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New Deadline for Filing W-2 & 1099-MISC Forms

(posted: November 14th, 2016)

Are you ready for the new reporting requirements?

As we move towards the end of the year and start thinking about tax time, it's important to note that 2016 marks the start of a new, tighter deadline for W-2, W-3, and 1099-MISC forms.

This year, any 1099-MISC forms with box 7 (non-employee compensation) amounts and all Forms W-2 will be due by January 31 rather than the previous March 31 deadline.

This deadline applies to both paper and electronic filings. If your business utilizes contractors or other non-employee services that require a W-9 form, it is important to have all of your documentation completed as early as possible to avoid late penalties.

What's the Story?
The accelerated deadline for Forms W-2 and 1099-MISC, Miscellaneous Income is one of many changes created by the Protecting Americans from Tax Hikes (PATH) Act. Passed at the end of 2015, the Act makes permanent many of the individual and business extenders, and changed many other tax-related items. (You can learn more in our previous blog: What's New in Taxes for 2016.)

As before, the 1099-MISC form must be filed by businesses who have received at least $600 in services not performed by an employee, including payments to contractors, or prizes and awards to an individual, estate or partnership.

Why Do I Care?
The new January 31 deadline is especially tight for processing 1099-MISC forms. It means that companies have less time to complete the 1099 process, including sending the 1099 forms to recipients, waiting for them to review and inform you of changes, and then making those adjustments before the deadline.

With the old, longer deadline, companies had more time to make those necessary adjustments before submitting the forms. It is still possible to submit a corrected return within a reasonable amount of time without being penalized, but your company will inevitably incur the time and expense to prepare and submit the corrected documentation.

Adjust your schedule so that you can finalize all required documents and file them in a timely manner to avoid penalties.

What Should I Do?
Start the process as early as possible. In the future, we suggest that you request non-employees to fill out W-9 forms throughout the year and prior to payment for services. This will allow you to start gathering the necessary information and preparing the 1099s at the end of December rather than waiting until January.

All wage reports are filed with the Social Security Administration (SSA), and they are expected to open the tax year 2016 filing season for Forms W-2/W-2c on December 12, 2016.

Keep in mind that PSVS can help reduce your burden by preparing and e-filing your 1099s for you.

Extensions and Late Fees
You do have the option of filing for a 30 day extension, but note that the extension is not automatic and requires an 8809 form to be filed. In the case of a late filing, the penalty ranges from $50-$260 per form depending on how late the filing is. The maximum penalty is $1,064,000 for small businesses and up to $3,193,000 for large businesses per year.

If you have any questions about the new 1099-MISC deadlines or how they will affect you, please do not hesitate to Contact us!

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