Two important tax filing tips for your business

Happy New Year!  We at Scott and Company hope 2011 was a good year for you and offer best wishes for an even better 2012. As you begin to think about 2011 tax returns for your business, please keep these two filing tips in mind:

1. You already know that S Corporation shareholders who provide services to the corporation should receive a W-2 reporting their reasonable compensation for those services.  Please make sure that you also include certain benefits paid by the corporation on behalf of the shareholders as compensation on the W-2.  These benefits include medical insurance, dental insurance, long-term care insurance premiums, personal use of a business vehicle, and life insurance premiums on any policy for which the shareholder or shareholder’s family is the beneficiary.  Of this list, medical insurance premiums are particularly important because, under IRS rules, they cannot be deducted by the shareholder on his/her personal tax return unless they are included on the W-2.  The due date for providing W-2s to your employees is January 31, 2012. The due date for filing government copies of W-2s for the 2011 tax year is February 29, 2012, or April 2, 2012 if you e-file.
2. Don’t forget to prepare 1099-MISC forms for all independent contractors to whom your company paid $600 or more in exchange for services during the year.  This rule has been in effect for many years, but these filings are especially important this year because, for the first time, business income tax returns will include a check box on the forms for the owner to affirm that he/she has prepared and filed all necessary 1099-MISC forms.  Please take a good look at your vendor list and identify any independent contractors for which this rule may apply.  The due date for mailing 1099-MISC forms to contractors is January 31, 2012.  The due date for filing copies with the IRS is February 29, 2012, or April 2, 2012 if you e-file.

We are happy to provide preparation services for either of these forms so please call to discuss your needs.  Whether you use our services to prepare these forms or not, though, please feel free to contact us at 803-256-6021 with any questions. We are happy to work with your payroll provider or internal staff to make this a smooth filing season.