This Podcast Is Episode Number 0197 And It Will Be About Contractors Last Minute Payroll Deadline For 2016 Happy New Year 2017!   It’s almost the end of the year and time to decide if your employees deserve a Bonus. You may call it a Generic Employee Bonus, Christmas Bonus, Holiday Bonus or Year End Bonus Giving An Employee Bonus Comes Down To Cash Flow Here Are Some Key Questions To Ask Yourself: Can I afford to give a bonus? Can I afford to give a Bonus to my employees? Do I want to give a Bonus to each of my employees? How do I decide how much Bonus should I give? Reality Check - Is Bonus Taxable? Starting with the last question first. In most cases, it may be taxable. All forms of Income including Bonus is income to your employee. All income is subject to State, Federal Payroll Taxes and is part of the employee’s W-2.   The most common are to give your employee a set amount known as a ‘Net Check”. It would not quite seem the same to say here is your bonus for $200.00 but the actual check received is for $169.04. Your employee is going to think you are tacky, cheap and you can afford to give them a Big Bonus.   Instead, what you give the employee is a check for $200.00 and the company pays all the payroll taxes. The value of the bonus is a lot higher when a check is grossed up (meaning you the employer pays all the taxes, company half, employee half of Social Security, Medicare, Federal Withholding, State, Local Taxes) Review all the outstanding Employee Advances When an Employee Advance is given, are the employees automatically setup on a repayment plan? Or, in your mind, the Money is a Payroll Advance with a loose payment plan. You are expecting to sit down and work out something more defined later. Later is 5 Minutes before you give them the check.     Did your employee think the money was a non-taxed bonus? Did your employee think Non-taxable reimbursement because (fill in the blank)?    Did your employee think was a Gift because (fill in the blank)?   Did your employee think it is a net payroll check? If your employee leaves, quits or gets fired, they usually expect their employee advance is paid in full. Either as a gift or was actually, all unpaid Employee Advances were net payroll checks. Usually, employees think all Payroll Advances as Net Payroll checks if they are planning to collect Unemployment.   As payroll, the amount of the check will increase their projected State Unemployment Benefits. Thinking of all my own clients over the years and with my clients with payroll; it has been by exception that the former employee will send money to cover an outstanding payment plan.   Without a written payment plan signed by the employee, Washington State does not allow the employer to withhold the remaining balance out of the employee’s final payroll check.   Sometimes an employee starts out as a 1099 Contactor. It can be a shock when converting a 1099 Contactor to a W-2 Employee for both the employee and the employer. Everyone is used to no taxes being taken out.      IRS Rule is anyone receiving over $600 or more for the calendar year needs to receive 1099 form 1099 Contractor need to meet the rules of being an Independent Contactor (Trade Contractor or General Contractor) otherwise they can be classified as an employee with back payroll taxes due.   Some states it is more common for Contactors to have mostly 1099 Contractors over formal W-2 Employees. All 1099 Contactors including your Trade Contractors and General Contractors need to be providing you with a W-9.  https://www.irs.gov/pub/irs-pdf/fw9.pdf  In 2016 IRS expanded list of those who receive 1099’s to include Attorneys.   Quick Note: Merchant Service Providers, Online Merchant Service Providers are required to provide 1099’s to their clients.     IRS intends to levy increased penalties in 2017 for...