, you won’t be liable for penalties if the error for any single amount is $100 or less or $25 or less if the errors involve backup withholding.
Even better: You don’t have to send corrected forms to payees, unless they ask for them.
Flip side: You remain on the hook for penalties if payees request corrected forms.
If you haven’t done so already, ensure that you have independent contractors’ correct Taxpayer Identification Numbers (TINs) by registering with the IRS for its online TIN matching program. You have two options:
* Interactive TIN Matching: You may match up to 25 payee/TIN and name combinations in real-time
* Bulk TIN Matching: You may submit a file with up to 100,000 TIN and name combinations and receive a response to your secure mailbox within 24 hours.
See the IRS’ e-services web page for more information.
Request an extension of time to file
You may apply to the IRS for an automatic 30-day extension of time to file your 1099-MISC forms by filing Form 8809. Remember to check the appropriate box on Line 6: 1099-MISC NEC reporting only.
Additional extensions are available, but you’ll need a good reason for requesting them. Form 8809 may be filed on paper, online or electronically through the IRS’ FIRE system.
Take overtime in stride
If you and your staff will be burning the midnight oil to hit your deadlines, you’ll probably be on the hook for overtime pay. Here are the five key overtime rules you need to know:
* Employees who are nonexempt under the Fair Labor Standards Act or an equivalent state law are owed overtime at time-and-a-half their regular rates of pay when they work longer than 40 hours in a week. If you’re in Alaska, California or Nevada, you must pay overtime after eight hours of work in a day.
* Nonexempts who work at home, at night or during the weekends, must keep track of their working time.
* If the office is closed on Jan. 16 in honor of Martin Luther King, Jr. Day and nonexempts work overtime during that week, don’t factor the holiday pay into their overtime rates. Reason: It’s idle time pay, which is excluded from the regular rate calculation.
* Holiday pay need not be included in the regular rate calculation for nonexempts who work through a holiday if they receive their regular wages in addition to the holiday pay. But you can’t credit this holiday pay against your obligation to pay overtime.
* If, instead of paying employees their normal wages plus holiday pay, they exchange the holiday pay for at least time-and-a-half for holiday work, you can credit that time-and-a-half premium against your obligation to pay overtime.
Source: CPA PRACTICE ADVISOR