Owners of small businesses have to deal with a number of annual reporting and compliance requirements. Deadlines for two reporting requirements for the 2023 tax year are coming up.
1099 Forms
If your small business or sole proprietorship paid for contract labor or other services by non-employees, you likely have to send them a Form 1099. Refer to the following requirements:
• A 1099-NEC form is required to be filed if you paid an individual, partnership or LLC $600 or more in calendar year 2023. This includes payments for services to non-employees.
• A 1099-MISC form is required to be filed if you paid an individual, partnership or LLC $600 or more in the calendar year 2023. This includes payments for rents, attorney fees and other income payments.
• A 1099-INT or 1099-DIV is required if you paid interest or dividends of $10 or more to an individual.
The 1099 forms are due to recipients on January 31, 2024 and most are due to the IRS February 28, 2024 (paper-filed) or March 31, 2024 (e-filed). 1099-NEC forms are due to the IRS by January 31, 2024.
Failure to file 1099s on time can lead to penalties of up to $310 per 1099 form. If the IRS believes the failure to file is “intentional,” they quote a minimum penalty is $630 per form!
Health Insurance Expenses Paid by S-Corporations
If your S-Corporation pays health, disability or accident insurance premiums on your behalf, including long term care insurance or Medicare premiums, these should be reported as taxable wages to you, subject to federal income tax withholding. In addition to being the proper reporting procedure, there is a tax benefit to you reported on your personal income tax return.
If you have not been including the insurance premiums paid throughout the 2023 calendar year in your paychecks, be sure to add the entire insurance amount paid to one of your last 2023 payroll checks.
You should provide this information to your payroll service provider by early January, since they will need to incorporate the amount into your 4th quarter 2023 payroll reports, your annual Form 940 and your 2023 W-2.
If you have questions about this featured topic or other accounting and tax related topics, please do not hesitate to contact us at 727-327-1999 OR [email protected].
ANY TAX ADVICE IN THIS COMMUNICATION IS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, BY A CLIENT OR ANY OTHER PERSON OR ENTITY FOR THE PURPOSE OF (i) AVOIDING PENALTIES THAT MAY BE IMPOSED ON ANY TAXPAYER OR (ii) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY MATTERS ADDRESSED HEREIN.
