Are my SSPS Payments Tax Reportable Income?
Many of the payments issued by SSPS are considered tax reportable income. Staff who authorize service for payment should inform service providers whether or not their payments will generate a tax document.
Tax reportable payments fall into two categories. They are either 1099 earnings or W-2 income.
The date of payment, not the date of service, determines the tax year.
Because the type of service determines the tax category, it is possible for one provider to receive a 1099, one or more W-2's, and one or more FICA refunds (Federal Insurance Contribution Act).
Federal Income Tax Withholding
Non-Union Covered Services
All non-union individuals, the self-employed, and businesses must contact the Internal Revenue Service (IRS) at 1-800-829-1040 regarding their Federal Income Tax responsibility.
SSPS Remittance Advice
SSPS sends a remittance advice document with each payment whether it is W-2 income or 1099 earnings or a non-tax reportable payment. This document lists each of the services included in the payment. If one or more of the paid services is W-2 income, an additional remittance advice document detailing the FICA deduction is also included.
1099 earnings apply to a self-employed person or a licensed business. A 1099 is issued to the service provider for any services defined as 1099 tax reportable by the federal government. 1099 earnings are reported to the IRS. 1099 payments are accumulated for each service provider. A service provider may furnish services for more than one service recipient, however, the provider will only receive one 1099 statement.
1099's are issued under the business tax identification number (TIN) if it is on file with SSPS. Otherwise, the 1099 is issued under the service provider's Social Security Number (SSN).
No FICA withholding and no federal income tax withholding is done for 1099 earnings.
Self-employed persons should contact the Social Security Administration at 1-800-772-1213 for further details regarding how they can pay/contribute toward Social Security benefits.
W-2 income is the earnings of an employee (service provider) who works for an employer (recipient/client). W-2 income is reported to the Social Security Administration (SSA) and the Internal Revenue Service (IRS).
A service provider may work for more than one recipient/client. Since W-2's are issued for the employee (service provider) of each employer (recipient/client), a provider may receive more than one W-2 statement.
As required by federal law, the Social Service Payment System withholds FICA from payments defined as W-2 tax reportable income. FICA stands for Federal Insurance Contribution Act. It is the deduction for both the Medicare tax and the Social Security tax. (The Social Security tax is officially called Old Age Survivors Disability Insurance, abbreviated as OASI or OASDI.) FICA withheld from W-2 tax reportable income is forwarded to the Social Security Administration after the provider accumulated wages for the tax year reach $2,100.00. If the employee does not accumulate income of $2,100.00 or more during the tax year, the FICA deducted from their payment(s) is refunded.
If you have earnings from delivering care to more than one employer, it may total more than $2,100.00. However, each employer is totaled separately. You will receive a W-2 for each employer from whom you received income. You will also receive a refund of the FICA deducted from income from one employer when the total income from that one employer is less than $2,100.00.
If an employee is paid less than $2,100.00 during the tax year for services defined as W-2 tax reportable that are provided to one employer, the employee is issued a FICA refund. The FICA refund equals the amount of FICA withheld from the employee's W-2 income from one employer (recipient/client) during the calendar year.
Since FICA refunds are issued for the employee (service provider) of each employer (recipient/client), a provider may receive more than one FICA refund.
Additional DCYF Tax Information
If you have questions about a tax document, contact your Social Worker or Case Manager.
If you need a replacement copy of your 1099/W-2, contact the DCYF Tax Desk.
DCYF Tax Desk
(833) 725-3502 Toll free