Year-end brings important reporting responsibilities for businesses, including identifying taxable fringe benefits, gathering vendor information and preparing Forms 1099.

Taking time to review your records before year-end can help reduce last-minute questions, identify missing information and minimize filing errors and corrections. Smith Leonard’s tax team can help you understand the requirements that apply to your business and prepare for the upcoming filing season.

Year-End Fringe Benefit Reporting

Certain benefits provided to employees, owners and other individuals may need to be included in taxable wages and reported before year-end payroll is finalized.

Because the tax treatment varies depending on the type of benefit and the recipient, businesses should review fringe benefits as part of their year-end tax and payroll process.

Fringe benefits to review may include:

• Personal use of company-provided vehicles
• Group-term life insurance
• Employer-provided housing or lodging
• Educational assistance
• Employee gifts and awards
• Moving expense reimbursements
• Certain health and accident benefits
• Benefits provided to owners, shareholders or partners
• Other noncash compensation or employer-provided benefits

Timing matters

Taxable fringe benefits generally must be accounted for at least annually. Special timing rules may also apply to certain benefits provided during the final months of the year.

Reviewing these items before your final payroll of the year gives your payroll provider and tax advisor time to determine whether adjustments are necessary.

Preparing for Form 1099 Filing Season

A smooth 1099 filing season starts well before forms are due.

Businesses should review vendor records, payment information and Forms W-9 before year-end so missing or incorrect information can be addressed early.

1. Review your vendor records

Make sure you have a current Form W-9 for vendors and service providers who may be subject to information reporting.

Form W-9 provides information used to determine whether a Form 1099 may be required, including the recipient’s:

• Legal name
• Business name, if applicable
• Federal tax classification
• Taxpayer Identification Number (TIN)
• Address

Whenever possible, obtain a completed Form W-9 before making payments to a new vendor or service provider rather than waiting until 1099 filing season.

2. Review payments made during the year

Review payments made to individuals and businesses that could be subject to information reporting, including:

• Independent contractors
• Consultants and other service providers
• Attorneys
• Landlords
• Medical and healthcare providers
• Partnerships and certain other entities
• Other recipients potentially subject to Form 1099 reporting

The appropriate Form 1099, reporting threshold and filing requirements can vary depending on the type of payment, recipient and tax year.

Don’t assume that the requirements that applied last year will remain the same this year.

3. Verify your information

Before submitting information for 1099 preparation:

• Confirm legal names against completed Forms W-9
• Verify Taxpayer Identification Numbers
• Confirm mailing addresses
• Review total payments made during the year
• Identify the nature of each payment
• Resolve missing or incomplete Forms W-9
• Review vendor classifications for potential reporting requirements

Taking these steps before filing can help prevent mismatched information, unnecessary corrections and delays.