April 15th is a date common to all of us – it is the deadline for filing most tax returns. But there are other dates we need to know as well. January 31st is a very important date for anyone with employees, and for those who pay non-employee contractors. This is the date when W-2s and 1099-MISC forms are due!
Who gets the forms?
This deadline includes providing these forms to the employees and non-employee contractors, and submitting them to the proper federal agencies. W-2 forms are submitted to the Social Security Administration and 1099-MISC forms go to the IRS.
Each employee receives a W-2. Non-employee contractors to whom you have paid $600 or more during the year are to receive a 1099-MISC. These forms show money earned in the previous year (2019 earnings are reported by January 31, 2020).
Start preparing now to avoid penalties
There are penalties for not filing on time, so begin preparing now. Make sure all employees and contractors have completed a W-9 (Request for Taxpayer Identification Number and Certification), and that the information for those you already have on file is current and correct. Plan now to give employees and non-employee contractors their W-2s and 1099-MISC respectively, before the end of January. This allows time to correct any errors before filing with the federal agencies.
Filing online is the better route
When you file with the federal agencies, you will need to include summation forms (W-3/Form 1096) if you don’t file online. In 2020, if you have 250 or more of either form, you must file online. This reduces to 100 or more in 2021, and by 2022, you must file online if you have 10 or more forms of each type.
Worth mentioning again – those pesky penalties
Again, there are penalties for not complying with the January 31st deadline. Penalties vary based on length of the delay, and can be charged on a per return basis with a maximum level set by the IRS. You can also be penalized for intentional disregard of filing forms, for failure to supply proper documentation to your workers, or for filing the wrong form for a worker (giving a 1099 when they should have gotten a W-2). Penalty amounts are outlined on the IRS website.
More information available on the IRS.gov website, or talk to a tax professional
Additionally, you can find complete information on who should receive a W-2 or a 1099-MISC form at the IRS.gov website. Most commonly, independent contractors and vendors who are self-employed individuals should be sent a 1099-MISC (if you paid them more than $600 during the year).
If you have questions on how, where, who, etc., please reach out to your tax or accounting professional.