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.

Examples of tax reportable income include most types of: child care, care for the aged, and care for the developmentally disabled. An example of a non-tax reportable payment is reimbursement for mileage.

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

SEIU 775 UNION COVERED SERVICES

As of July 1, 2006, Individual Providers who provide union-covered services may voluntarily have Federal Income Tax withheld by submitting a properly completed W4 to SSPS. The SSPS does not withhold Federal Income Tax for payments for non-union covered services.

Federal Income Tax IS NOT withheld unless a properly completed W4 has been received from the Individual Provider. To obtain a blank W4 or for questions about a W4 that has been submitted, please contact the SSPS W4 Mainline at (360) 407-4000.

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

1099 earnings apply to a self-employed person, or a licensed business. A 1099 is issued to the service provider when $600.00 or more is paid during the calendar year (tax year) for services defined as 1099 tax reportable. 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 providers Social Security number (SSN). 1099 earnings are reported to the Internal Revenue Service (IRS).

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

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 $1,600.00. If the employee does not accumulate income of $1,600.00 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 $1,600.00. 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 $1,600.00.

FICA Refunds

If an employee is paid less than $1,600.00 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 DSHS tax information

If you have questions about a tax document, please contact your Social Worker or Case Manager.

If you need a replacement copy of your 1099/W-2, please contact the DSHS Tax Desk.

The DSHS Tax Desk phone number is
(360) 664-5830.

The DSHS Tax Desk e-mail address is: TAXINFO@dshs.wa.gov

Or, write to:

    DSHS Tax Desk
    Department of Social and Health Services
    Office of Accounting Services
    PO Box 45842
    Olympia, WA 98504-5842