Avoid IRS Penalties: File W-2s and 1099s On Time
Its January!
IRS penalties for late 1099 and W-2 filing can add up quickly and become a costly mistake for business owners. If you miss the filing deadline or submit incorrect or incomplete information, the IRS may charge penalties starting at $50 and increasing to $280 per form, depending on the delay or error. For example, failing to file ten 1099s or W-2s could result in thousands of dollars in fines. To stay compliant and avoid unnecessary costs, it’s essential to file accurately and on time—and ensure all payee information is complete and correct.
Specifically, a penalty may apply if you:
- Fail to file on time
- Don’t provide all required information
- Include incorrect information
- Fail to report a TIN (or report an incorrect TIN)
- File paper forms that are not machine readable
- File paper forms when you are required to e-file (this can be $280 per form)
Below are two forms you may need for accurate reporting:
One is W4 which is for the employees
https://www.irs.gov/pub/irs-pdf/fw4.pdf
The other is W9 which is for independent contractors.
https://www.irs.gov/pub/irs-pdf/fw9.pdf
As a suggestion you may want to check with your employees and contractors if there have been any changes. Unfortunately sometimes with vendors you may have to hold the payment until you receive the W9.
As an owner, It should be a standard practice to request a W9 form from any new vendor/contractor. Unfortunately, the only leverage you may have to get one is payment.
Be aware, too, that under section 6722, the penalty amounts can double if you fail to provide correct payee statements and you cannot show reasonable cause. To avoid penalties for reasonable cause, you must prove that the failure was due to an event beyond your control or “significant mitigating factors.”
**Note – This is not an exhaustive list of the penalties that may occur.
If you have other bookkeeping deadline dates that should be posted please email us the name of the item and the date it is due
