Businesses have many tax and other filing deadlines to keep up with, and some of them have larger than expected consequences for non-compliance.
That’s why it’s important to stay on top of important payroll tax filing deadlines, including those for 1099 and W-2 forms. Last year, these dates changed for the 2016 reporting year, pushing the deadline back one full month, and that change continues for 2017 reporting as well. To help clients, prospects and others remain compliant with payroll reporting rules, Hanson & Co. has provided a summary of essential details below.
Who Receives a Form 1099-MISC and W-2?
Each company employee should be provided with a W-2 form. 1099-MISC forms are issued to any supplier, vendor or service provider the company has paid $600 or more per year for services rendered. This can include rent, independent contractor services, other income, prizes, medical and healthcare payments, fishing boat proceeds and payments to an attorney. A 1099-MISC form should also be sent out for payments of $10 or more in royalties and brokers’ payments in lieu of dividends or tax-exempt interest. Copies of these reports must be filed with the appropriate federal agency (the Social Security Administration for W-2 forms and the IRS for 1099-MISC forms). This deadline is the same whether the form is mailed or submitted electronically – another change from previous years.
Payroll Reporting Deadlines
In order to combat fraud and identity theft, the IRS has moved up the filing date for 2017 W-2 and 1099 forms to January 31, 2018 – one month earlier than the previous filing date. This will enable extra time to fully verify the legitimacy of tax returns and ensure refunds are appropriately issued. Many states (21 including Colorado) are also employing the earlier filing date for state income taxes for this same reason.
The deadline for providing W-2 forms to employees and 1099-MISC forms to other workers for 2017 is still January 31, 2018, which is unchanged from previous tax seasons. Also, don’t forget other important 2017 tax deadlines in early 2018. Along with annual wage and tax reports, unemployment tax forms and payment and Form 941 (Employer’s Quarterly Federal Tax Form) for fourth quarter 2017 are all due January 31, 2018.
W-2 Non-Compliance Penalties
Unfortunately, missing deadlines can come with a steep penalty, which has been recently increased by the IRS to account for inflation. A company that fails to file information returns on a timely basis, intentionally disregards filing requirements (i.e. does not provide all necessary information or reports inaccurate information) or does not furnish W-2 forms to employees as required will be subject to a tiered penalty system.
With some exceptions, filing a corrected statement within 30 days of the due date results in a fee of $50 per W-2 form (maximum of $536,000 or $187,500 for small businesses generating less than $5M per year). If a company correctly files more than 30 days after the deadline but before August 1, the penalty is $100 per Form W-2 (maximum of $1,609,000 or $536,000 for small businesses). The penalty rises to $260 per information return for those who file after August 1, do not file corrections or do not file the required W-2 forms. Intentional disregard of filing requirements has a much steeper penalty of $530 per form with no maximum.
Maintaining tax compliance among changing rules and deadlines can be challenging especially when managing your business is your main focus. The good news is that Hanson & CO can help! If you have questions about preparing and submitting W-2s, IRS Form 1099-MISC or W-3 (for Forms W-2) or if you would like assistance with tax planning, tax preparation or another issue, please call us at (303) 388-1010 or click here to contact us. We look forward to speaking with you soon.