New Form 1099-NEC; Reporting sick, family leave wages; Election workers; Employment tax deposits

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Reporting nonemployee compensation and backup withholding 

The IRS reminds employers that starting in tax year 2020, payers must complete the new Form 1099-NEC, Nonemployee Compensation, to report any payment of $600 or more to a payee.

Generally, payers must file Form 1099-NEC by January 31. For 2020 tax returns, the due date is February 1, 2021. There is no automatic 30-day extension to file Form 1099-NEC. However, an extension to file may be available under certain hardship conditions.

Also, nonemployee compensation may be subject to backup withholding if a payee has not provided a taxpayer identification number to the payer or the IRS notifies the payer that the TIN provided was incorrect.

Guidance on reporting qualified sick and family leave wages paid

The IRS provided guidance in Notice 2020-54 (PDF) to employers requiring them to report the amount of qualified sick and family leave wages paid to employees under the Families First Coronavirus Response Act (FFCRA) on Form W-2.

The Notice also provides employers with optional language to use in the Form W-2 instructions for employees.

Additional information about tax relief for those affected by the COVID-19 pandemic can be found on IRS.gov.

Do you hire election workers?

Each election year, thousands of state and local government entities hire workers to conduct primary and general elections. Compensation paid to election workers is income and may be subject to taxes and reporting requirements.

Election Workers: Reporting and Withholding will help you understand their unique reporting and withholding requirements and which election workers may be covered by a Section 218 Agreement.

You can also check out Payroll Reporting for Election Workers on IRSvideos.gov.

Deposit Requirements for Employment Taxes, Notice 931

Before the beginning of each calendar year, you must determine if you should use a monthly or semiweekly deposit schedule for employment taxes. The deposit schedule you must use is based on the total tax liability you reported during a lookback period. Your deposit schedule isn't determined by how often you pay your employees or make deposits.

Instead of making deposits during the current quarter, you can pay your total Form 941 tax liability when you timely file Form 941 if:

1. Your total Form 941 tax liability for either the current quarter or the preceding quarter is less than $2,500, and
2. You don't incur a $100,000 next-day deposit obligation during the current quarter.

Refer to Notice 931 (PDF) for deposit requirements and more information about the lookback period for calendar year 2021.

Check out Filing and Paying to find additional information on paying and depositing your employment taxes.