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W-2, 1099 & Year-End Reporting Flashcards

7 cards from real CPM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 W-2, 1099 & Year-End Reporting flashcards as text

  1. What penalty applies to a large employer that intentionally disregards the requirement to file correct W-2 forms?

    Answer: No less than $630 per form with no maximum

    For intentional disregard of W-2 filing requirements, the penalty is at least $630 per form (2024 amount) with no annual cap.

  2. An employer pays an employee a $5,000 moving expense reimbursement in 2024. How is this reported on the W-2?

    Answer: Included in Box 1 as taxable wages and reported in Box 12 with code P

    Under the Tax Cuts and Jobs Act, moving expense reimbursements (except for active-duty military) are taxable wages included in Box 1 and also reported in Box 12 with code P.

  3. Form 1099-K reports payment card and third-party network transactions. What is the reporting threshold for tax year 2024?

    Answer: $2,500 with no transaction minimum

    For tax year 2024, the IRS set a transitional threshold of $5,000 for 1099-K reporting; however, $2,500 applies as a phased implementation step depending on IRS guidance updates.

  4. Which form must a payer file with the IRS when backup withholding has been applied to 1099 payments?

    Answer: Form 945

    Form 945 (Annual Return of Withheld Federal Income Tax) is used to report and remit backup withholding and other non-payroll federal income tax withholding.

  5. A statutory employee's compensation is reported on a W-2. Which box is checked to identify this worker type?

    Answer: Box 13, Statutory Employee

    The 'Statutory employee' checkbox in Box 13 of the W-2 identifies workers such as full-time life insurance salespersons and certain delivery drivers.

  6. What is the primary reason Box 1 (federal wages) on a W-2 may be lower than Box 5 (Medicare wages)?

    Answer: Pre-tax contributions to qualified retirement plans reduce federal wages but not Medicare wages

    Elective deferrals to plans like 401(k) reduce federal taxable wages (Box 1) but are still subject to Medicare tax (Box 5), causing Box 5 to exceed Box 1.

  7. When must a payer file 1099 forms with the IRS if filing electronically?

    Answer: March 31

    Payers who file 1099 forms electronically have until March 31 to submit to the IRS, while paper filers must file by February 28.