NONPROFIT YEAR-END TAX TIPS

As the end of the calendar year approaches, not for profit organizations need to prepare for year-end reporting as does any other business.

Typically the two most time consuming tasks are the preparation and distribution of W-2 and 1099 forms.

In preparation for your W-2 procedures here are some items to review to help assure the forms are issued timely and accurately:

• Make sure your year-to-date payroll information is correct. If you have made any adjustments to the normal payroll processing during the year they all need to be properly recorded in your payroll system. Also, any manual transactions such as a check to be voided or manual replacement issued need to be recorded in the system.
• Make sure the employee files are complete with accurate addresses and Social Security numbers. The IRS can impose a fine for every W-2 form that has a missing or incomplete Social Security number.
• Understand your special W-2 requirements particularly for issues such as pension, deferred compensation, third party sick pay, dependent care and group life insurance over $50,000.
• Be familiar with any appropriate federal, state and local electronic reporting requirements that must be met. As electronic filing becomes the more standard process, if your state or local tax jurisdiction has it available but is not yet required, typically it is the preferred method of filing.
• Order sufficient forms including extras in case there is a need to re-print.

In preparation for your 1099 procedures you should:

• Make sure your year-to-date vendor payment information is correct. Any manually issued checks or voided checks need to be properly recorded in the vendor file.
• Any refund(s) you may have received during the course of the year from a vendor that receives a 1099 has to be properly reflected in the vendor file. The vendor’s 1099 needs to be reduced by the amount of the refund.
• Make sure the vendor files are complete with accurate addresses and Federal ID numbers. The IRS can impose a fine for every 1099 form that has a missing or incomplete Federal ID number.
• As with the W-2 forms be familiar with any appropriate federal, state and local electronic reporting requirements that must be met.