We have listed some of the changes for W-2 and 1099 Forms. Just remember, that if your not sure what kind of form you need. Contact the IRS, or your accountant. If you want to make sure you have the right form(s). You can request a free sample from us. Just go to the sample page, and place the item number into the text box, and check out.

2011 W-2/1099 Changes

W-2s & 1099s

·         The penalties for failure to file correct information returns and failure to furnish correct payee statements have increased.  These penalties will be adjusted for inflation every 5 years after 2012.

W-2

·         The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 has temporarily reduced the rate of social security tax withholding (for employees only) from 6.2% to 4.2% for wage payments made in 2011.

·         Two new codes have been added to box 12 of the 2011 Form W-2:         

o   Code DD is used to report the cost of employer-sponsored health coverage.  However, this reporting will not be mandatory for 2011.

o   Code EE is used to report designated Roth contributions under a governmental section 457(b) plan.

W-3

·         To improve document matching compliance, box b of the 2011 Form W-3 has been expanded to include a new section, Kind of Employer, which contains five new checkboxes.  Filers are required to check one of these new checkboxes. 

W-2 & W-3

·         The advance earned income credit payment is eliminated for tax years beginning after December 31, 2010.  Therefore, box 9, Advance EIC payments, has been deleted from the 2011 Form W-2 and W-3.

1099s

·         The pilot program for truncating an individual’s identifying number on paper payee statements has ended.  Filers must show the payee’s complete identifying number on all copies of the form.

1099-B

·         New boxes have been added to Form 1099-B for reporting the date of acquisition (box 1b), cost or other basis (box 3), amount of loss disallowed due to a wash sale (box 5), whether the property sold is a noncovered security (box 6), amount of gain or loss (box 7), and whether the gain or loss is short-term or long-term (box 8).  These new boxes must be completed when reporting sales of securities unless box 6 is checked. 

·         There are new rules for:

o   How many forms must be filed for each transaction

o   Short sales of securities

o   Foreign currency

o   Transfer statements

o   Issuer returns

o   Use of transfer taxes and option premiums in determining gross proceeds, and

o   Basis reporting.

1099-K

·         Form 1099-K, Merchant Card and Third Party Network Payments, is new for 2011 and is used by payment settlement entities to report merchant card payments and third-party network transactions to participating payees.

1099-MISC

·         Payments of $600 or more for certain rental property expenses made by persons receiving rental income from real estate are to be reported on Form 1099-MISC.

1099-R

·         The blank box formerly to the left of the box labeled “1^st year of design. Roth contrib.” has been numbered box 10 and labeled “Amount allocable to IRR within 5 years”.  Other boxes on this form have been renumbered to accommodate this change.

1099-SA & 5498-SA

·         Excess employer contributions (and the earnings on them) withdrawn from employee HSAs by the employer should not be reported as a distribution on Form 1099-SA or as a contribution on Form 5498-SA.