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It’s Almost Year End – Time to Start Thinking About 1099s & W-2s

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Filing 1099s and W-2s
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reprinted with permission from the tax1099.com blog
Form 1099, W-2: When to File? Due Dates and more by Ed Pratt

When to File
“When should I file my 1099s?” Seems like an easy question, right? There are deadlines that you need to meet, so as long as you meet them you are doing well. The end. Of course, everyone out there is a little different. Some of those reading this post are owners of small businesses. Others are accountants. Others work in accounts payable departments in large organizations. And don’t forget, some deadlines changed this year (thanks Congress!). So let’s consider the original question in a little more depth.

Deadlines, deadlines, deadlines
First, the deadline for notifying recipients has not changed. You need to postmark the mailed form or deliver it electronically to recipients by January 31.  There are two important deadline updates that we covered in an earlier post.

    • W-2s are due to the Social Security Administration (SSA) on January 31 whether they are filed by paper or electronically.
    • 1099-MISC forms with box 7 amounts are due to the IRS on January 31 whether they are filed by paper or electronically.

All other filing dates for the IRS remain the same, typically February 28 for paper filing and March 31 for e-File. So that is what you have to meet in order to remain in compliance.

When should I file?
As early as possible! I know, all of the bookkeepers and accountants are rolling their eyes and saying, “tell my clients that!” And it’s true. You rely on your clients to enter data, and they are often not as attuned to the deadline pressures listed above.

Would they tune in to penalties? You could mention that late filings fall into penalty areas for the IRS, with the maximum penalty being $260 per each instance. With the earlier deadlines for W2s and box 7 on 1099-MISC, this might be a good year to remind them of the potential for penalties.

If you prefer carrots to sticks, you could also mention that their contractors’ 1099s and employees’ W2s will arrive earlier if they are able to submit them earlier. Two billion forms, including W2s and 1099-MISC, are filed each year. Most of those are still delivered via the USPS. Unlike Christmas, the post office doesn’t ramp up temporary staff to delivery tax forms. So the earlier you get the forms submitted, the more likely they are to miss the mail bulge the first week of February.

A good date to shoot for is the week before the due date. We see about 60% of all the forms filed through Tax1099.com coming in the final week, with each day getting a bit heavier in volume through the day before the deadline.

To meet postmark requirements, check to see what is the last time to submit and have the forms hit the mail in a timely manner. We usually require them to be submitted by midnight the day before the deadline, which is why our volume is a little lower on the deadline date.

What do the big guys do?
Many of our larger filers are in Accounts Payable departments in large organizations. They work out a year-round process to collect, maintain, and validate their contractor data. When filing time comes, they have most of the data they need ready well before the end of January.

This year, some will file form 8809 for an automatic 30-day extension of time to file their 1099-MISC forms to the IRS. Even when the deadline for filing was March 31 for box 7 amounts, some larger organizations would file for the extension each year. This year we suspect many more clients will take advantage of the 8809 form in Tax1099.com.

With the 8809, keep in mind it has to be filed by the original filing deadline (not to beat a dead horse, but it’s January 31 for box 7 amounts on the 1099-MISC). Also, the W-2 is no longer eligible for an automatic extension. You can submit a signed and written version of the 8809 to attempt to receive an extension for the W-2 form.

File early
Still, an early start is the best policy. Filing early gets your forms out earlier and gives you a chance to make edits before the e-File deadline in some cases. When you find out after the e-File deadline that a form needs a correction, you can file that online, too. And if you can’t file early, remember the deadlines and stay in compliance.

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