How Do I Prepare These End-of-Year Reports?
The process of preparing these reports is pretty simple, if you have kept good payroll records, that is.
1. Verify the taxpayer identification number (Social Security Number, Employer ID Number, or other tax ID number). The tax ID number must be on Form W-4 for employees or Form W-9 for contractors. If you don't have a valid tax ID number for a contractor, you must withhold federal income taxes from that worker (see this article about backup withholding for more information).
2. Verify personal information - name and address on the W-4 for employees or W-9 for contractors.
3. Verify wage and withholding information for the forms - gross wages for 2010, withholding, Social Security and Medicare wages, and other information.
4. Finally, figure out how you will print and distribute these payroll reports. Options for preparing year-end tax reports include getting the forms from the IRS, using a payroll service, or using tax software/online tax software.
5. Distribute no later than January 31, 2011. The individuals should have the forms no later than January 31, so if you are mailing these forms, they should be mailed a few days before the end of the month.
It sounds easy, but if you haven't done it before, give yourself enough time to figure it out.
For More Information
Read more about How to Prepare Form W-2 for employees and Form 1099-MISC for contract workers.
More Information on End-of-Year Payroll Tax Reports for employees and contract workers.
