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The IRS Forms Are Here! The IRS Forms Are Here!

Since many business owners liken tax matters to having teeth pulled, this post is a user-friendly list of reminders for four popular IRS forms for new employees! Please consult your tax professional for advice and detailed information.

Form 940

irs-form-940Employers need to complete the Form 940 and pay federal unemployment taxes. Here are 5 things to know about the 940.

  • The Federal Unemployment Tax Act (FUTA) rate is still 6.0% (no surtax).
  • Credit reduction states borrowed money from the federal government when their unemployment insurance became insolvent. The states and percentage of credit reduction are listed on Form 940 Schedule A, which you have to fill in and submit.
  • The due date is January 31.
  • Federal tax deposits have to be made electronically via the Electronic Federal Tax Payment System (EFTPS).
  • The IRS provides instructions and updates for Form 940 on their website.

Form W-2

irs-form-w2Employers complete the Form W-2 and submit it to the Social Security Administration along with their Form W-3. Also, their employees are awaiting copies of the W-2 so they can get their fat income tax refund checks!

  • Make clear copies for the SSA (Copy A), state/local tax department (Copy 1), and employees (Copies B, C, and 2).
  • The deadline for employers to mail out the W-2 forms to their employees is January 31.
  • The due date for mailing paper copies to the SSA and e-filing is January 31.
  • Beware of common errors such as light-colored ink (use black!), font size (use 12-point Courier!), and missing decimal points/cents from entries (and don’t use dollar signs!).
  • Keep your Copy D with a copy of your Form W-3 for four years.

W-9

irs-form-w9When paying a nonemployee (such as a contractor), a business owner must have the payee complete IRS Form W-9 with the name and Tax ID Number (TIN).

  • Check the IRS’s W-9 instruction guide for more detailed information.
  • IRS wants you to remember that the backup withholding rate for reportable payments is 24%. (If that sentence makes no sense to you, check with your tax professional.)

Form 1099-MISC

irs-form-1099First of all, there is the tricky determination of whether someone is an employee or 1099 contractor (free whitepaper: Independent Contractor vs. Employee Classification).

  • The 1099 instructions contain reminders and details. It’s worth your time to skim and see what applies to you. Also, it reminds you about the pesky Form 1096 that must accompany your 1099s on their travels to the IRS.
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