How To Create W2 In Quickbooks 2014

QuickBooks W2 & 1099 help

Preprinted 4, 6, 8 part W2 forms update Jan 9, 2015 3:00PM EST.
Intuit has released a payroll update to fix the alignment problem with the pre-printed W2s.
You can read more about their programming glitch here
http://support.quickbooks.intuit.com/support/Articles/SLN89389
To update > Employee menu > Get Payroll Updates > download the update. You will NOT see a change in the release number > close QuickBooks, reopen.
IMPORTANT!!!!
We have tested the update and it is better, but should always test the alignment as printers can vary.
Test print Copy A to plain paper and hold behind the form. Make any necessary alignments,

W2 PRINTING HELP
UPDATE QuickBooks before Printing Forms!
Payroll: Employee menu > Get Payroll Updates
1099 printing: Help menu > Update (download and install the latest release of QuickBooks software)

In the chart below, choose the forms you purchased, find your QuickBooks version and click on the link for a step by step printing guide. Which form goes to who ? "Who gets what copy"

Detailed Guides to printing W2s using QuickBooks:

Want to avoid tax notices? Double check to make sure your tax forms agree to what you have previously submitted on your monthly & quarterly payroll tax filings by downloading the following (pdf files) checklists. The state and federal government will match up your payments and monthly/quarterly tax forms to the W2 filings so spend the 1/2 hour to an hour proofing your numbers to save yourself the aggravation and expense of trying to make corrections later.
Federal W2 Checklist	Do your W2's agree to your 941 forms filed?
State W2 Checklist	For states that withhold state tax from paychecks, make sure the amounts reported monthly/quarterly agree to the total on the W2s
*Have questions about what should be included in the W2?* Read the official guide from the IRS IRS instructions W2- What must be included in a W2 and how and where to file and if you still have questions, the IRS has a special telephone line for 1099 and W2 questions, 1-866-455-7438 (8:30-4:30 EST) Typical additions to the W2 include: Taxable portion of Group term life (Over $50,000) report the taxable cost of excess coverage, determined by using the table in section 2 of Pub. 15-B, in boxes 1, 3, and 5 of Form W-2. Also, show the amount in box 12 with code C. For employees, you must withhold social security and Medicare taxes, but not federal income tax. Former employees must pay the employee part of social security and Medicare taxes on the taxable cost of group-term life insurance over $50,000 on Form 1040. You are not required to collect those taxes. However, you must report the uncollected social security tax with code M and the uncollected Medicare tax with code N in box 12 of Form W-2. Third Party Sick Pay - disability payments made by a state agency or insurance company (Code M) Auto Allowance -report as wages on Form W-2 the amount of unsubstantiated allowance. The excess amount is subject to income tax withholding and social security and Medicare taxes Substantiated employee business expense reimbursements- Generally, payments made under an accountable plan are excluded from the employee's gross income and are not reported on Form W-2. However, if you pay a per diem or mileage allowance and the amount paid for substantiated miles or days traveled exceeds the amount treated as substantiated under IRS rules, you must report as wages on Form W-2 the amount in excess of the amount treated as substantiated. The excess amount is subject to income tax withholding and social security and Medicare taxes. Report the amount treated as substantiated (that is, the nontaxable portion) in box 12 using code L. Click here for a Guide to Reimbursed Expenses Educational assistance programs. A $5,250 exclusion for employer-provided educational assistance applies to benefits provided to your employees under an educational assistance program. However, educational assistance that exceeds $5,250 may be excludable from an employee's wages if it qualifies as a working condition benefit. See Pub. 970, Tax Benefits for Education, and section 2 of Pub. 15-B for more information. Moving Expenses- Qualified moving expenses that an employer paid to a third party on behalf of the employee (for example, to a moving company) and services that an employer furnished in kind to an employee are not reported on Form W-2. .Qualified moving expense reimbursements paid directly to an employee by an employer are reported only in box 12 of Form W-2 with code P. Nonqualified moving expense reimbursements are reported in boxes 1, 3, and 5 of Form W-2. These amounts are subject to federal income tax withholding and social security and Medicare taxes (or railroad retirement taxes, if applicable). Club Dues, Personal Use of Auto, Health Club Memberships, Personal use of company cell phones are reported as wages on Form W-2. The amounts are subject to income tax withholding and social security and Medicare taxes HSA- Employers Contributions- Publication 969 Show any employer contributions (including amounts the employee elected to contribute using a section 125 (cafeteria) plan) to an HSA in box 12 of W-2 with Code W. See IRS bulletin 2008-29 Contributions made in 2011 for 2010 year will be reported on the 2011 W-2 Form. Contributions by an S corp to a 2% shareholder-employee's HSA are treated as guaranteed payments and are deductible by the S corporations and includible in the shareholder-employees gross income. The Shareholder-employee can deduct the contribution made tot he shareholder-employe's HSA on their 1040 return. Only employee HSA contributions made through a cafeteria plan are reported on the W-2(code w). Deductions from Employee's paychecks not part of a cafeteria plan are not pre-tax deductions and are not reported on the W2, the employee can take a deduction on their 1040 return for their HSA contribution Subsidized Employer Provided Meals - Value of meals furnished by an employer is excludible from the employee's income if the meals are furnished on the employer's premises and are furnished for the convenience of the employer. Convenience is defined as a substantial non-compensatory business reason for the employer to furnish meals. Christmas bonuses, gifts over $25 per year per employee, service awards, referral awards, suggestion awards are mostly likely deemed wages and should be reported in the W2 form. Don't forget - January 1st Todos Change Unemployment Rates? many states modify the Unemployment/Disability rates payable by the employer. Employers should receive notification in late December/early January as to their current rates, or you may be able to access your current rates through an online account with the State Department of Labor. So find out those rates and make required changes to the associated payroll items (Item list > payroll item > right click and Edit> click next until you land on the rate window> make changes Check Accrued Vacation Time and Sick Time Reports > Employee Reports > Paid time off List Verify the beginning balances are correct and print for your references. Make necessary changes Deduction payroll items- Payroll items that are deduction types have a checkbox "This is an annual limit (restart calculations at the beginning of every year). This checkbox will have an CHECK in the box by Default. If when you set up the item you did not uncheck that box, the deduction will restart as of January 1st. Loan repayments & garnishment deductions should NOT restart as of January 1st. Make sure that this box is unchecked for these types of payroll items. Medicare Surcharge TAX TO SET UP - new Medicare surcharge deduction of .9% is added to employees paychecks after their wages reach $200,000. To set up this new Nuisance Tax please click here to download instructions
Social Security W2 preparation Q&A website	Great place to get answers to frequently asked questions about W2s preparation. (Including how to handle 3rd party sick pay on W2s). It is a long page so scroll halfway down to the section on W2s
State Websites	Visit your state website for regional information on tax filing requirements
Employees want to know why they owe taxes on their return?
W4 Assistant or Publication 919	Refer employees who need help determining how many exemptions to claim on their W4 form to this site
Due Dates:
Due dates:	February 2nd - distribute to employee You may request an extension of time to furnish W-2's to employees by sending a letter before January 31st to: IRS-Enterprise Computing Center- Martinsburg Information Reporting Program Attn: Extension of Time Coordinator 240 Murall Drive Kearneysville, WV 25430 Include your name, address, employer ID, a statement that you are requesting an extension to furnish "Forms W-2" to employees, reason for the delay and your signature Send To the State: Check your state filing requirements. Most states that have an employee withholding tax will require Copy 1 of the W2 and a State W3 require submission in February, some as early as: February 15th - Varies by State but many require filing W2's by the 15th. Send to the Social Security Administration February 29 Social Security Administration Data Operations Center Wilkes-Barre, PA 18769-0001 If you use certified mail, change the zip code to 18769-0002 Extension request for filing must be filed on Form 8809 . and mailed to: Enterprise computing Center- Martinsburg Attn: Extension of Time Coordinator, 240 Murall Dr. Kearneysville, WV 25430
IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that, any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed in this communication
Undeliverable W-2 Forms - Keep for 4 years any employee copies of forms W-2 that you tried to but could not deliver.

1099 Help

Click here for HOW TO PRINT 1099s in QuickBooks

INSTRUCTIONS ON PRINTING 1099s in QuickBooks
	QuickBooks Version 2012 2013 2014 2015 Click Here

******Reminder, You must EXCLUDE from 1099 forms amounts you paid to vendors with a credit cards, debit cards, gift cards, Paypal type payment providers, or other payment card.
http://tinyurl.com/excluded-vendor-payments-1099

.
Be sure download the latest release of QB (help menu - Update) then close QB and install the update before. QB will then exclude from the 1099 any transactions paid for with a credit card. You MAY still need to exclude debit card payments and paypal payments - download our instructions above and learn the details

Example Journal entry that will remove amounts from QuickBooks 1099 filing. But Read our instruction
guides

Notice that we are reducing an Expense that points to a 1099 mapped account and increasing a bank account.
Once all your 1099s are completed you can create one more reversing Journal entry crediting the 1099 bank
account and debiting the expense account without including the vendor name. Or just delete all the adjustments in the
bogus 1099 bank account

****** READ OUR DETAILED INSTRUCTIONS**** QuickBooks updates are available that will make this
task much easier!!! click on the appropriate link below.

DETAILED HOW TO GUIDE FOR PRINTING FORM 1099
If you are using
QuickBooks Version
2012 2013 2014 2015
Click Here

1099s are sent to vendors whom you paid more than $600 using a check.

You may have heard earlier this year that 1099s would be required for all payments made to vendors, the legislation for that rule has been repealed, along with the reporting of rental property expense payments (see 1099 instructions). The same rules apply as in previous years except you now need to exclude payments made by credit cards/debit cards/Paypal.

Have questions about what should be included in the 1099? First take a look at the instructions (the 1st and 2nd link on this list and then at our example list at the bottom of this webpage) and if you still have questions, the IRS has set-up a special telephone line for 1099 and W2 questions,
866-455-7438 (8:30-4:30 EST).

Who should receive a 1099	Examples
How to print 1099s in QuickBooks	QuickBooks versions 2012 to 2015 "including how to make adjustments
Due Date	Generally, you must furnish Forms 1098, 1099, and W-2G information by February 2, 2015 and submit the paper 1096/1099 set to the IRS by March 2, 2015
30 day extension to file a 1099	File extension by February 28
1099 IRS General Instructions 1099 IRS Misc Instructions	IRS Publications 2014
1099 Corrections	How to correct an incorrectly filed 1099
W-9	Form for vendors to complete to collect tax information
Interest payments	QuickBooks does not print 1099-Int forms for you. If you have paid over $600 to an individual for interest in the course of your trade or business file Form 1099-int with the IRS. Order 1099-Int forms plus a 1096 transmittal form from the IRS 800-826-3676.
Toll free IRS number	Get your 1099 questions answered for free by calling the IRS toll free number 866-455-7438 (8:30 am-4:30 pm eastern time)
Who is an independent contractor	Independent contractors vs Employee
Where to file form 1099
How to report an unincorporated business name on the 1099	Sole proprietors. You must show the individual's name on the first name line; on the second name line, you may enter the �doing business as (DBA)� name. You may not enter only the DBA name. For the TIN, enter either the individual's SSN or the EIN of the business (sole proprietorship). The IRS prefers that you enter the SSN. Limited liability company (LLC). For a single-member LLC enter the individual's name only on the first name line and the LLC's name on the second name line. For the TIN, enter the individual's SSN (or EIN, if applicable). If the LLC is a corporation, partnership, etc., enter the entity's EIN.

Distribution of Form 1099-MISC.
Copy	Goes to
A	The IRS with a transmittal form 1096
1	The state tax department - visit State website for more information on where to file
B	The payment recipient
2	A second copy for state filing by the recipient - (if tax is withheld by your business and the tax is reported on 1099)
C	You - the payer

Examples of who should receive a 1099: -

The more common 1099-Misc payments are for business expense payments for services and rents totaling over $600 per payee per year when the payee is operating as an unincorporated entity. Examples of unincorporated entities are sole proprietorships, partnerships and LLCs. Generally payments to corporations do not require a 1099. Corporate entities are required to have the designator Inc., Corp, PC, or PA follow the company name. Be sure you have the correct information to determine if a 1099 is required by requesting the payee to complete a form W-9. The exemption from reporting payments made to corporations does not apply to payments for legal services. Therefore, you must report attorneys' fees (in box 7). Another exception: Payments to crew-members by owners or operators of fishing boats including payments of proceed from sale of catch must be included on a 1099.

1099-Misc is generally for payment of services to unincorporated entities. Purchases of products DO NOT require a 1099-Misc unless it is payments in cash to fisherman for fish purchased for resale .

Examples of the types of expenses that require 1099's

� Payments for rents for office space including amounts paid to you for home office space, storage space, and machine rental require a 1099 to be sent.

� Examples of services include independent contractors, subcontractors, commissions, consultants, cleaning services, professional fees including attorneys and accountants, referral fees, entertainers, and temporary help. (Include travel reimbursement for which the non-employee did not account to the payer). Remember a 1099 is required if the recipient is NOT incorporated (Attorney's are an exception - All payments for legal fees, regardless of what type of entity the attorney operates under, including corporations, must receive a 1099 for services rendered).

� Payments by attorneys to witnesses or experts in legal adjudication

� Director fees

� Payment for services, including payment for parts or materials used to perform the services if supplying the parts or materials was incidental to providing the service. For example, report the total insurance company payments to an auto repair shop under a repair contract showing an amount for labor and another amount for parts, if furnishing parts was incidental to repairing the auto.

� Exchanges of services between individuals in the course of their trades or businesses. For example, an attorney represents a painter for nonpayment of business debts in exchange for the painting of the attorney's law offices. The amount reportable by each on Form 1099-MISC is the FMV of his or her own services performed. However, if the attorney represents the painter in a divorce proceeding, this is an activity that is unrelated to the painter's trade or business. The attorney must report on Form 1099-MISC the value of his or her services. But the painter need not report on Form 1099-MISC the value of painting the law offices because the work is in exchange for legal services that are separate from the painter's business.

� Report interest or dividends paid by the business on a form "1099-Int" or "1099-Div" (QuickBooks will not print these forms). Order blank forms from the IRS by calling
800-829-3676

� Interest or dividends payments to unincorporated entities also require a 1099 but the reporting limit is reduced from $600 to $10 per payee per year.

� Take note that payments to owners of S Corporations from earnings are not dividends. They are "distributions" and do not fall within the 1099 reporting guidelines.

� Protect yourself against IRS reclassifying your workers as an employee

Have your independent contractor sign an agreement (engagement letter) that
discusses what the business arrangement will be and it should also mention that the worker will not be treated as an employee for federal purposes
Obtain competitive bids on the project from more than 1 independent contractor
Have your independent contractor obtain a workers compensation policy and provide you with a certificate of insurance every year
Keep a vendor file on the contractor with bids, contracts Form W-9, and document times when work was turned down by the vendor
Do not add independent contractors to your health policy

� Reporting a settlement payment is dependent on how the check was written

When the payment includes both the lawyer and claimant:
Two 1099s are generated, both with the total amount of the check. is included in the lawyers 1099 should be reported in box 14, and is also included in the the claimants 1099 in box 3
When the payment is made to an escrow account, one 1099 to the lawyer is created and included in box 14
When the settlement is split, legal fees paid to the attorney and the claim amount paid directly to the claimant, two 1099s are generated. The legal fees are reported in box 7 in the lawyers 1099, and claimant amount reported in Box 3

What name should appear on a 1099 when the company is a sole owner LLC learn more

� How to determine if you should treat a person as an independent contractor or an employee

: IRS website - Who is an independent contractor vs. Employee
Pamphlet on Independent contractor vs employee

Every case is unique and must be considered with its own list of circumstances. You can research common law (case law that you can read to help make a determination�) but the IRS has recently developed a form that you can complete and mail in for help making the correct determination. This is a terrific tool to help you understand what the IRS will look at in making the determination. In fact it is so thorough that you will most likely be able to make your own determination by the time you are through completing it.

Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding .can be completed and sent to the IRS . This form looks at who has financial control, behavioral control, and the relationship of the worker and the company. There is also a section on service providers and salespersons which indicates that this is an area that the IRS believes is not being handled correctly. Every accounting department should download and read this form to gain a better understanding of how the IRS makes the determination.

Form 8919 . New form beginning in 2007 where a worker can alert the IRS that he/she was incorrectly treated as a 1099 consultant rather and as an employee. This form will permit the worker to "NOT PAY" the employers share of social security and medicare tax. This form will be reviewed by the IRS to determine if the worker made a correct assessment or if the employer should receive an employment tax audit. This could be the beginning of an increase in employer tax audits by the IRS.

For comprehensive training on who can be classified as an independent contractor, download the PDF training guide for Auditors used by the IRS to train their employees on who is an independent contractor vs employee

� Court cases:
Employment Tax case citations:
Common law employee:
Orion Contracting Trust v. Commissioner, T.C. Memo 2006-211.
Kumpel v. Commissioner, T.C. Memo 2003-265.
Ronald McLEan E. Video v. Commissioner, T.C. Memo 2003-13.
Weber v. Commissioner, 103 T.C. 378 (1994), aff�d, 60 F.3d 1104 (4th Cir. 1995).
Nationwide Mutual Insurance Co. v. Darden, 503 U.S. 318 (1992).
Corporate officer as employee:
Joseph M. Grey Public Accountant, P.C. v. Commissioner, 119 T.C. 121 (2002); aff�d in unpublished opinion, 93 Fed. Appx. 473, 93 AFTR2d 2004-1626 (3d Cir. 2004); cert. denied sub nom. Nu-Look, 125 S.Ct. 60 (2004).
Nu-Look Design, Inc. v. Commissioner, T.C. Memo 2003-52, aff�d, 356 F.3d 290 (3d Cir. 2004), cert. denied, 125 S.Ct. 60 (2004).
Spicer Accounting, Inc. v. United States, 918 F.2d 90 (9th Cir. 1990).

Fines can be debilitating. Audits by your state unemployment agency are common, beware they are now sharing the information with the federal department of labor and the IRS. http://www.dol.gov/opa/media/press/whd/WHD20111373.htm

� Should you include reimbursed expenses on a 1099 with payments for services? The 1099 instructions published by the IRS included the following as just two examples of what to include in a 1099:
"A
fee paid to a non-employee, including an independent contractor, or travel reimbursement for which the nonemployee did not account to the payer, if the fee and reimbursement total at least $600"
"
Payment for services, including payment for parts or materials used to perform the services if supplying the parts or materials was incidental to providing the service "

Since these are only examples, we must make an interpretation as to what is considered an "accounting" and what is considered "incidental".
So substitute in example one substitute "expense reimbursement" for "travel reimbursement" expense reimbursement for which there is no accounting.   The above examples suggests that all expense reimbursements are includable in the 1099 unless there is an accounting of the expense.
So what is the definition of an accounting?
Reg. 1.274-5(g)(2); Tem Reg. 1.274-5T(h)(2)
When the taxpayer is reimbursed for meals and entertainment expenses incurred on behalf of a client and adequately accounts to the client for such expenses, the reimbursed expenses are not included in the independent contractors income.

Code section 162 , 212 and 274 (d) talks about substantiation of expenses as adequate records or by sufficient evidence corroborating the taxpayers statement.

Our interpretation- if you receive a merchant receipt corroborating the amount paid for the expense, along with the independent contractor's description of time/place or business use of the expense being reimbursed, then that would be deemed an "accounting" and would therefore not be required to be included in the 1099.

    Keep in mind that when you reimburse 100% of the meals and entertainment where the independent contractor provided an adequate accounting, your tax return will be limited to a 50% deduction.
Remember, it is the burden of the company that deducts the expense to have in its possession the substantiation and documentation supporting that deduction. Reg 1.275-5(g)(4):Temp Reg 1.274-5T(h)(4). However you do not need to prove that reimbursed entertainment expenses are directly related to or associated with the clients business to qualify for the deduction In general a diary and record of receipts will satisfy the "accounting" requirement. The diary should include the amount of the expenditure, time and place of the expenditure. A receipt is required for every expense above $75.00.

Here is a "gotch ya". If the independent contractor does NOT account to the client for code 274 expenses (travel, entertainment, entertainment facilities, business gifts, foreign conventions) the contractor must include any reimbursements or allowances in income and may only deduct entertainment expenses that are directly associated with his business. If the reimbursed entertainment expenses relate to the clients business and not the contractor's the contractor still has income but is denied a deduction for reimbursed entertainment expenses since code section 274 provides no deduction for entertainment shall be allowed unless directly related to associated with the taxpayers business. SO INDEPENDENT CONTRACTORS - be sure to give adequate accounting to the client for 274 expenses. !

One last note:   The IRS is sharing 1099 data with any state that request's it. By requesting this information, States are hunting up companies that do business in their state but do not collect sales tax or pay income tax in that state. For example a NJ company paid a commission payment to an independent sales representative in Michigan for $1000 and filed a 1099. By September of the following year, Michigan has sent a Nexus (term used to identify businesses with a presence in a state and is thus subject to state income taxes and to sales taxes identify non-resident based entities doing business in a state) questionaire to the NJ company to see if this company owes Michigan income taxes or sales tax.   You see, a 1099 for services generally is enough to generate Nexus in a state. Taxable income will then depend on sales in that state vs sales everywhere, employees in that state vs employees everywhere, equipment/building in that state vs equipment/building everywhere.

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that, any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed in this communication

Failure to file 1099 penalty range increases between $30 to $100 per 1099 that was filed late or not at all.

IRS Circular 230 Disclosure:

To ensure compliance with requirements imposed by the IRS, we inform you that, any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed in this communication