Every employer engaged in a trade or business who pays remuneration, including non-cash payments of $600 or more for the year (all amounts if any income, social security, or Medicare tax was withheld) for services performed by an employee must file a Form W-2 for each employee (even if the employee is related to the employer) from whom:
- Income, social security, or Medicare tax was withheld.
- Income tax would have been withheld if the employee had claimed no more than one withholding allowance or had not claimed exemption from withholding on Form W-4, Employee's Withholding Allowance Certificate.
If your business made payments for services performed for a trade or business by people not treated as its employees you may need to file Form 1099-MISC. Usually, businesses file Form 1099-MISC when they need to report miscellaneous income for payments of $600 by people not treated as its employees. Common 1099-MISC filing examples include:
- Substitute dividends and tax-exempt interest payments reportable by brokers.
- Fees to subcontractors or directors and golden parachute payments.
- Fish purchases paid in cash for resale.
- Gross proceeds paid to attorneys.
- Crop insurance proceeds.
W-2 & 1099 Requirements
Important Update: The IRS released final regulations lowering the threshold for having to electronically file (e-file) forms from 250 to 10. This new regulation includes the total of all aggregated forms filed.
In addition, you may be required to file a transmittal (cover sheet). W-2 paper copies will need to include Form W-3 while 1099-MISC paper copies will need to include Form 1096. It should be noted that transmittal forms are not required if filing electronically.
W-2 & 1099 Copies
If your business is required to file Forms W-2 or 1099-MISC, you will need to provide multiple copies. To avoid penalties, make sure to send the correct copy to the correct audience when applicable.
For Social Security Administration
Filed with Employee's Federal Tax Return
For Employee's Records
For State, City, Local Department
Filed with Employee's State, City, Local Income Tax Return
By now most businesses and insurance companies are familiar with the Patient Protection and Affordable Care Act (PPACA), sometimes referred to as ACA or ObamaCare. Employers and insurers are required to file to the IRS or electronically file if filing over 250 forms. Copies must also be sent to recipients or employees.
The Internal Revenue Code (IRC) Section 6055 outlines the requirements for 1095-B filing. Form 1095-B must be issued by the insurance company (or self-insured employer) to the individual and the IRS as proof of coverage. Form 1094-B is the related transmittal sent to the IRS.
What is Form 1095-B?
Form 1095-B is used to report certain information to the IRS and to taxpayers about individuals who are covered by minimum essential coverage and therefore are not liable for the individual shared responsibility payment. Minimum essential coverage includes government-sponsored programs, eligible employer-sponsored plans, individual market plans, and miscellaneous coverage designated by the Department of Health and Human Services.
Who Needs to File?
Every entity that provides minimum essential coverage to an individual during a calendar year must file an information return and a transmittal to the IRS. Employers (including government employers) subject to the employer shared responsibility provisions sponsoring self-insured group health plans will report information about the coverage using Form 1095-C. Small employers that are not subject to the employer shared responsibility provisions sponsoring self-insured group health plans will use Forms 1094-B and 1095-B to report information about covered individuals. See the official IRS instructions or use this tool to determine if you have a filing requirement.
IRC Section 6056 defines the filing requirements for large employers (50 or more full-time employees including full-time equivalent employees) to provide their employees with documentation outlining any applicable offer of health coverage. Form 1095-C is a statement issued by employers with 50 or more full time employees (including FTEs) to employees and the IRS. Form 1094-C is the related transmittal sent to the IRS.
What is Form 1095-C?
Form 1095-C is used to report information about each employee and summary information for each employer to the IRS. Forms 1094-C and 1095-C are used in determining whether an employer owes a payment under the employer shared responsibility provisions under section 4980H. Form 1095-C is also used in determining the eligibility of employees for the premium tax credit. Applicable Large Employers that offer employer-sponsored self-insured coverage use Form 1095-C to report information to the IRS and employees. This includes information about individuals who have minimum essential coverage under the employer plan and therefore are not liable for the individual shared responsibility payment for the months that covered under the plan.
Who Needs to File?
An employer subject to the employer shared responsibility provisions under section 4980H must file one or more 1094-C (including Form 1094-C designated as the Authoritative Transmittal, whether or not filing multiple 1094-C forms), and must file Form 1095-C for each employee who was a full-time employee of the employer for any month of the calendar year. The employer is required to furnish a copy of the Form 1095-C to the employee.