Revenue Cycle Insider

Question: When hiring part-time or full-time staff, which tax documents do I need to use? Do I use a W-2 for full-time staff and a 1099 for part-time? What about staff who work in our building but not for our business, like the custodial folks?

Oklahoma Subscriber

Answer: The Internal Revenue Service (IRS) has various forms for collecting appropriate taxes from companies and workers, based on their respective situations. However, the forms are categorized into “employee” or “contract worker” rather than by amount of time worked.

A W-2 form is usually associated with employees, and the IRS requires a W-2 form for employees who are paid more than $600 in a year.

A W-9 form is for contracted workers. “If you’ve made the determination that the person you’re paying is an independent contractor, the first step is to have the contractor complete Form W-9, Request for Taxpayer Identification Number and Certification. This form can be used to request the correct name and Taxpayer Identification Number, or TIN, of the payee. The W-9 should be kept in your files for four years for future reference in case of any questions from the worker or the IRS,” the IRS says.

If you have custodial staff working for your practice, in the sense that your practice hired a cleaning company, but not paid directly by your practice, the W-9 and 1099-NEC forms may be appropriate.

A 1099-NEC form is the employer’s responsibility to maintain and provides a record of the payments made to an independent contractor or other associate who is not an employee. “If you paid someone who is not your employee, such as a subcontractor, attorney, or accountant $600 or more for services provided during the year, a Form 1099-NEC needs to be completed, and a copy of 1099-NEC must be provided to the independent contractor by January 31 of the year following payment. You must also send a copy of this form to the IRS by January 31,” the IRS says.

You can find the relevant IRS forms on its website.

Rachel Dorrell, MA, MS, CPC-A, CPPM, Development Editor, AAPC