Planning Ahead

Workgroup managers should calculate an estimate of the amount of money that an eligible member is likely to earn in the calendar year before the eligible member is officially brought on to the workgroup or at the beginning of each new calendar year for returning eligible members. If that estimate hits (or even closely approaches) the $600 threshold, workgroup managers need to inform the eligible member in advance that they will most likely have to report this income on their personal income taxes. Managers should also take this opportunity to collect all necessary information for tax reporting (such as a social security number, a W-9 form, or any other documentation required by the payer) so that they do not have to collect that information at the last minute when 1099s are issued in January. Workgroup managers should work closely with their agency’s accounting department or, if a third-party consultant is handling payment, with their accounting team, to ensure that all necessary documentation is collected in advance and that sensitive information such as SSN is stored securely.