Introduction
Filing 1099s and W-2s is a crucial part of managing payroll and tax compliance for businesses. These forms ensure accurate reporting of income for employees and contractors while keeping your business aligned with IRS regulations. Gusto simplifies this process by automating form generation, filing, and distribution. This guide provides a step-by-step walkthrough on filing 1099s and W-2s with Gusto, making tax season stress-free.
1. Understanding 1099s and W-2s
1099 Forms
- Used to report payments made to independent contractors earning $600 or more annually.
- Contractors are responsible for their own taxes, and 1099s provide the necessary income documentation.
W-2 Forms
- Issued to employees to report their wages and tax withholdings.
- Employers are responsible for withholding and paying taxes on behalf of employees.
2. Setting Up Employees and Contractors in Gusto
Add Employees and Contractors
- Navigate to the “People” tab in Gusto and click “Add Employee” or “Add Contractor.”
- Enter accurate details, including:
- Name and contact information.
- Social Security Number (SSN) or Employer Identification Number (EIN).
- Payment type (hourly, salaried, or contractor).
Verify Classification
- Ensure workers are correctly classified as employees or contractors to avoid misclassification penalties.
- Gusto provides guidance to help you make the right classification.
3. Filing W-2s with Gusto
Step 1: Review Employee Information
- Confirm that employee details, including SSNs and addresses, are accurate.
- Update year-end wage information, including bonuses and PTO payouts, if applicable.
Step 2: Generate W-2 Forms
- Gusto automatically calculates wages, withholdings, and taxes.
- The platform generates W-2s based on this data, ensuring accuracy.
Step 3: File and Distribute W-2s
- Gusto electronically files W-2s with the IRS and Social Security Administration (SSA).
- Employees receive their W-2s digitally via the Gusto portal or as printed copies upon request.
4. Filing 1099s with Gusto
Step 1: Review Contractor Payments
- Verify that all contractor payments for the year are recorded in Gusto.
- Confirm that contractors’ Taxpayer Identification Numbers (TINs) are accurate.
Step 2: Generate 1099 Forms
- Gusto compiles payment data and generates 1099 forms for all eligible contractors.
Step 3: File and Distribute 1099s
- Gusto e-files 1099 forms with the IRS.
- Contractors receive their 1099s digitally through the Gusto portal or via mail.
5. Benefits of Filing with Gusto
1. Time-Saving Automation
- Gusto handles calculations, form generation, and filing, reducing manual effort.
2. Accuracy and Compliance
- Automated calculations minimize errors, ensuring compliance with IRS regulations.
3. Centralized Records
- Access all forms and payment details in one place for audits or future reference.
4. Employee and Contractor Convenience
- Workers can easily access their forms online, streamlining their tax filing process.
6. Tips for a Smooth Filing Process
- Double-Check Data: Ensure all employee and contractor information is up-to-date.
- Monitor Deadlines: Stay aware of IRS filing deadlines for W-2s (January 31) and 1099s (January 31).
- Leverage Gusto Support: Use Gusto’s help center or reach out to support for any questions.
- Prepare for Year-End: Reconcile payroll data before generating forms to avoid discrepancies.
Conclusion
Filing 1099s and W-2s doesn’t have to be a stressful process. With Gusto, businesses can automate filings, ensure accuracy, and meet deadlines with ease. By leveraging Gusto’s tools and support, you can focus on running your business while staying tax compliant.
Call to Action
Ready to simplify your tax filings? Sign up for Gusto today and experience hassle-free 1099 and W-2 management!
