14 Are you 100% sure about this? I e-filed most of my 1099s but had to paper file a couple of them because of some issues with the system. Do I need a 1096 just for those paper ones, or for all of them?

21 You only need a Form 1096 for the paper-filed 1099s. If you e-filed most of them but paper-filed a few, you would complete a 1096 only for those paper-filed forms. So in your situation, you'd submit a 1096 with your paper 1099s, and in Box 3 you'd put only the count of those paper forms you're submitting (not including any e-filed ones). The 1096 acts as a transmittal/cover sheet only for the physical forms you're mailing in.

17 Yes, Box 5 on Form 1096 should be the total of all amounts from Box 1 of all the 1099-NECs you're submitting with that 1096. So if you have 5 contractors and the Box 1 amounts on their 1099-NECs are $1000, $2500, $750, $3200, and $900, you would put $8350 in Box 5 of the 1096.

This is really helpful! So what about if my employer is really small (like 5 people)? I don't think I got any 1095 form at all. Is that normal or should I be asking for something?

If your employer has fewer than 50 full-time employees, they're not required to provide a 1095-C form. So for a small business with only 5 employees, not receiving a 1095 form is completely normal. The main thing that matters is whether you had qualifying health coverage. If your small employer provided health insurance and you were enrolled, you were covered. If you're ever questioned about your coverage, you can provide other documentation like insurance cards or pay stubs showing health insurance deductions.

They potentially could since employers submit this info to the IRS, but currently the IRS isn't enforcing the individual mandate penalties at the federal level. Some states still have their own penalties though (CA, MA, NJ, RI, and DC I think?). If you're in one of those states, you might want to correct that.

But wait - I thought Roth contributions were tax deductible? Are you saying they're not?

You're confusing Roth contributions with traditional retirement contributions. Roth contributions (which is what code AA represents) are made with after-tax money, meaning you pay tax on that income now. The benefit is that when you withdraw the money in retirement, including all the growth, it comes out tax-free. Traditional 401(k) contributions (which would be code D in Box 12) are tax-deductible now, but you pay taxes when you withdraw the money in retirement.

For the AA codes (Roth 401k contributions), the amount is already INCLUDED in your Box 1 wages because Roth contributions are made with after-tax dollars. If you had traditional 401k contributions (which would be code D in Box 12), those would already be EXCLUDED from your Box 1 wages because they're pre-tax. You don't need to make any adjustments either way - the Box 1 amount is already correct.

Thank you! That makes sense. So basically the Box 1 amount is what I should be using for my tax return, and all these codes in Box 12 are just additional information that I don't need to do anything with.

Thank you so much for explaining this! I never considered that my W-4 might need updating with the new 401k contributions. Should I ask my HR department about adjusting my withholding, or is that something I need to figure out on my own?

You should start by using the IRS Tax Withholding Estimator on their website - it will help you figure out what adjustments you need to make. It's pretty user-friendly and walks you through everything step by step. After you know what changes you need, then talk to your HR department. They'll have the forms you need to update your withholding. Just explain that you want to adjust your W-4 because of the 401k contributions and income changes. They deal with this stuff all the time and should be able to help you complete the form correctly.

This is exactly what my financial advisor told me! She said big refunds are basically giving the government an interest-free loan all year. I adjusted my withholding too and have been putting the extra $200/paycheck into a high-yield savings account. By the time tax season came around, I had actually earned interest on that money instead of letting the IRS hold it for free.

Thanks for mentioning this! Does the deduction for half the SE tax reduce the amount of SE tax I pay, or just my income tax? And do I need a separate form for that or is it part of the regular 1040?

The deduction for half of your SE tax doesn't reduce the SE tax itself, but it does reduce your income tax. It's considered an "adjustment to income" (sometimes called an "above-the-line deduction"), which means you get this benefit even if you take the standard deduction rather than itemizing. You don't need a separate form for this deduction. When you complete Schedule SE to calculate your self-employment tax, the form will automatically calculate the deduction amount. This amount then transfers to Schedule 1 of your Form 1040 as an adjustment to income. Tax software handles this transfer automatically, making it pretty seamless.

If your W-2 wages already hit the Social Security limit ($168,600 for 2024), you'd only pay the Medicare portion (2.9%) on your self-employment income. If your W-2 is below the limit, you pay the full SE tax on your net self-employment income, but only up to the point where your combined income hits that limit. Either way, you still calculate it on Schedule SE.