It is time for businesses to begin planning for their 2022 reporting requirements.
Businesses that make payments to individuals are required to report these payments to the IRS on an informational return. Common informational returns include a W-2 to report wages or 1099s for various payments. The individual receiving the payment also is provided a copy of the informational return to file their personal tax returns.
Informational return requirements vary by form and amount of the payment made. Below is a summary of business informational report filing requirements:
| Form | Common Form Reported Information | Additional Information Reported Detail | Reporting Threshold | Due Date – Electronic Filers | Due Date – Paper Filers |
|---|---|---|---|---|---|
| W-2 | Box 1: Wages, Tips, Other Compensation Box 3: Social Security Wages Box 5: Medicare Wages and Tips Box 7: Social Security Tips Box 8: Allocated Tips Box 15-20: State and Local Income Tax Information | Reporting required unless there is no withheld income tax, Social Security tax, or Medicare tax, or the employee was paid less than $600 | To IRS: January 31 To Recipient: January 31 *Required for businesses filing more than 250 W-2s | To IRS: January 31 To Recipient: January 31 | |
| 1099-MISC | Box 1: Rents Box 2: Royalties Box 3: Other Income Box 4: Federal Income Tax Withheld Box 7: $5,000 or More of Direct Sales of Consumer Products to Recipient for Resale Box 9: Crop Insurance Proceeds Box 10: Gross Proceeds Paid to an Attorney | 1099-MISC is used when payments are made in the course of regular trade or business | $10 or more in royalties or broker payments $600 or more of other payments $5,000 or more of direct sales of consumer products to a buyer for resale | To IRS: March 31 To Recipient: January 31 | To IRS: February 28 To Recipient: January 31 |
| 1099-NEC | Box 1: Nonemployee Compensation Box 2: $5,000 or More of Direct Sales of Consumer Products to Recipient for Resale | Includes fees, commissions, prizes and awards, oil and gas payments for working interest to a nonemployee | $600 or more in payments | To IRS and Recipient: January 31 | To IRS and Recipient: February 28 |
| 1099-K | Box 1a: Gross Payment Card and Third-Party Network Transactions Box 1b: Card Not Present Transactions | Reports payments made by credit card, payment card, or third-party network transactions for the sale of goods and services | Individual transactions of $600 or more | To IRS: To Recipient: January 31 | To IRS: To Recipient: January 31 |
| 1099-INT | Box 1: Interest Income Box 3: Interest on U.S. Savings Bonds and Treasury Obligations Box 11: Bond Premium | $10 or more in interest payments | To IRS: March 31 To Recipient: January 31 | To IRS: March 31 To Recipient: February 28 | |
| 1099-DIV | Box 1a: Total Ordinary Dividends Box 1b: Qualified Dividends Box 2a: Total Capital Gains Distributions Box 5: Section 199A Dividends | $10 or more in dividends payments | To IRS: March 31 To Recipient: January 31 | To IRS: February 28 To Recipient: January 31 | |
| Form 8027 | Line 1: Total Charged Tips Line 2: Total Charged Receipts Showing Charged Tips Line 4a: Total Tips Reported by Indirectly Tipped Employees Line 4b: Total Tips Reported by Directly Tipped Employees | Form 8027 must be filed if the business is a large food and beverage establishment. Large food and beverage establishments normally employ more than 10 employees on a typical business day and where tipping of food or beverage employees is customary | No reporting threshold | To IRS: March 31 *Required for businesses filing 250 or more Forms 8027 | To IRS: February 28 |
Extension for Filing Informational Returns
To request a 30-day extension to file Forms W-2, 1099s, 8027, and other informational returns, taxpayers should use Form 8809.
Some 1099 forms are granted an automatic 30-day extension by filing Form 8809.
However, Forms W-2 and 1099-NEC are not eligible for an automatic extension and requests for extension of time to file using Form 8099 must be paper filed. Forms W-2 and 1099-NEC are only allowed one 30-day extension.
To be eligible for approval of a 30-day extension, a filer must meet specific criteria, e.g., natural disasters, death or serious illness, the entity’s first year of business, a third-party payee statement wasn’t received in a timely manner, etc.
If your business is filing Form 8809 for multiple extension requests, then the form must be filed by the earliest original due date of the informational form. Form 8099 does not extend the due date to furnish informational forms to recipients.
If you have 250 or more information returns, you must file them electronically. For tax year 2022, the IRS is launching an online portal—the Information Return Intake System—in January 2023 that will allow taxpayers to electronically file both small and large volumes of 1099 forms.
Informational Forms Reporting Reminders
Businesses may receive Notice 972CG for incorrectly filing informational returns or for failure to timely file informational forms and provide copies to recipients. Penalties range from $50 to $290 per form for failure to file by the applicable forms’ due date. In addition, if there is an intentional disregard for proper filing, penalty per form increases to $580. The IRS assesses interest on penalties. The penalty can be contested within 45 days of receiving the notice.
Consider these best practices to help you provide accurate and timely informational returns:
- Review the organization’s accounts payable procedures to maintain proper documentation for vendors.
- Require all new vendors to complete Form W-9, Request for Taxpayer Identification Number and Certification, prior to remitting payment.
- Review the current-year vendor listing for incomplete information and request a completed Form W-9, if necessary.
- Familiarize yourself with payroll processor deadlines and provide a year-end adjustment in advance of the final payroll to avoid potential fees for unnecessary amendments of tax and wage reporting forms.
- Review the organization’s general ledger and vendor listing to evaluate the overall filing requirement for each category of reported information. Pay particular attention to vendors with “LLC”—limited liability company—in their name. For tax purposes, such vendors may be treated as partnerships, disregarded entities, or corporations. In general, payments to a corporation (including an LLC that’s treated as a C or S corporation) don’t have to be reported on Form 1099-MISC.
- Verify the classification of the organization’s workers to assess whether the appropriate information return is filed, i.e., Form W-2 versus Form 1099-NEC.
- Under the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act, employers are required to report the amount of qualified sick leave wages and qualified family leave wages paid to employees in box 14 of the 2022 Form W-2 or on a separate statement.
For more information regarding the filing of business informational reports, please see IRS instructions and reach out to a professional at Forvis Mazars.
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