The W-2 year-end process is burdensome enough. The last thing you need to worry about is back-up withholding from payments made to independent contractors and filing Form 1099-MISC. For its part, the IRS is paying more attention to the Form 1099-MISC process this year.
Here’s what you need to know for the 2012 filing season.
Paying independent contractors
Independent contractors who don’t do business as corporations and who are paid at least $600 in cash must receive Form 1099-MISC by Jan. 31, 2013. Check your records: If contractors didn’t provide you with their Taxpayer Identification Numbers (TINs) prior to payment, their payments were subject to back-up withholding, which is reported on Form 945. Watch out: The IRS recently confirmed in emailed advice that payers who fail to back-up withhold and file Form 945 will be subject to a penalty equal to 5% of the amount of taxes required to be shown on the return per month, up ...(register to read more)