How do you know whether or not you need to file W-2 Forms or 1099 Forms for your employees?
It all depends on what role you play in the trucking industry and your drivers’ tax classification.
If you’re an owner operator or fleet manager, you should determine if new hires are full-time employees or independent contractors from the start.
This will effect what paperwork you need to keep up with to stay compliant.
Here’s everything you need to know about the 1099 Form and W-2 Form.
The W-2 Form is used to report salary, income with social security, income or Medicare tax withheld, and any compensations offered throughout the tax year.
Employers must file W-2 Forms electronically with the SSA (Social Security Administration) for their employees each year.
In addition, employers must send copies of W-2 Forms to employees so that they can use W-2 information to complete their personal tax returns.
So, if you’re a business owner, who do you need to file W-2 for?
Essentially, employees/drivers will need to receive a W-2 Form if you provided them with income that had social security, income, or Medicare tax withheld.
This means that most company drivers will receive a W-2 Form.
If you’re an independent contractor, you’ll have to cover your end of government expenses. Therefore, you’ll receive a 1099 Form, which is used to report miscellaneous income.
If you’re an agent or commission driver, you might have the “Statutory Driver” box checked on your W-2. Statutory and self-employed drivers should also fill out Schedule C to assess business profit and loss.
The e-filing deadline for filing W2 online is January 31, 2020, but it’s important to understand what classification your employees fall into in order to prepare for various tax deadlines.
If you own a trucking company and hire employees to drive your trucks, you’ll need to file 941, 940, and issue W-2s.
However, if you hire drivers as independent contractors that make more than $600, you’ll need to provide them and the IRS a 1099 Misc. Form.
Independent contractors will then use the information on this 1099 Form to file their tax returns.
If you are just a truck driver driving on your own, or a leased driver, you’ll also need the 1099 Form, which is also known as the 1099 contractor form.
As a driver, if you own or lease your truck, you could be an independent contractor. Make sure you know your employment classification upon hire.
If you’ve hired independent contractors for your company, you’ll need to complete 1099 filing for them.
Staying Tax Compliant
Keeping up with employer taxes is critical to staying compliant with the IRS and keeping your employees and contractors happy.
If you’re still unsure what to file, contact the team at TaxBandits, and they’ll be happy to help.