Posted in: 1099s, Best practices, Communication, Hiring & training staff, In this week's e-newsletter, IRS regs, Latest news & views, Tax compliance
It’s not the usual year-end stuff that’ll trip you up — it’s the never-heard-that before questions that can throw you for a loop.
Here are five situations A/P and Payroll folks see just infrequently enough to make them tricky. Test yourself — or your co-workers — to see how well they know the ins and outs of IRS’ regs. Answers below, courtesy of the American Institute of Professional Bookkeepers.
- An employee passed away during the year, and your company paid death benefits — but not under a plan. Those benefits are reported on Form ________.
- One of your independent contractors is paid $1,000 per contracted job, plus any substantiated expenses for which he submits receipts. On the 1099-MISC, you should include the total of all payments and expenses. True or False.
- A new employee insists he can use his W-2 as IRS notification of a change of address. True or False?
- Last year, your company gave every employee a fruit basket (valued at $25) for the holidays. This year, everyone got a $25 gift card to the local grocery store instead. Both gifts are treated the same way for tax purposes.
- Once a year, your company hosts a holiday party for employees. You don’t have to treat that as taxable income. True or False?
Answers & explanations
- Form 1099-R
- False. Substantiated, reimbursed expenses aren’t considered income and shouldn’t be included on the 1099.
- False. A gift card is considered a cash equivalent. Any gift of cash — or a cash equivalent — is taxable.