, ,

1099-NEC vs 1099-MISC

1099-NEC vs 1099-MISC

In 2020, the rules for filing and submitting 1099-NEC and 1099-MISC tax forms changed. Moving forward, 1099-MISC forms are no longer used to submit nonemployee compensation. This separates nonemployee payments from miscellaneous payments and eliminates the confusion around form due dates.

Filing either 1099-NEC or 1099-MISC requires the completion of a Form 1096 as well. This is an Annual Summary and Transmittal of U.S. Information Returns that summarizes all of your 1099 files for the year. IRS uses this form to summarize the tax forms businesses send to hired workers.

Read more
, ,

W-9 vs 1099

W9 vs 1099

As an employer hiring independent contractors, like construction workers, you need specific tax forms that differ from those given to full-time employees. The forms needed for 1099 workers include W-9 and 1099. Both forms provide the employer and employee with the correct tax files to ensure compliance with IRS regulations. The main difference between the forms is in files the form and what financial documentation is provided. Understanding the difference between these forms will help make sure you’re ready for tax season.

Read more
, ,

1099 Forms: What you need to know as a business owner

1099 Forms: What you need to know as a business owner

A 1099 form is a tax form specifically distributed to independent contractors. Correct distribution of 1099 forms keeps you in compliance with EDD’s strict classification guidelines. Independent contractor’s 1099 status differs from W-2 workers. Since the 2020 passage of AB-5, the Gig worker bill, the criteria for correct contractors and worker classification changed.

Read more
,

What is an EDD Benefit Audit?

What is an EDD Benefit Audit

If you’re a business based in California, you’ve likely had dealings with the Employment Development Department (EDD). It is the responsibility of EDD to collect payroll taxes and conduct payroll tax audits of companies and businesses. In addition, EDD performs what’s called Unemployment Insurance (UI) benefit audits. The federal-state unemployment insurance system (UI) helps people who have lost their jobs by giving them temporary wage replacement. The purpose of the government benefit audits is to protect the integrity of the UI program.

Read more
,

4 Tips to Avoid an EDD Audit of Your Business

4 Tips to Avoid an EDD Audit of Your Business

The California Employee Development Department (EDD) is one of the largest state departments and is responsible for compliance with employment guidelines, maintaining employment records, and collecting payroll taxes.

Read more

Top Questions About EDD Audits

Top Questions About EDD Audits

If you are employing workers as a business, there’s a chance the Employment Development Department (EDD) may audit you. They conduct standard procedures to find any errors or discrepancies among the classification of W-2 and 1099 employees. There is a difference between the two, and the correct classification is imperative to ensure you and your business do not suffer penalties or fines during an audit.

Read more
, ,

How to Handle a Misclassification Audit

How to Handle a Misclassification Audit

Unintentional misclassifications may result in a $50 penalty for each W-2 form that was not filed for an employer classified as a contractor. The employer also faces penalties of: 1.5% of employee wages to compensate for income tax withholding, 40% of employee payroll taxes, 100% of matching employer payroll taxes plus interest on each of these penalties, and a Failure to Pay Taxes penalty of 0.5% of the unpaid tax liability for each month delinquent.

Read more
,

Can I Issue a W-2 and a 1099 to the Same Individual?

Can I issue a W-2 and a 1099 to the same individual?

W-2 forms and 1099 forms are meant for different workers. You cannot issue the same employee a W-2 and a 1099 at the same time. It’s confusing differentiating the two in your own business, understanding the differences are key to making sure your business avoids triggering an EDD audit.

Read more
,

Biden Administration Revokes Employer Friendly Independent Contractor Test

Biden Administration Revokes Employer Friendly Independent Contractor Test

In early May of this year, the Biden Administration officially made the decision to revoke the previously adjusted Trump era ruling on independent contractor classification.

Read more
, ,

CA EDD Updated Information Sheet Released

CA EDD Updated Information Sheet Released

For employers who hire both W-2 and 1099 contractor workers, it is essential that the criteria for a worker to be classified as a contractor are met. To meet those requirements, one has to actually understand the requirements… a task that the labyrinthine language of government entities does not make simple.

Read more