Preparing your business for year end 2022
As year end approaches, keep the following 2022/2023 tax filing deadlines and suggestions in mind.
2022 payroll reporting
The following payroll returns are due January 31, 2023:
- Provide copies of Form W-2 to employees
- File Form W-3 and Forms W-2, Copy A, with Social Security Administration
- File Payroll tax returns with appropriate agency:
- Form 941, Employer’s QUARTERLY Federal Tax Return (or Form 944, Employer’s ANNUAL Federal Tax Return)
- Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return
- Form VA-6, Employer’s Annual or Final Summary of Virginia Income Tax Withheld (or annual withholding report for applicable state)
- Form VEC-FC-20/21, Employer Quarterly Payroll and Tax Report (or SUTA report for applicable state)
- File Form 945, Annual Return of Withheld Federal Income Tax (if income tax was withheld on non-payroll items)
2022 Form 1099 information returns
Form 1099-NEC (which reports non-employee compensation)
Payments for non-employee compensation are reported on Form 1099-NEC in Box 1. Form 1099-NEC is due to recipients and the IRS on January 31, 2023:
- Provide Form 1099-NEC to unincorporated independent contractors to whom you have paid $600 or more for services used in a trade or business during calendar year 2022
- File Form 1096 and Forms 1099-NEC, Copy A, with the Internal Revenue Service
- Attorneys’ fees for services of $600 or more paid in the course of a trade or business are reported in box 1 of Form 1099-NEC, regardless of legal classification (unincorporated, LLC or Corporation)
- Payments made by debit or credit card should not be reported on Form 1099-NEC. These electronic payments are reported on Form 1099-K, payment card and third-party network transactions, by the merchants and third-party networks who collect the payments.
Other Forms 1099
Forms 1099 which report payments other than non-employee compensation are due to recipients on January 31, 2023 and to the IRS on February 28, 2023.
- Provide Form 1099 to recipients by January 31, 2023
- The type of Form 1099 depends on the amount and type of payment made. Examples include Form 1099-INT (Interest Income), Form 1099-DIV (Dividend Income), Form 1099-MISC (Miscellaneous Income), Form 1099-S (Report proceeds from the sale of real estate and certain royalty payments)
- File Form 1096 and Forms 1099 with the Internal Revenue Service by February 28, 2023.
- Gross proceeds paid to attorneys of $600 or more paid in the course of a trade or business in connection with legal services are reported in box 10 of Form 1099-MISC, regardless of legal classification (unincorporated, LLC or Corporation).
- Gross proceeds are not reported on Form 1099-NEC.
- Payments made by debit or credit should not be reported on Form 1099-NEC. These electronic payments are reported on Form 1099-K, Payment Card and Third-Party Network Transactions, by merchants and third-party networks who collect the payments.
IMMEDIATE ACTION REQUIRED: It is recommended that businesses review their records prior to December 31, 2022 to make certain that a Form W-9 (Request for Taxpayer Identification Number and Certification) is on file for any contractor requiring a Form 1099. Best practice is to collect the Form W-9 during the year and prior to payment. Form W-9 to send to vendors.
Electronic filing requirements for information returns
Taxpayers filing 250 or more information returns (i.e. Forms 1099) must file them electronically via the FIRE System (Filing Electronic Returns Electronically). The 250 or more requirement applies separately to each type of form. For example, if you must file 300 Forms 1099-NEC and 100 Forms 1099-MISC, you must file Forms 1099-NEC electronically, but you are not required to file Forms 1099-MISC electronically. The Taxpayer First Act of 2019 authorized the IRS and Treasury to issue regulations that reduce the 250-return requirement for 2022 tax returns. If final regulations are issued and if they are effective for 2022 tax returns required to be filed in 2023, an article will be posted at IRS.gov explaining the change. Until regulations are issued, however, the number remains at 250. The electronic filing requirement does not apply if you apply for and receive a hardship waiver. Learn more.
Information Reporting Intake System (IRIS) – NEW
Provision 2102 of the Taxpayer First Act requires IRS to develop an Internet portal by January 1, 2023, that allows taxpayers to electronically file Forms 1099 after December 31, 2022. The IRS portal will provide taxpayers with IRS resources and guidance, and allow them to prepare, file and distribute Forms 1099, and create and maintain tax records. For the latest updates, please visit IRS.gov. Additional information can be found on the IRS website (refer to purple text).
Change in format of Form 1099 Information Returns
For tax years beginning after December 31, 2021, issuers must:
- Use the January 2022 versions of Forms 1099 for filing and furnishing in 2023.
- Write in the calendar year for which they are reporting.
Continuous use conversion:
Forms 1098, 1099-A, 1099-C, 1099-DIV, 1099-G, 1099-INT, 1099-K, 1099-MISC, 1099-NEC, and 1099-S and their instructions have been converted from annual updates to continuous use. The form and its instructions will be updated as needed.
Local tax reporting
Business License Renewal Applications for License Year 2023 must generally be filed and taxes paid by March 1, 2023. Some localities, such as Hanover County, do not have a business license (except for contractors) while other localities require a license for just certain types of businesses. Contact your locality for more information. Keep in mind that if your business operates in multiple localities, multiple licenses may be required.
If you moved from one locality to another during 2022 be sure you have obtained a business license in the new locality and filed business closure forms in the locality from which you moved. You may be entitled to a refund of BPOL from the old locality for that portion of the year after the relocation to the new locality. Some localities automatically refund based on the information on the business closure form but others require that you actively seek a refund (send in a letter/request).
Returns of Business Tangible Personal Property have filing dates which vary depending on the locality:
- Chesterfield County March 1, 2023
- County of Hanover May 1, 2023
- County of Henrico March 1, 2023
- City of Richmond March 1, 2023
IMMEDIATE ACTION REQUIRED: Since tangible personal property tax due is calculated on the assessed value of assets available for use as of January 1, 2023, the asset listing should be reviewed each year to confirm that assets disposed of during the year have been removed by December 31 and assets acquired have been added. Assets still owned but not in use should be disposed of prior to December 31, otherwise they are reportable for local property tax purposes.
Also note that tangible personal property expensed for federal income tax purposes is still reportable to the localities.
Federal and local tax resources
About the Authors
The information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.