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Hyper20
New Member

Forgot to add a employee to my taxes

Hi new business owner I filled my personal taxes 1040c but I didn’t realize I had to do my personal and business togeather cuz I’m a llc and now two of my employees refunds are getting denied cuz no proof of income what can I do and forms

7 Replies
Opus 17
Level 15

Forgot to add a employee to my taxes

See a professional tax preparer.  You may have a great deal of issues to work out.

 

When you are an LLC with no employees, you have the option of using your SSN or getting a federal EIN (employer ID number).  When you have employees, you must have an EIN.  Did you get one?

 

You must withhold federal and state income taxes, social security and Medicare Tax, did you do that?

 

You must file form 941 quarterly with the IRS to report the federal withholding and federal unemployment tax payments, did you do that?  There will be a similar quarterly form for your state taxes withheld.

 

You must issue each employee a W-2 at the end of the year, and when you file the W-2, a copy goes to the IRS, along with a W-3 form that summarizes all your employee W-2s.  Did you file those documents?

 

It kind of sounds like you didn't, if the IRS says they have no records of the employees' wages.  Aside from causing hardship to your employees, failing to do these tasks can subject you to large penalties.

 

You may also have significant state responsibilities.  For example, in New York State, an employer must provide each employee with a pay statement or pay stub containing 15 specified items of information, and fine for noncompliance is $100 per paycheck per employee.  

 

If these were subcontractors, you can forget about all the withholding and pay stub talk, but you must issue each subcontractor a 1099-NEC no later than January 31, with copies to the IRS.  

 

Good luck.

 

 

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
Carl
Level 15

Forgot to add a employee to my taxes

Don't walk. RUN!!!!! to a tax professional as fast as you can! Do it NOW!

You don't have time to play with this, as your penalties, fines and late fees for doing things wrong, or not doing them at all are already high, and climbing higher with each passing day.

If your state also taxes personal income, then you can expect all your fines, penalties and late fees to be double, as you'll probably being paying those to the state, as well as the IRS.

What you pay a tax professional is going to seem like a pittance, compared to what you're going to pay to the IRS, and probably to the state too if applicable.

 

Hyper2020
New Member

Forgot to add a employee to my taxes

Yes I have ein What happened was I filed my personal taxes at 10:40 C I didn’t know that I had to do my business with my personal I thought they were separate well then I found out that I can’t and two of my employees can’t get the refunds because of of it I just need to know how can I amend my return and show their wages in taxes paid

VolvoGirl
Level 15

Forgot to add a employee to my taxes

And it depends what kind of LLC you set up.  You may have to file a separate LLC business return.  Or if it is a Single Member LLC and not a S corp then it is a disregarded entity and you file a Schedule C in your personal 1040 tax return for it.

 

Then did you pay them as employees and hold out taxes from their pay OR pay them as independent contractor or sub-contractors?   If they are employees you give them a W2.  If they are independent contractor labor you give them a 1099NEC.

Opus 17
Level 15

Forgot to add a employee to my taxes

@Hyper2020 

I don’t understand your problem because it does not make sense as you described.

 

If you filed the form 941 as required, and you filed form W-2 and W-3 as required, but you simply did not include your employee wages as an expense on your schedule C, that would not block your employees from receiving their tax refunds.

 

A single member LLC is a disregarded entity and you would file one tax return for the whole year that lists your business and personal income. Your business is listed on a schedule C, and you report your gross income and your expenses and you pay income tax and self-employment tax on your net profit after expenses.  If you did not include your business on your personal form 1040, you will file an amended form 1040 that adds the schedule C and all of your business information including your expenses for employee wages.

 

However, failing to file a schedule C by itself will not block your employees from receiving their tax refunds. You must have failed to do something else. Either they are subcontractors, not employees, and you failed to issue a 1099-NEC, or they are employees and you failed to issue W-2s.  

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
VolvoGirl
Level 15

Forgot to add a employee to my taxes

Why do you say 1040 C?  Did you fill out a Schedule C in your 1040 return?  Or are you a C corp. business?

Mike9241
Level 15

Forgot to add a employee to my taxes

your situation is quite confusing. I don't think any of us really know what you did or didn't do or even what type of tax entity we are dealing with. see a tax professional to get things cleaned up. 

 

if those you hired were independent contractors, there is no reason why they couldn't get their refunds even if you didn't issue them 1099's. they are required if you paid over $600 to either or both of them but the problem would be non-filing at your end and shouldn't block their refunds. if they were employees, w-2's are required. did you file copies with the Social Security Adm along with form W-3.  you'll also have issues if there was state withholding. forms would need to be filed with the state.  in addition, you need to get educated as to record keeping and filing requirements for your business. for employees you would also likely have to file unemployment compensation returns federal and state. you probably need workmen's compensation insurance - failure to have it when required can result in fines in the $000's.   

 

perhaps the problem is that your employees don't know how to file.

 

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