P>Hi folks I'm hector Garcia CPA and advanced Quickbooks pro advisor and in this video I'm going to show you how to prepare a 941 form with the employee retention credit. I'm going to make the assumption that you know and understand what the ERC is, and I'll put some links in the description below if you want to see other videos that explain that, so we're going to make the assumption you understand what it is, and you know how the company qualifies etc, etc so we're just gonna concentrate on what are the actual tasks that we have to do inside Quickbooks desktop to enable that employee retention credit. Now to get started I'm going to go into employees and payroll center, and I'm going to pull up the 941 as we have it right now. I'm going to go back and look at quarter 4 of 2020, and I'm going to look at the 941 that Quickbooks has prepared for us. I'm going to click here it says create form and select quarter 4 of 2020 then hit ok. Quickbooks will calculate my regular 941. I'm going to scroll down here, I'm just going to show you to the next page here. Show you what we have, so we have the total normal amount paid for payroll, the federal withholding social security medicare, all that stuff, and then you're going to see here that the amount due is 6868.86. I'm going to go to the next page and notice that there's nothing under the credits for the ERC that's going to be underline 13c and 13d, so they're going to be sitting there, so there's nothing there now because we haven't configured it yet. I'm just kind of showing you as a baseline this is what this...
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Things to know about 941 X
What is a 1099-NEC form for?
The 1099-NEC form, also known as the 1099-MISC form, is an important document utilized in the United States for reporting income received as a self-employed individual or an independent contractor. The purpose of the 1099-NEC form is to report non-employee compensation, such as fees, commissions, or miscellaneous income, to the Internal Revenue Service (IRS).
The 1099-NEC form helps individuals who have received payments of $600 or more in non-employee compensation during the tax year to accurately report their income and ensures that the IRS is aware of all taxable earnings. This form is typically used by freelancers, consultants, gig workers, and other self-employed individuals who are not classified as employees but still receive income from various sources.
Filling out a 1099-NEC form requires providing personal information such as your name, address, and social security number or employer identification number (EIN). Additionally, you must include the payer's information, including their name, address, and EIN. The form also asks for details regarding the payment, such as the total amount received and any federal income tax withheld.
Once completed, the 1099-NEC form is submitted to the IRS, and a copy is also sent to the recipient of the non-employee income. It is crucial to ensure the accuracy of the form, as any discrepancies may lead to tax issues or audits. Therefore, it is vital for both payers and recipients of non-employee compensation to understand the purpose and significance of the 1099-NEC form.
Overall, the 1099-NEC form plays a fundamental role in the United States tax system, providing a means for reporting and tracking non-employee income. It helps the IRS monitor taxable earnings outside of traditional employment, allowing them to ensure compliance with tax regulations. As a self-employed individual, it is essential to be familiar with the 1099-NEC form and its requirements to fulfill your tax obligations accurately.
Do I have to pay taxes on 1099-NEC?
If you receive a 1099-NEC, also known as a Nonemployee Compensation form, you may wonder whether you are required to pay taxes on it. Here is some relevant content that can shed light on this question:
1. Understanding the 1099-NEC Form:
The 1099-NEC form is used to report income earned through self-employment or freelance work. If you received this form, it means you have received payment of $600 or more from a client or payor who did not withhold taxes on your behalf. It is important to note that the 1099-NEC is not the same as a W-2 form, which employees receive.
2. Tax Liability with 1099-NEC:
When receiving income reported on a 1099-NEC, you are responsible for reporting and paying taxes on it. This means you are considered self-employed, and you are subject to both income taxes and self-employment taxes.
3. Reporting and Paying Taxes:
To pay taxes on income reported on a 1099-NEC, you need to report it on the appropriate tax forms. You will include this income on your Form 1040 when filing your individual income tax return. However, unlike W-2 employees, you will need to calculate self-employment tax using Schedule SE and include it in your tax payment.
4. Estimated Tax Payments:
As a self-employed individual, it's important to note that you may need to make estimated tax payments throughout the year to avoid underpayment penalties. Since self-employed income does not have taxes withheld during the year, estimating and paying your taxes quarterly can help you meet your tax obligations and minimize penalties.
5. Deductions and Self-Employment Tax:
As a self-employed individual, you might be eligible for various deductions that can help reduce your tax liability. Business expenses, such as office supplies, travel expenses, and even a home office deduction, can offset your income. However, keep in mind that self-employment tax is calculated separately and cannot be reduced by deductions.
6. Filing Deadlines:
It's crucial to be aware of the tax filing deadlines when dealing with 1099-NEC income. The deadline for filing individual income tax returns is usually April 15th, but it can be extended to October 15th if you file for an extension. Additionally, estimated tax payments for the current year are typically due quarterly.
Disclaimer: Please consult a tax professional or the IRS website for specific guidance related to your situation, as tax laws can vary depending on the jurisdiction and individual circumstances.
Who needs to receive a 1099-NEC?
If you are a business owner or a freelancer, you may have come across the form 1099-NEC (Non-Employee Compensation). This form is crucial for reporting your income to the Internal Revenue Service (IRS). However, not everyone needs to receive a 1099-NEC. Here are some guidelines to determine who should receive this form:
1. Independent contractors: If you paid an independent contractor $600 or more for their services during the tax year, you are required to issue them a 1099-NEC. Independent contractors include individuals or unincorporated businesses that provide services to your business.
2. Self-employed professionals: If you have received $600 or more as a self-employed professional for services rendered, you may expect to receive a 1099-NEC from your clients. This includes professions such as writers, designers, consultants, and other freelance work.
3. Attorneys: Attorneys and law firms should receive a 1099-NEC if they were paid $600 or more for their legal services. This rule applies regardless of whether they operate as a corporation, partnership, or individual.
4. Payment for rent or equipment: If your business made payments of $600 or more for rent, equipment leasing, or machinery, you should issue a 1099-NEC to the recipient. This includes payments made to landlords, rental agencies, or equipment suppliers.
5. Gross proceeds paid to an attorney: If you made payments of $600 or more in connection with legal settlements or other legal services to an attorney, a 1099-NEC is required.
It's important to note that the 1099-NEC is different from the 1099-MISC form, which was previously used to report non-employee compensation. The 1099-NEC is specifically used for reporting non-employee compensation and became effective starting with the 2020 tax year.
To ensure compliance with IRS regulations, it's advisable to keep accurate records of payments made to individuals or businesses throughout the year. Additionally, consulting with a tax professional or referring to the IRS guidelines can help you navigate the process of issuing 1099-NEC forms.
What is difference between 1099-MISC and 1099-NEC?
Are you a freelancer or self-employed individual who is confused about the differences between the 1099-MISC and 1099-NEC forms? You're not alone! Understanding these forms is crucial for reporting your income accurately to the IRS. Let's uncover the distinctions between these two tax documents.
1. Purpose:
The 1099-MISC form was traditionally used to report various types of income, such as nonemployee compensation, rent, royalties, and more. However, starting with the tax year 2020, the IRS reintroduced the 1099-NEC form solely for reporting nonemployee compensation.
2. Nonemployee Compensation:
The primary distinction between the 1099-MISC and 1099-NEC revolves around nonemployee compensation. Previously, nonemployee compensation was reported in Box 7 of the 1099-MISC form. With the introduction of the 1099-NEC, nonemployee compensation must now be reported in Box 1 of the 1099-NEC.
3. Reporting Period:
The reporting period also differs between the two forms. The 1099-MISC form covers income earned during a calendar year, whereas the 1099-NEC form pertains specifically to nonemployee compensation received during the tax year.
4. Filing Deadlines:
Another crucial aspect to note is the difference in filing deadlines. The deadline for furnishing copy B and copy 2 to the recipient is January 31 for both forms. However, when it comes to filing with the IRS, the deadline for electronic filing of the 1099-NEC is January 31. For the 1099-MISC form, if Box 7 amounts are being reported, the deadline is also January 31. However, if Box 7 amounts are not being reported, the deadline for filing the 1099-MISC with the IRS is March 31.
5. Other Reporting Requirements:
Apart from nonemployee compensation, the 1099-MISC form is still applicable for reporting various types of income. This includes rent payments, royalties, crop insurance proceeds, healthcare payments, and more. On the other hand, the 1099-NEC form only covers nonemployee compensation.
It's worth noting that the differences explained here are specific to tax year 2020 and beyond. If you're filing for previous tax years, consult the appropriate IRS guidelines or consider seeking professional tax advice to ensure accurate reporting.
In summary, the 1099-MISC and 1099-NEC forms differ in their purposes, treatment of nonemployee compensation, reporting periods, filing deadlines, and other income reporting requirements. Familiarizing yourself with these distinctions will help you stay compliant with the IRS and avoid any tax filing complications.
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