By Pam Swartout, Manager and Tracey Selig, CPA, Senior Accountant at Blue & Co.
The time of year for preparing and filing your 1099s and W-2s is here.
In order to ensure timely and accurate submissions of the above-mentioned forms, Blue & Co. wants to inform you of the Form 1099 and W-2 requirements, their due dates, and the repercussions of incorrect or unfiled forms.
The due date for filing Form W-2 and 1099 is January 31, 2023.
1099s are information returns that are required to be filed if you’ve made payments to individuals and unincorporated entities for interest, dividends, rents, royalties, commissions, non-employee compensation, and services.
This also includes payments made to attorneys and healthcare providers whether they are incorporated or not.
Interest, dividends, and royalties have a ten dollar filing threshold. Payments in excess of $600 for rents, commissions, and non-employee compensation require a 1099 to be filed.
Dividends paid by S corporations are generally not reportable on Form 1099.
Taxpayers should obtain a completed form W-9 (Request for Taxpayer Identification Number) from all persons and entities for potential reportable 1099s payments prior to their work beginning.
Doing this may save you a lot of headaches by avoiding uncooperative payees during the 1099 deadline.
Penalties and Fines Associated with Incomplete or Incorrect Returns, Wage, and Tax Statements
The Internal Revenue Service (IRS) and Social Security Administration (SSA) have started to strictly enforce the penalties related to information returns (1099s) and wage and tax statements (W-2s).
If an employer fails to file forms with the IRS and SSA or fails to include all the required information on the form, the employer is subject to penalties.
The IRS states that an employer may be fined up to $290 per form with missing or incorrect social security numbers, and at least $580 per form for intentional disregard of the filing requirements.
Entities filing 250 or more returns, such as W-2s, 1099s, income, payroll, or excise tax returns, must file all returns electronically, or they will be subject to a penalty of up to $290 per return.
If you need assistance or have any questions related to filing 1099s and/or W-2s, please reach out to your local Blue & Co. tax advisor.