1099-MISC Box 15a and 15b – Section 409A Deferrals and Income – Nonqualified deferred compensation plans are used by businesses to supplement existing qualified plans and provide an extra benefit to key personnel and highly compensated employees. In small businesses, this usually includes the owner and founder.
How do I report section 409A income?
Amounts that have failed Section 409A are reported to nonemployees (such as directors or certain independent contractors) on Form 1099-MISC, Box 14. This reporting notifies the employee or contractor and the IRS that the additional tax is due.
What is 409A deferred compensation?
In a broad sense, a nonqualified deferred compensation plan refers to compensation that the company promises to pay to its participants in a subsequent plan year. Essentially, workers earn a sum of money in one year and they get paid at some time in the future.
What box is deferred compensation?
Box 11
Box 11 — This section shows the total amount distributed to you from your employer’s non-qualified (taxable) deferred compensation plan.
Where are Section 409A deferrals reported on a 1099?
Section 409A deferrals are reported in box 12. Nonqualified deferred compensation income is reported in box 14. Boxes 15, 16, and 17 report state taxes withheld, state identification number, and amount of income earned in the state, respectively.
When to use 1099 MISC box 15A and 15B?
Do you have to file Form 1099 Misc for nonqualified deferred compensation?
Nonqualified deferred compensation (box 14). You must also file Form 1099-MISC for each person from whom you have withheld any federal income tax (report in box 4) under the backup withholding rules regardless of the amount of the payment.
When to use box 15A and 15B?
Appropriate use of Boxes 15a and 15b help payees and the IRS correctly calculate the amount of tax owed. Reporting related to Section 409A can be particularly complex and the direct assistance of benefit plan expert’s help is necessary and warranted. The standard $600 reporting threshold applies to Box 15a non-qualified deferred compensation.
