Backup Withholding, The Forgotten Piece of the 1099 World

  Keeping up with the ever-changing regulations governing  exempt workers  scan be a challenge.  Improper exempt workers classification and non-compliance with regulations pertaining to exempt workers and non-exempt workers generate some of the largest back pay awards and fines ever recorded. Penalties and back wages are computed with the same formula for all companies–large or small. Exempt employee classification and compliance infractions can be devastating or ruinous to any employer. As an exempt employee,  your compensation is typically based on a fixed salary rather than hourly wages. Although payroll rarely makes the decision on which employee is classified as exempt it is critical that they understand the regulations regarding how the determination should be made. It is even more critical that the payroll department understand and apply the strict rules for paying employees who are classified as exempt. The department must ensure that all exempt employe...

  As travel expenses can quickly add up, efficient travel expense reimbursement processes are crucial to maintain financial health and employee satisfaction. Expense management in itself is terrifying for payroll professionals.  How to compensate employees for the hours spent traveling on business is becoming one of the major concerns of the payroll department today. Many recent changes in federal and state wage and hour rules as well as economic pressures on employers and employees alike can create a situation that can practically invite non-compliance lawsuits—especially if the travel time results in overtime being owed to the employee. So, as an employer you must ensure that you are following the statutory guidelines when in comes to expense management.   But it isn’t just the DOL that is interested in travel pay, or how you are working on expense management. The IRS also has strict regulations on when employees can be paid for travel expenses without it being con...

  Backup withholding   is a tax-related concept that often goes overlooked in discussions about the Form 1099 This training is all about backup withholding – the forgotten piece of the Form 1099 . When you receive a   Form   1099 , such as a   1099-NEC form   or   1099-MISC form , you’re typically reporting income from non-employee sources. Backup withholding is income tax withholding on payments to contractors (or other 1099’able payments). You’ve probably heard of backup withholding, or at least seen the box on the 1099-NEC or 1099-MISC for “federal income tax withheld,” but most people have never really thought about what this means. That’s not speculation – the Treasury Inspector General has studied the issue of businesses who should be doing backup withholding and who are not doing it – it happens over 400,000 times a year. Backup withholding is required in situations where you don’t have your contractor’s taxpayer ID number at the time you pay th...