W2 / 1099 deadline looms: changes of note

Forms W2, 1099-MISC, and other information returns are required to be distributed to payees by January 31, 2012 (reports are due to tax agencies later, with varying due dates depending on whether paper or electronic media are used for reporting). Here are a couple of changes of note for 2011 information returns:

    * On Form W2, employers must now report the cost of employer-provided health insurance in Box 12, with the code DD. The amount is just informational and does not affect the employee’s taxable wages (for now).
    * The IRS has added Form 1099-K, whereby a “payment settlement entity” will report payments made to payees. This reporting requirement, on its face, impacts banks, credit card processors, PayPal, and the like. However, if you pay rent or independent contractors using a credit card or PayPal, you are tangentially affected by Form 1099-K. You will need to reduce the amount you would otherwise report on Form 1099-MISC by the amount that is now reportable on Form 1099-K; otherwise, the payee is potentially double-taxed.

About jgrahamcpa

CPA. Record label owner (Two Sheds Music). Music/sports junkie. Lebanese food enthusiast. Unhinged Braves / Crimson Tide fan.
This entry was posted in Business advisory, Taxes. Bookmark the permalink.

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