The IRS is reminding employers and other businesses that they face a Jan. 31 filing deadline for wage statements and forms for independent contractors.
That’s not just an IRS thing, it’s a requirement of the Protecting Americans from Tax Hikes Act. The law requires employers to file Forms W-2 and W-3, and Forms 1099-MISC for independent contractors, with the Social Security Administration by Jan. 31.
The deadline helps the IRS more easily verify reported income – and also helps thwart fraud, the agency states. Slackers will likely face penalties. Penalties for filing incorrect information returns and/or not providing correct payee statements have increased and now include inflationary adjustments, the IRS warns.
Penalties are based on when the correct information return or correct payee statement are filed. What’s more, they are two separate penalties. So employers who don’t file a correct Form 1099-MISC and don’t give a correct Form 1099-MISC to the payee can face two penalties.
Employers need to do several things to prepare. Employees’ names, addresses, Social Security or individual taxpayer identification numbers should be double-checked. And employers should verify that their company’s account information is still active with the Social Security Administration – and the IRS suggests doing that before January.
If employers still need the paper versions of Forms W-2, those also should be ordered early.
The IRS cautions that time extensions to file Forms W-2 are no longer automatic. Extensions, in fact, will be allowed only for specific reasons that are outlined in Form 8809. That form pertains to Forms W-2, W-2G, 1042-S, 1094-C, 1095, 1097, 1098, 1099, 3921, 3922, 5498, and 802.
For example, employers who are requesting an extension for Forms W-2, or if they checked the box on line 5 (requesting an additional extension to an automatic extension), must meet one of the following criteria:
- The business endured a catastrophic event in a disaster area declared by the president that made the business unable to operate or made records unavailable.
- Death, serious illness or unavoidable absence of the individual who is responsible for filing the forms affected the operation.
- Fire, casualty or natural disaster affected the business operation.
- The business was in its first year of establishment.
Additional information can be found in the instructions for Forms W-2 here.
The IRS also reminds everyone that electronic filings are faster and more convenient.
About Terry Sheridan
Terry Sheridan is an award-winning journalist who has covered real estate, mortgage finance, health care, insurance, personal finance, and accounting and taxation issues for newspapers, magazines, and websites. A Chicago native and former South Florida resident, she now lives in New England.