Determining last year's Massachusetts workforce count will help you answer 2 important questions when it comes to your contribution responsibilities:
- Whether or not your 1099-MISC contractors are considered covered individuals.
- Whether or not you're responsible for paying a share of the contributions.
W-2 employees are always covered individuals. 1099-MISC contractors are only covered individuals if they made up more than 50% of your workforce and meet certain criteria.
How to determine your total number of covered individuals
To calculate your total workforce from the previous calendar year:
- Add up the total number of MA W-2 employees you paid each pay period in the previous calendar year and divide that number by the number of pay periods. This is your MA W-2 average.
- Add up the total number of MA 1099-MISC contractors you paid for services each pay period in the previous calendar year and divide that number by the number of pay periods. This is your MA 1099-MISC average.
- If your MA 1099-MISC average is greater than your W-2 average, then they are considered covered individuals.
- Add up your total number of covered individuals in the previous year.
If you had 25 or more covered individuals in your workforce for last year, then you are responsible for making employer contributions for covered individuals in your current workforce.
If you had less than 25 covered individuals in last year's workforce, you do not need to make an employer contribution this year. However, you will still need to remit the employee portion of the contribution on their behalf.
Read more about who qualifies as a covered individual in order to make an accurate workforce count.