Yes, you’ve been filing the 1099 form for workers who aren’t directly on your payroll for years. Well, make it quick this tax season – by Jan. 31. The Internal Revenue Service really wants to see your forms on time!
We’re talking about the 1099-MISC forms here and, specifically, the ones reporting $600 or more “nonemployee compensation” in Box 7. That applies to wages for independent contractors, commissions for independent sales representatives, professional fees, etc.
Here’s the big change. The deadline for making those 2016 reports to the IRS now is Jan. 31. And it’s a firm Jan. 31. That’s earlier than in the past. The tax agency is promising penalties that start at $50 a day for each late form.
(We should point out that 1099-MISC forms that do not use Box 7 have until Feb. 28 for paper returns and March 31 for electronic returns before penalties kick in.)
Fortunately, businesses can get an automatic, 30-day extension by filing Form 8809 by paper or electronically by the end of the month. You’ll be able to find the right place on that form; there’s a separate, boldfaced line just for “1099-MISC NEC” extensions.
If you’re thinking 1099s, you’re probably working on W-2 forms for company employees, too. They’re also due to the Social Security Administration on Jan. 31. But, this year the tax collectors are not allowing automatic extensions for filing W-2s beyond that date. Businesses seeking extensions now must send in a “detailed explanation” – as the 8809 says — about why it’s going to take more time to submit their W-2s. The IRS also has boosted penalties for late W-2 filings. For more information on W-2s, check the “General Instructions for Forms W-2 and W-3“on the IRS website.
As tax firm Hawkins Ash CPAs wrote in discussing 1099s, the IRS actions trace back to the Protecting Americans from Tax Hikes Act of 2015 (nicknamed PATH).
The tax season opens on Monday, Jan. 23. We at EricJohn Ltd. are ready to guide small businesses and individuals through the ever-changing demands of their tax returns!