PR Tax Update

HR Resource
July 5, 2012 — 1,778 views  
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Payroll departments and staff across the United States should take note of several important payroll tax updates that have occurred over the past year. The Internal Revenue Service (IRS) has revised critical forms and procedures that govern employee wages and benefits, so take a look at some of the current and proposed payroll tax changes outlined below.

W-2

A W-2 form (Wage and Tax Statement) must be completed by any employer who pays a worker any form of salary or compensation. Wages, hourly pay and tax withholdings are all numerically stated on the form so that employees can figure out their own income tax liabilities. Currently, every company or manager must send these forms out in the mail before January 31st so that people have time to fill out the necessary tax forms by April 15th.

Recent changes include a provision that extends the 4.2 percent rate of social security tax withholding for wage payments made in 2012. New options on the form include variations of the kind of employer, among many other things.

Form 1099

The Form 1099 is used by employees and employers to report income other than wages, salaries and tips (which are all accounted for on the aforementioned W-2 Form). This includes payments to and from independent contractors and leased businesses. For example, a landlord or property owner is required by the Small Business Jobs Act of 2010 to report any income from rented units.

For payroll purposes, the new 1099 variations are listed below in alphabetical order:

• 1099-A - Acquisition or Abandonment of Secured Property

• 1099-B - Proceeds from Broker and Barter Exchange Transactions

• 1099-C - Cancellation of Debt

• 1099-CAP - Changes in Corporate Control and Capital Structure

• 1099-DIV - Dividends and Distributions

• 1099-G - Government Payments

• 1099-H - Health Insurance Advance Payments

• 1099-INT - Interest Income

• 1099-K - Merchant Card and Third Party Network Payments

• 1099-LTC - Long Term Care Benefits

• 1099-MISC - Miscellaneous Income

• 1099-OID - Original Issue Discount

• 1099-PATR - Taxable Distributions Received From Cooperatives

• 1099-Q - Payment from Qualified Education Programs

• 1099-R - Distributions from Pensions, Annuities, Retirement Plans, IRAs, or Insurance Contracts

• 1099-S - Proceeds from Real Estate Transactions

• 1099-SA - Distributions From an HSA, Archer MSA, or Medicare Advantage MSA

• 1042-S - Foreign Person's U.S. Source Income

• SSA-1099 - Social Security Benefit Statement

• SSA-1042S - Social Security Benefit Statement to Nonresident Aliens

• RRB-1099 - Payments by the Railroad Retirement Board

• RRB-1099R - Pension and Annuity Income by the Railroad Retirement Board

• RRB-1042S - Payments by the Railroad Retirement Board to Nonresident Aliens

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