Organizations that make wage payments to employees—and certain payments to nonemployees—are required to report these transactions to the IRS. Copies of these returns also must be provided to the payment’s recipient. While Form W-2 is one of the most recognizable tax information returns, there are numerous transactions a taxpayer can participate in that also require filing a tax information return. IRS reporting rules vary based on the type and dollar amount of payment made. See the table below for a summary of filing requirements for the most common nonwage information returns.
*Due date to IRS is March 31, if filed electronically
**A $600 reporting threshold applies in certain situations
If any of your Forms 1099-MISC reporting NEC (Box 7) will be filed with the IRS after the January 31 due date, you should separate the transmission of those forms from any non-NEC Forms 1099-MISC. Otherwise, the IRS will treat each transmitted form as if it’s subject to the penalty for failure to file by January 31—even though taxpayers have until February 28 (March 31, if filing electronically) to submit non-NEC Forms 1099-MISC to the IRS. On the other hand, two separate recipient statements aren’t required. You can furnish each recipient with a single payee statement reporting all Form 1099-MISC payment types.
Extension for Filing Information Returns
Form 8809 is used to request a 30-day extension to file Forms W-2, 1099 and other information returns. One additional 30-day extension can be requested for all information returns except Forms W-2 and 1099-MISC when reporting NEC in Box 7. Nonautomatic extension requests may be filed on Form 8809 for Forms W-2 and 1099-MISC reporting NEC, if certain criteria are met. Some examples include natural disasters, death or serious illness, the entity’s first year of business or a third-party payee statement not being received in a timely manner.
Information Reporting Reminders
Penalties for filing incorrect information returns or failing to furnish the correct statements to recipients can typically range from $50 to $270 per return. If improper filing is due to intentional disregard, the penalty increases to at least $550 per return. If you have an information reporting filing requirement, consider the following best practices to help provide accurate and timely information to recipients and the IRS:
- Review the organization’s accounts payable procedures to maintain proper documentation for vendors.
- Require all new vendors to complete Form W-9, Request for Taxpayer Identification Number and Certification, prior to remitting payment.
- Review the current-year vendor listing for incomplete information and request a completed Form W-9, if necessary.
- Familiarize yourself with payroll processor deadlines and provide a year-end adjustment in advance of the final payroll to avoid potential fees for unnecessary amendments of tax and wage reporting forms.
- Review the organization’s general ledger and vendor listing to evaluate the overall filing requirement for each category of reported information. Pay particular attention to vendors with “LLC”—limited liability company—in their name. For tax purposes, such vendors may be treated as partnerships, disregarded entities or corporations. Generally, payments to a corporation (including an LLC that’s treated as a C or S corporation) don’t have to be reported on Form 1099-MISC.
- Verify the classification of the organization’s workers to assess whether the appropriate information return is filed, i.e., Form W-2 versus Form 1099-MISC.
- Electronic filing is mandatory for organizations required to file 250 or more information returns of the same type, unless the IRS has granted a waiver. The IRS, however, encourages all filers to submit these returns electronically, even if they’re below the 250-return threshold.
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