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Do not send 1099s & W-2s to IRS too early

Posted by taxguru on January 24, 2014

Every year at this time, I need to remind people that being quick to prepare and send 1099s to IRS can lead to problems, such as in this email I sent to a client.

In regard to filing W-2s and 1099s, a common mistake people make is sending them too soon to the IRS and State.  The due dates are staggered for a very good reason.

By January 31, you are supposed to send copies of the W-2s and 1099s to the payees.  If they see any problems with any of the info on the forms, they need to get back to you and have you correct them.

It’s not until Feb 28 that the IRS and DFA are supposed to be sent their copies.

Big problems happen if you send in W-2s and 1099s with errors on them too soon.  You will then have to prepare Corrected forms and send those in.  What often happens is that IRS misses the checked Corrected box and sees two 1099s or W-2s for the payee and sends them tax due notices for not reporting the income from both the original and corrected forms.  I have seen this happen a lot.

The best way to avoid this is to only send IRS and DFA one original form and try to avoid sending in corrected ones.  When I send out 1099s, I include a note to the payee to get back to me ASAP with any corrections.  If they wait until after Feb 28 to notify me of mistakes, the hassles they will face with IRS mishandling of corrected forms will be their fault.  Also, to make it easier for them to see how the amounts were determined, I include a printout of their payments from my QuickBooks file.

I hope this helps.  Let me know if you have any other questions.



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