We often receive questions regarding year-end closing or cut-off dates. We hope that you find the explanation below helpful.
New Business Processing
December 31, 2020 will be a normal business day and the standard service times for processing documents received that day will apply.
1099 Income Reporting
New business requirements need to be received and processed by Wednesday, December 30 to be included in 2020 Miscellaneous Income Tax Reporting (1099 MISC). The commission payments sent Thursday, December 31 following the December 30 closing are the final payments for the 2020 tax reporting year.
The agent’s individual cut-off date depends on when the agent has elected to be paid. For example, if the agent is paid monthly and the most recent scheduled date is December 7, all commissions applied by December 7 will be included in the 1099 MISC for the year. The next pay date is January 7, 2021.
Most agents choose the standard method which is the 10th, 20th and the last day of the month. If the agent is set up on the standard method, then generally all commissions applied by December 18 will be included in the 1099 MISC for the year.
General Agent Bonus
The General Agent Bonus for 2020 is based upon all commissions processed through December 31, 2020.
The payment date for each agent in the hierarchy may be different. Consider a situation where the general agent is paid on the standard schedule and the broker is paid monthly with the most recent pay date of December 7. A case is paid on December 31. The general agent’s share of the commission will process on December 31 and will be included in the bonus for 2020. The broker’s share will process on January 7 and will be included in the bonus for 2021.