Year-end reporting season is a chaotic time for business owners and human resources personnel across the country. This year brings with it just the second season of earlier deadlines for W-2 and 1099-MISC reporting, so businesses can feel overwhelmed and pressured with the need to file on time to avoid fines.
One simple piece of advice to alleviate stress and assure peace of mind as forms are sent to recipients and the SSA/IRS: double-check all reporting documents and deadlines.
Checking forms for errors may seem like an action not worth mentioning, but it is one of the most neglected steps among businesses. Once data input is complete, many organizations do not take the added measure of reviewing information for accuracy. Though this is the second year for the new deadline, businesses need to be aware of the Jan. 31 filing deadline this year. Beginning in 2017, for the 2016 reporting year, filers were required to send W-2 and 1099-MISC recipient copies and submit to the SSA/IRS by January 31, regardless of method (paper or e-file). Having an earlier deadline means that companies should pay close attention to their information and re-check their forms earlier for inaccuracies.
“Year-end reporting requirements change annually, and sometimes even in the middle of the season,” said Bob Nault, Greatland’s CEO. “Penalties for misfiling or misinformation can be costly to growing companies, and particularly sting when these are mistakes that are easily avoidable. At Greatland, we help our customers eliminate concerns about fines and provide accurate, up-to-date information so filers are prepared.”
While the deadline for 1095 forms has been extended from January 31 to March 2 for recipient filing, it is still recommended to file as soon as possible. Filers should now be in the habit of completing these forms and completing them properly without relying on measures like Good Faith Filing.
Many information return reporting penalties have increased recently. Here is a list of filing penalties for W-2, 1099, and 1095 forms taxpayers should be aware of this season:
- Failure to file complete and accurate Forms 1094-C – data on employer-provided health insurance – by the form deadline will result in penalties equal to $260 per form, not to exceed $3,218,500 million per year.
- Failure to file W-2s on time means the IRS can assess a penalty of $50 per W-2 even if you file the correct form within 30 days of the due date. If you file between 30 days of the due date and August 1, the fine increases to $100 per form, with a maximum fine of $1,609,000, or $536,000 if you operate a small business. The fine becomes $260 per Form W-2 if you file after August 1, do not file corrections, or do not file required Forms W-2; the maximum penalty is $3,218,500 per year ($1,072,500 for small businesses).
- If you fail to file a 1099-MISC form by the due date and you correctly file within 30 days, the penalty is $50. The fine increases to $100 per return if you file more than 30 days late but by August 1. Lastly, it increases yet again to $260 per return if you file after August 1 or you don’t file at all.
Small businesses (for penalty purposes) are defined as organizations with annual gross receipts of $5 million or less for the three most recent tax years.