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Tag Archive for 1099

W-2 Or 1099 For Shareholder Employees Of S Corporations?

1099 or W-2 For Shareholders: Paul Hamann

W-2 Or 1099? That’s the number one question Jack receives here at RCReports.

Answer: W-2

We hear your argument: Paying wages via 1099-MISC instead of W-2 has no tax effect!

Here’s Jack’s reply: It’s the law.

FS-2008-25 states: Corporate officers are specifically included within the definition of employee for FICA (Federal Insurance Contributions Act), FUTA (Federal Unemployment Tax Act) and federal income tax withholding under the Internal Revenue Code.

Generally, an officer of a corporation is an employee of the corporation. The fact that an officer is also a shareholder does not change the requirement that payments to the corporate officer be treated as wages.

Just to be certain we looked up the IRS definition of Employee and Independent Contractor, just to make sure there wasn’t some loophole or wiggle room to argue for independent contractor status.
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1099 Or W-2 For Shareholder Employees Of S Corps?

1099 or W-2? Answer: W-2 We hear your argument: Paying wages via 1099-MISC instead of W-2 has no tax effect! Here’s the reply: It’s the law.

1099 or W-2? Answer: W-2

We hear your argument: Paying wages via 1099-MISC instead of W-2 has no tax effect!

Here’s the reply: It’s the law.

FS-2008-25 states: Corporate officers are specifically included within the definition of employee for FICA (Federal Insurance Contributions Act), FUTA (Federal Unemployment Tax Act) and federal income tax withholding under the Internal Revenue Code.

Generally, an officer of a corporation is an employee of the corporation. The fact that an officer is also a shareholder does not change the requirement that payments to the corporate officer be treated as wages.

Just to be certain we looked up the IRS definition of Employee and Independent Contractor, just to make sure there wasn’t some loophole or wiggle room to argue for independent contractor status.
Read more

1099 Or W-2 for Shareholder – Employees Of S Corps? Updated for 199A

PAUL HAMANN A

1099 or W-2? Answer: W-2

We hear your argument: Paying wages via 1099-MISC instead of W-2 has no tax effect!

Here is the law:

FS-2008-25 states: Corporate officers are specifically included within the definition of employee for FICA (Federal Insurance Contributions Act), FUTA (Federal Unemployment Tax Act) and federal income tax withholding under the Internal Revenue Code.

Generally, an officer of a corporation is an employee of the corporation. The fact that an officer is also a shareholder does not change the requirement that payments to the corporate officer be treated as wages.

Just to be certain we looked up the IRS definition of Employee and Independent Contractor, just to make sure there wasn’t some loophole or wiggle room to argue for independent contractor status.

Read more

Time To File Your Taxes: Tax Season Has Begun!

Kat Jennings

The start of the 2017 tax season occurred this Monday on January 23rd. (Some argue tax season never ends.) By this we mean that Monday was the first day you can officially your income tax returns. Employers have until the 31st of this month to give you your W-2 and 1099 forms. If you made income on your investments in 2016, you may have to wait until mid-February to get all of your required forms.

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Employer EITC Notice To Employees – New CA Requirement!

Annette Nellen

Several states require employers to notify employees that they may be eligible for the federal (and perhaps also state) Earned Income Tax Credit (EITC). This year, California law was changed to require employers to also notify employees about the California EITC recently added to the law.

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Repeal 6050W – Small Businesses, IRS “Notices” And The Tax Gap

TaxConnections Picture - small businessA recent article in the Wall Street Journal noted that about 20,000 small businesses (out of millions of them) received notices (Letter 5036) from the Internal Revenue Service that they may have underreported their income (“Small Business in IRS Sights,” 8/9/13). The article includes quotes from some small business owners rightfully upset that the IRS presumes they have underreported their income and makes them take the time to explain (again – they already did this on their original filed return) what their gross receipts are. The IRS has acknowledged the sending of notices and offers guidance on how to respond.

The problem ties to Form 1099-K, a requirement added to the law in 2008 (IRC Section 6050W). It requires the companies that process credit and debit card transactions for merchants to issue a 1099-K to the merchant and the IRS showing the amount processed. Paypal and similar processors also have to file, but there is a de minimus threshold for those types of transactions.

There are reasons why the 1099K might not tie to the merchant’s proper amount to report as gross receipts. For example, the small business might be a C corporation using a tax year other than the calendar year used for 1099 reporting. Or, as one merchant notes in the WSJ article, the 1099-K includes the sales tax charged to customers – an amount not reported in the small business’s gross receipts because the sales tax belongs to the state, not the business. Read more