Increased Form 1099 Reporting and W-2 information
Increased Reporting on 1099-MISC Form
The 1099-MISC form is used to report payments made to independent contractors if annual payments are more than $600. In the past, payments made to corporations have previously been excluded from these reporting requirements. For example, if a small business pays Office Max $1,000, previously they did not have to send that corporation a 1099-MISC. However, a provision in the health care reform bill eliminates this exception and puts these changes in effect for payments made after December 31, 2011. Therefore, beginning in January 2012, businesses will be required to complete a 1099-MISC for all payments made to corporations. (The current exception for payments to tax-exempt organizations is not affected.)
In addition, under current law, businesses that file more than 250 1099-MISC are required to file the forms electronically through the IRS “FIRE” system. This system requires special transmission software, and was designed for large businesses and payroll processors with professional IT departments. Because small businesses typically have leaner staff in these areas, this additional requirement may pose an undue burden on small employers.
All federal, state, and local government agencies and non-profits were exempt from this expanded disclosure. As the IRS releases guidance, this page will be updated. Please see your tax professional in order to ensure compliance with this change.
(Note: Section 9006: Expansion Of Information Reporting Requirements)
Employer provided health – W2 reporting
Beginning in tax year 2011, employers will be required to disclose the value of the benefit paid by them for each employee’s health insurance coverage on the employee’s annual Form W-2, which is distributed in early 2012. The amount to be reported is subject to IRS regulations that will be issued in 2011 but it is expected to include the cost of health coverage, dental, vision and employer HSA and HRA contributions. Employers should initially use COBRA rates to determine the value of health benefits.
This amount is included on the W-2 is for informational purposes only and will NOT subject the employee to an increased tax liability.
For questions and additional information about the 1099 and W2 changes email COSE’s advocacy team.
(Note: Sec. 9002: Inclusion Of Cost Of Employer-Sponsored Health Coverage On W–2)