If you use freelance drivers or other contracted workers in your trucking fleet, you have to report these payments using IRS Form 1099-NEC.
Knowing the difference between these forms and filing them on time is very important for you and anyone you pay during the tax season. The smallest mistake could result in serious hassle and fines for you and your employees.
Form 1099-NEC: Is This the Form You Need?
IRS 1099-NECis a tax return form for reporting payments made to miscellaneous workers during the tax season. You’ll need to file this form for everyone you’ve paid who isn’t an actual employee of your company. This includes any independent contractor or subcontractor that may have been hired on your behalf.
Below is a list of services, incomes, and expenses for which you will need to file an IRS Form 1099-NEC. If you’ve paid any of these during the tax season, you must file a separate 1099-NEC form for each.
Paid $600 or more in services, lodging, and other expenses
There are some expenses that you DO NOT REPORT on your Form 1099-NEC this tax season:
Any payments made to official employees of your company – they’ll need that W-2.
Form W-2: Why You Need It
Here’s an in-depth look at the IRS Form W-2 and what’s required of you as an employer.
IRS Form W-2 is a yearly tax reporting statement that you issue to each of your official employees. It is necessary for reporting salaries and other fees paid to employees the tax season. Both the IRS and SSA (Social Security Administration) need copies of the W-2 for every official member of your trucking fleet. These forms are as important for you as they are for your employees and their own tax filings. Your drivers each need the IRS W-2 Form to report income and taxes withheld to complete their own tax returns.
Filing your 1099 NEC or W-2 Form 2020 late or incorrectly could cost you and your employees time and money. Missing the W-2 deadline results in a $30 fine for each form not filed, with a top fine of $500 after 30 days! Definitely, something you’ll want to avoid.
Make a mistake? Not a problem! Luckily you can use an IRS Form W-2c to make any necessary corrections.
But hurry – You have to file this form as soon as you discover the error. And don’t forget that you also need to send copies of the corrected W-2 Forms to each employee for their own taxes.