Most people associate tax season with income tax deadlines so it’s easy to forget about other forms they may need to file for the January 31 deadline. So what other forms should business owners know about? The IRS requires business owners to file wage statements (W-2s) and independent contractor forms (1099-NEC) by January 31. Employers must report wages, tips and other compensation paid to an employee on such forms.
Independent contractor forms
Businesses who pay independent contractors must file Form 1099 and report the non-employee compensation.
They have to report payments of at least $600 on Box 7 of the 1099-NEC form. Payments made to corporations are not subject to 1099-MISC unless those payments are for legal services. The contractor will fill out form W9, providing the name, address, SSN or EIN and US citizenship or residency status. Payments to foreign contractors are not subject to 1099.
Wage statement forms
Other required employer forms include Form W-2, Wage and Tax Statement, Form W-3, and Transmittal of Wages and Tax Statements with the Social Security Administration.
How to file
While it may seem like a nuisance, filing these forms serves as an additional measure to prevent fraud. This is because the IRS verifies the income reported by individuals from the January 31 deadline with their income tax returns.
Like most federal forms, taxpayers conveniently have the option to paper-file or e-file these forms. Be aware that failure to file them on time will result in penalties from $50 to $260 per return.
Additionally, intentional disregard is subject to a penalty of $530 per return, so hang on to your hard-earned cash and file these on time!
