US Congress recently passed a new law that changed certain Form 1099 and Form W-2 deadlines.
In order to combat tax fraud, US Congress passed The Protecting Americans from Tax Hikes (PATH) Act of 2015. It was signed by President Obama last December. This act revises the filing deadlines for Form W-2 and certain Form 1099.
Form W-2: Beginning with 2016 Forms, all Federal W-2s are now due on January 31. This applies to both paper and electronic filing of both agency and employee copies. In the past, January 31 was the deadline to provide employee copies while February 28 was the deadline for paper filings and March 31 for electronic filings. Now, there’s only one date to remember when it comes to W-2 returns – JANUARY 31.
Form 1099-MISC: If there is an amount stated in Box 7: Non employee Compensation, then the new filing deadline is January 31. If there is no amount stated in Box 7, then February 28 remains the deadline for paper filings and March 31 for electronic filings.
What is Form 1099?
If you’re doing this for the first time, you may be wondering what is Form 1099. Form 1099 is an “information return” related to different types of taxable income you have received throughout the year. This includes rent, royalties, medical & health care payments, as well as other payments made to non-employees. Simply put, a Form 1099 notifies the IRS that you have actually paid a certain amount of money to your vendors.
As a business owner, you will often use the Form 1099-MISC to report on payments made to independent contractors. For you to complete this report, your vendors have to submit a W-9 form (also known as a Request for Taxpayer Identification Number) to you. If you have not done this regularly throughout the year, catching up on your W-9 collection can take time and lots of follow up with your vendors.
Difference with W-2 Forms
Form W-2 reports wages, salaries and tips. This is used for hired employees. Form 1099 (particularly Form 1099-MISC) is used for independent contractors
Start Planning Today
Form 1099 returns, if not filed properly and on time, can result to penalties from the IRS. It’s best to start planning for them as early as now since they tend to pile up towards the end of the year. Here are some tips to help you start planning today:
- Verify employee filing status and confirm mailing addresses before year-end.
- Verify that form W-9 of your independent contractors are up-to-date and accurate.
- Make sure to have all needed information before January 1, 2017 since the deadline has been cut short.
- Contact your payroll provider and determine who will handle these filings. Never assume that since your past provider did it for you before, they’ll do it again.
- If you don’t have the time to prepare for your Form 1099 returns, you can get professional help from outsourced companies like Vertaccount.
Things can go wrong if you don’t prepare properly for 1099 season. This article by Forbes list 10 things you should know about Form 1099 before you file them. But there’s hope. Vertaccount is always here to help you prepare and file you Form 1099 returns. We can even verify and update your independent contractors W-9 forms!
Check here for our rates and contact us today to get started.