Closely Held Business Advisor: Important Reminders Before Year-End For Businesses

With the end of the calendar year approaching, don’t overlook important tax filing requirements for your business. Please contact your Elliott Davis advisor if you have Group-term Life Insurance, Personal Use of Company Vehicles, Stock Options, Non-qualified Deferred Compensation Plans, Employee Business Expense Reimbursements, or Sick Pay.

  • Group-term Life Insurance – If the company paid for group-term life insurance over $50,000 for an employee or a former employee, you must report the taxable cost of excess coverage (>$50,000 per person) on the employee’s Form W-2. The cost of the excess coverage is subject to both Social Security and Medicare taxes.
  • Personal Use of Company Vehicle – If you or an employee used a car for both business and personal purposes, you must divide the expenses between business and personal use. Personal use of a company vehicle is considered a taxable fringe benefit and must be included in Box 1 wages on Form W-2. This taxable fringe benefit is subject to both Social Security and Medicare taxes.
  • Stock Options – Please contact your Elliott Davis advisor if you have had any stock option transactions during the year or anticipate having any stock option transactions during the year to determine if there will be any reporting requirements.
  • Non-qualified Deferred Compensation Plans –If you have any amounts paid or allocated to employees under a non-qualified retirement plan, contact your Elliott Davis advisor.
  • Employee business expense reimbursements – Amounts paid to employees under an accountable plan (substantiation for expenses is documented) are excluded from wages. Any amounts paid as an undocumented allowance are required to be treated as wages. Per diem or mileage paid in excess of IRS approved rates is required to be treated as wages.
  • Sick pay – If you have employees who received sick pay from an insurance company, you will be required to report this. The third party should notify you of the amounts to be reported.

Form 1099 Reporting – Please start gathering your list of businesses and individuals to whom you made payments in the course of your trade or business, and to whom you will be issuing Form 1099s for 2017. You will need the legal name, address, and federal identification number for each business or individual that must be issued a Form 1099.

We encourage you to request a completed Form W-9 from your vendors where payments will require that you provide them with Form 1099 and request an updated Form W-9 as needed. Please click here for a blank Form W-9 and related instructions.

Form 1099 MISC, Miscellaneous Income – Filing requirements can be found at this link. Form 1099 MISC with income reported in box 7 are due to recipients and the IRS by January 31, 2018. Timely filing is required and substantial penalties can be imposed for late filing, incorrect filing or non-filing of required Forms 1099 (and Forms W-2). Our accounting advisory team can support you…from gathering the required data to processing your forms. Contact your Elliott Davis advisor for support.