Accounting Services Ramps Up in January
For employers, January is not just the beginning of a New Year, it is also the end of the previous year. While we are wrapping up 2021, let’s not forget to start 2022 strong. The best place to start is by asking your employees to update their Form W-4 for 2022 including any address changes, so employers can get them updated before mailing out W-2s in January. It is also a good time to go through your vendor list and request Form W-9 from the vendors to which you will be issuing Form 1099.
The penalties for late filing 1099s are no longer a slap on the wrist. With penalties of up to $540 per form, even a small business could face tens of thousands of dollars in fines.
Forms W-3 and W-2 for 2021 are due to be mailed or electronically filed with the Social Security Administration by January 31, 2022. Copies B, C, and 2 of Form W-2 are due to your employees by January 31, 2022. You will meet this requirement if the form is properly addressed and mailed on or before the due date.
Something new for 2021 is that the employee’s Social Security number may now be truncated on the employee copies of the W-2. Truncation of the Social Security numbers on these copies is voluntary. Do NOT truncate their Social Security number on copy A (Social Security Administration) of the W-2 form. An employer’s Employer Identification Number may not be truncated on any form.
The Social Security Administration encourages all employers to electronically file their W-2 forms. However, you must electronically file your forms if you are required to file 250 or more forms for 2021. Pending IRS final regulations, this requirement may be reduced to 100 forms for 2022, and 10 forms for 2023. Visit ssa.gov/employer/returnfilers.html for more information.
Employers who claimed credits under the FFCRA or ARPA are required to separately report the qualified leave wages to their employees. This should be reported on the W-2 in Box 14, and you must separately report the total amount of qualified sick leave wages paid for reasons 1-3 (Self Care), qualified sick leave wages paid for reasons 4-6 (Dependent Care), and qualified expanded family leave wages.
The Employee Retention Credit (ERC) ended for most employers as of September 30, 2021.. There are provisions in the law for recovery startup businesses that pay qualifying wages between July 1 and December 31, 2021. Recovery startup businesses are those that started after February 15, 2020, and have annual receipts of less than $1 million.
Form 941 for the 4th quarter has no changes from the 3rd quarter form. This is a huge relief because the form has changed often due to COVID Credits. The 4th quarter Form 941 is due January 31, 2022. Form 940, 941, 943, 944, and 945 forms can now be electronically filed as well. Please see your bookkeeper for more information if you would like to participate.
Form 1099-NEC must be filed on or before January 31, 2022. Form 1099-MISC has had a title change from Miscellaneous Income to Miscellaneous Information and are due by February 28, 2022, if they are paper filed, and by March 31, 2022, if they are electronically filed.
Ketel Thorstenson, LLP understands that the 2021 payroll tax forms have been more complicated than prior years. We have stayed on top of all the changes, and are here to help with any questions or concerns that you may have.