Friday, January 6, 2017

Check W-2 and 1099 Tax Forms for Errors

Tax season is a hectic time for businesses, with many critical forms to be completed and filed. This year is no exception, and with earlier deadlines for W-2 and 1099-MISC reporting, businesses are feeling added pressure to file on time in order to avoid penalties.
Double-check all reporting documents and deadlines.

Checking forms for errors may seem like second nature, but it is actually one of the most neglected steps among companies. Once data is entered, many organizations do not take the added measure of reviewing information for accuracy. Businesses need to be aware of the new filing deadline this year, January 31. Beginning in 2017, for the 2016 reporting year, filers must 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 re-check their data sooner than later during this time crunch.

"There have been a number of key changes the last several years when it comes to tax reporting," said Bob Nault, Greatland's CEO. "Penalties for misfiling or misinformation continue to increase, and missing a deadline is a mistake that is 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. In its second year, the Affordable Care Act reporting requirements are still in place and the good faith transition relief remains intact, allowing filers an added layer of protection for potential errors. However, double checking these forms can be beneficial and educational.

Many information return reporting penalties have increased recently. Below is a list of filing penalties for W-2, 1099, and 1095 forms taxpayers should be aware of this season:
If returns are filed within 30 days after the due date, the penalty is $50 per return.
The maximum penalty for organizations that issue returns within 30 days is $532,000 ($186,000 for small businesses).
The penalty for filing returns more than 30 days after the due date, but before Aug. 1 is $100 per return.
The maximum penalty for issuing returns more than 30 days past the due date, but before Aug. 1 is $1,596,500 ($532,000 for small businesses).
Failure to file information returns or if filed after Aug. 1 results in a fine of $260 per return.
The maximum failure-to-file penalty is $3,193,000 ($1,064,000 for small businesses).

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.