As we wrap up our end-of-year to-do lists, it’s time to look ahead to the New Year’s to-do list. That new list should include changes to the due date for wage (W-2) and non-employee (1099) compensation returns. Today, The Tax Warriors® explain the changes and what businesses can do to avoid the increased penalties. As in previous years, employees and independent contractors must receive W-2 and 1099 statements by January 31st, but now so must the IRS and Social Security. E-filers no longer get the extended time to file. This means you must review, mail employees’ forms, and have your authorization back to the accountant before January 31st. This change is an IRS effort to reduce fraud. While admirable, it adds to an already busy time of the year for businesses and accountants.
What can you do now to meet this shorter deadline? Ensure you have W-9s for all contractors and vendors paid more than $600 in 2016. Then, as soon as you print that last check for 2016, print those vendor ledgers and employee year-to-date registers, or copy the check register pages and get them to your accountant ASAP.
The due dates for Form 1099 MISC still have the same due dates of February 28th to the IRS if paper filed, and March 31st if electronically filed. However, since your accountant will need the materials for independent contractors, you should consider sending all the information at once. There are only 20 working days in January 2017, so this proactive measure will save time for both you and your accountant. The penalties for late filings and non-filing have increased. Here is a list of the new penalties, which are PER FORM so they can add up quickly:
- Filing only 30 days late is now $50 (previously $30)
- Filing 31 days until August 1st is now $100 (previously $50)
- Filing with missing or incorrect TIN or filing after August 1st is now $260 (previously $100)
- Intentional disregard of filing requirements is now $530 (previously $250)
These fines double if you do not send the form to the payee, and if it is not submitted to the IRS. The IRS is looking for all sources of revenue and the best defense is likely a good offense. So, plan now to meet the new deadlines!
