Posted by taxguru on January 25, 2016
For as long as I can remember, there have been two different deadlines for information returns, such as 1099s and W-2s. For decades, I have been writing about the importance of these different dates. This year, I have seen more misinformation going around about this issue than any time I can recall.
1. First is the date that they should be given to the payees or employees. That has always been the end of January. Because that is on a Sunday this year, the deadline is February 1 for reporting 2015 payments. A little known fact is that this is really a courtesy for the payees and there is no official late penalty from IRS or anyone else for not providing the 1099s or W-2s by January 31.
Likewise, any workers who claim they can’t do their tax returns until they receive their 1099s are full of beans. 1099s are not required to be attached to tax returns and all small business owners should have their own records of how much money they received. 1099s are just a second level income reporting mechanism that is required to keep taxpayers “honest” in the eyes of of our overlords at the IRS.
2. Next is the date that the W-2s and 1099s are to be filed or submitted to the Federal and State governmental tax agencies. There has always been an extra month for this to be done, meaning February 28 or 29. Practically every year, I have written about how it’s a wise move not to send in the governmental copies in too soon in order to give the employees and payees time to catch any mistakes in the figures on the forms. Filing Corrected forms with IRS and SSA creates a lot of problems for everyone down the road, so making sure that the original forms are accurate is critical. Filing with the government agencies late can incur some penalties.
Over the past few weeks, I have seen a lot of supposed tax authorities claim that the 1099s and W-2s are to be filed with the government by the end of January. I took a live online CPE class a few weeks ago, where the instructor and his PowerPoint slides were claiming that all 1099s and W-2s were due to IRS by Feb 1. I just received an email this morning from a software vendor that made that same claim.
Knowing that there is a lot of confusion all over the place with the constantly changing reporting requirements related to ObamaCare, I wondered if the deadlines for 1099s and W-2s had been moved up a month. What I found when I checked with IRS and SSA websites and the official instructions for their forms was that the deadlines have not changed since prior years. All of these “authorities” who are trying to scare people about an upcoming deadline a week from today are wrong. The CPE instructor who claimed that W-2s are to be filed with IRS was also wrong about that fact. They are still to be submitted to the Social Security Administration (SSA), just as they always have.
Posted in 1099, W-2 | Comments Off on Confusion over 1099/W-2 Due Dates
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.
Posted in 1099, IRS, W-2 | Comments Off on Do not send 1099s & W-2s to IRS too early
Posted by taxguru on January 24, 2013
It’s time for another reminder to not be so quick sending IRS its copies of 1099s and W-2s. I just sent this message to client after he sent me copies 1099s that he had already mailed to IRS.
Thanks for sending me the copies of the 1099s you submitted to IRS. I have printed them out and put them in the corp’s tax file folder.
In the future, it would be a good idea to wait until some time in February to send IRS its copies. The recipients are supposed to be given their copies by January 31; but IRS doesn’t need its copies until Feb 28. The reason for the extra month is to give everyone a chance to spot any errors prior to sending the IRS copies in.
If you do later send in a Corrected 1099 to correct an already filed erroneous form, IRS will often miss the “Corrected” box entry and will show both of the forms as valid ones in their computer and expect to see the total of both of the amounts on the payee’s tax return, creating a mess to straighten out.
Let me know if you have any questions.
Posted in 1099, IRS, W-2 | Comments Off on Slow down with 1099s and W-2s