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1099 & W-2 Filing Guide for Small Business

Choose the right filing method, right forms, and get everything done on time, easily. 

1099 Form Due Dates for 2020. 

The new 1099NEC forms must be mailed to recipients and e-filed or mailed to the IRS on or before February 1, 2021.

For other 1099s, file by February 28, 2021, if you file on paper, or by March 31, 2021, if you file electronically.

The due dates for furnishing payee statements remain the same.

New E-Filing Requirements

For payers with 100+ 1099 forms, E-Filing is required in 2020.

This will change to just 10+ forms in 2021.

DiscountEfile.com helps you get it all done, easily!

 

New 1099-NEC Forms for Nonemployee Compensation

The 1099-NEC is a new form for business taxpayers to report payments of nonemployee compensation.

Starting with tax year 2020, taxpayers must complete this form to report any payment of $600 or more to a payee.

Generally, this form is due by January 31st but for 2020 tax returns, the due date is Feb 1,2021 because the 31st is a Sunday.

There is no automatic extension for this form but may be available under certain hardships.

Nonemployee compensation may be subject to backup withholding if a payee has not provided a taxpayer identification number to the payer or the IRS notifies the payer that the TIN provided was incorrect.

More information about this form can be found here: Form 1099-NEC, Nonemployee Compensation

1099-MISC Changes

Due to the creation of Form 1099-NEC, the Form 1099-MISC has been rearranged and boxes renumbered.

  • Payer made direct sales of $5,000 or more (checkbox) in box 7.
  • Crop insurance proceeds reported in box 9
  • Gross proceeds to an attorney are reported in box 10.
  • Section 409A deferrals are reported in box 12.
  • Nonqualified deferred compensation income is reported in box 14.
  • Boxes 15, 16 and 17 report state taxes withheld, state identification number and amount of income earned in a state.
1099-R Changes

Use Code 1: to report a distribution of up to $5,000 for a qualified birth or adoption that is exempt from the 10% early distribution tax and that can be repaid.

1099-PATR Changes
New boxes were added and existing boxes were renumbered, retitled, and/or repurposed to allow for reporting information to patrons needed for section
199A. (boxes 2, 5, 6, 7, 8, and 9)

Box 13 title and content change.

5498 Form Changes
Box 11: RMD required checkbox. Don’t forget that RMDS were impacted by section 114 of the SECURE Act as well as CARES Act.

New repayment code has been added “BA” for reporting a repayment of a qualified birth or adoption distribution. (box 14a and 14b)

1042-S Form Changes

Box 3b and 4b (tax rates): The revised backup withholding rate under section 3406 (24%) has been added to the Valid Tax Rate table.

Boxes 12b, 12c, 13f, 13g, 15b, 15c,16d, and 16e (Chapter 3 status code) :

  • The following codes have been deleted: 01 (US Withholding agent), 02 (US Withholding agent – other), 34 (US Withholding agent – foreign branch of FI)
  • The following codes have been added: 36 (Foreign Govt – Integral Part) and 37 (Foreign Govt. – Controlled Entity).
  • Code 19 has been updated from “Govt. or International Org.” to “International Organization”

Box 12f (country code): If the withholding agent is a US person or a foreign branch of a US person, filers are not permitted to enter “US” in box 12f even though US is not a code on the list.

TIN Masking
Recipient SSN masking is allowed on all 1099’s and new this year , it is also allowed on electronically filed W-2 recipient copies.

Note: some states may not allow TIN masking on the state copy. It is up to each individual state for the W-2.

Non-Dated, Continuous Use 1099 Forms

The following forms and instructions have been converted from annual updates to continuous use.
– Form 1097-BTC
– Form 1098-C
– Form 1098-F
– Form 1098-MA
– Form 1098-Q
– Form 1099-CAP
– Form 1099-LS
– Form 1099-OID
– Form 1099-LTC
– Form 1099-Q
– Form 1099-SA
– Form 1099-SB

1099 Rules that can make or break you
Here is a great article from Entrepreneur Magazine about who is required to file 1099 forms and why, the exceptions and how you can be proactive about 1099s to protect your business from large penalties. 

Read the Article

Due Date for W2 Copy A

February 1, 2021 is the deadline for W-2 Forms for tax year 2020.

This includes: W-2, W-2AS, W-2CM, W-2GU, W-2VI, W-3 and W-3SS with the SSA. The due date is now February 1 whether you file using paper forms or electronically.

You no longer get more time to e-file or print and mail copies to the SSA.

New E-Filing Requirements

For payers with 100+ W2 forms, E-Filing is required in 2020.

This will change to just 10+ forms in 2021.

DiscountEfile.com helps you get it all done, easily!

Truncation of SSN on Employee Copies

For data security, employee SSN can be truncated on employee copies. 

  • Do not truncate on Copy A
  • Do not truncate on paper filed W-2s
Civilian Spouses of Service Members
Civilian spouses of service members can elect to use the same residence for purposes of taxation as the service member
Moving Expenses
The only amounts to be reported in Box 12 under code P “Moving Expenses” are for reimbursements paid directly to a member of the US Armed Forces
Penalties increased
Failure to file and failure to furnish penalties and penalties for intentional disregard of filing and payee statement requirements have increased due to adjustments for inflation. The higher penalty amounts apply to returns required to be filed after December 31, 2020.
Sick & Family Leave Wage Reporting

The Families First Act generally required employers with less than 500 employees to provide paid leave due to COVID-19 and/or sick leave under certain conditions.

Employers are required to report the amount of qualified sick and family leave wages paid to employees under sections 7001 or 7003 of the Families First Coronavirus Response Act (FFCRA) on Form W-2.

In addition to including qualified sick leave wages in boxes 1, 3 and 5 of the W-2, employers must report the following type and amount of wages that were paid separately on Form W-2, Box 14 or in a statement provided with the W-2. The description given for each entry must include language described by the IRS in Notice 2020-54.

Deadlines for 2020 1099 & W-2 Filing

February 1, 2021
(January 31 is a Sunday)

All 1099 Recipient Copies B / C / 2 mailed to recipient
W-2 Employee Copies B / C / 2 mailed to employees

1099-NEC for contractors - Copy A forms to IRS (via mail or e-file, which is required for 100+ forms)
W2 Copy A to IRS (mailed or e-filed)

 

March 1, 2021 - Paper 1099 Copy A forms to IRS
(February 28 is a Sunday)

1099 Form Copy A, along with 1096 Transmittals, mailed to the IRS for all 1099 forms except 1099-NEC with non-employee compensation, which are due January 31.

 

March 31, 2021 - E-file 1099 forms with IRS

1099 Forms E-filed to the IRS, except 1099-NEC with non-employee compensation, which are due January 31.

 

 

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Simply enter your data, or import it from QuickBooks®, then click a few buttons and you're done.

We print and mail recipient copies, plus e-file with the government, for around $4 per form.

**IF YOU FILE MORE THAN 100 W2 or 1099 FORMS, YOU MUST E-FILE FOR 2020**

Learn More

Easy 1099 & W-2 Starts with Your Software System

Your accounting software is the first step to filing 1099 & W-2 Forms the easiest way.

You have 3 main options. 

Your Accounting Software

If your accounting software prints 1099 & W-2 Forms, you can purchase compatible forms and envelopes.

The program will summarize all of the wage data for the year, then print recipient and government copies.

Important: Forms must the layout used in your software.

Shop for W2 Forms

Shop for 1099 Forms

Specialized 1099 & W-2 Software

If your accounting software does NOT print the forms, specialized 1099 & W-2 software is ready to help!

Import wage data, or manually enter it into the system. Then, print the 1099 or W-2 forms you need. E-filing is also typically available.

Be sure that forms are compatible with the layouts programmed into the software.

Shop for Specialty Software

Online 1099 & W-2 Filing

The easiest way to file less than 50 forms is online! Discount E-file takes care of printing and mailing recipient copies for you, plus e-files with government agencies.

You simply import or type in data and we do the rest!

E-Filing is required for 100+ forms, but you can e-file as few as one!

Learn More

BMISFED051099 - Choosing the Right Forms

Select the right type of 1099, in the right format, for easy printing and mailing.

1] Which 1099 Form to Use

New 1099-NEC forms replace 1099-MISC for 2020!

You must file a 1099NEC  if you've paid $600+ to an individual who is not an employee during the tax year.

There are many other types of 1099 forms used for other purposes. Here is a list.

1099-NEC Filing Requirements

2] Number of 1099 Parts

The number of parts you need is based on which government agencies you need to file with - Federal, State, and/or City.

1099NEC Parts:
- Copy A: Federal Government (Red Copy)
- Copy B: Recipient Copy
- Copy C/2: Payer or State Copy
-

Shop 1099MISC Sets

3-Part States

AK, CA, FL, GA, IL, IN, IA, KY, LA, MD, MI, MO, NV, NH, NM, NY, OR, SD, TN, TX, VT, WA, WY

4-Part States

AL, AR, AZ, CA, CO, CT, DE, DC, GA, ID, IL, IN, IA, KS, KY, LA, ME, MD, MA, MI, MN, MO, MS, MT, NE, NJ, NM, NC, ND, OH, OK, OR, PA, RI, SC, UT, VT, VA, WV, WI

5-Part States

AL, AZ, CO, CT, DE, HI, ID, ME, MA, MN, MS, MT, NE, NC, ND, OH, OK, PA, SC, UT, WI

Decoding 1099-MISC Requirements

Get the details on your options and regulations on our blog post "Decoding 1099-MISC Requirements"

Get the Details

3] Type of Paper

1099-NEC Tax Form Copy A for Federal IRS Filing - DiscountTaxForms.com

Preprinted 1099 Forms are for software that only prints the data. Boxes are preprinted on the form and recipient instructions are preprinted on the back.

Blank 1099 form paper is for software that prints form boxes and data. Recipient instructions can be printed on the back. If they aren't, you must supply them per IRS regulations.

Continuous, pin-fed 1099 forms can be used with typewriters or dot-matrix printers.

Don't Forget 1099 Envelopes

Use compatible envelopes to ensure the recipient and return addresses show through the windows correctly.

1096 Transmittal Forms

When mailing 1099 Copy A forms to the IRS, include one 1096 form for each payer. This form summarizes all of the 1099-MISC submitted by the payer.

LW2AW-2 - Choosing the Right W2 Forms

Select the right type of W-2, in the right format, for easy printing and mailing.

1] Government Requirements

The number of W2 parts needed depends on which government agencies you must report to.

Federal Only = 4 Parts
Federal & State = 6 Parts
Federal, State & City/Local = 8 Parts

4-Part States

AK, FL, NV, NH, SD, TN, TX, WA, WY

6-Part States

AL, AZ, AK, CA, CO, CT, DC, DE, GA, HI, ID, IA, IL, IN, KS, KY, LA, MA, MD, ME, MI, MN, MO, MS, MT, NC, NE, ND, NJ, NM, NY, OH, OK, OR, PA, RI, SC, UT, VA, VT, WI, WV (add extra parts for city withholding taxes)

8-Part States

AL, DE, KY, MD, MI, MO, NY, OH, PA

Decoding W2 Requirements

Get the details on your options and regulations on our blog post "Decoding W-2 Requirements"

Get the Details

2] Software Functionality

Your W-2 Software will determine which forms to use.

Each software supports different tW-2 layouts. First, check to see if you should use blank W-2 paper or preprinted forms, then determine which layout you need. Many systems support Official W2 Forms, as well as 2up, 3up or 4up condensed formats.

The best way to ensure compatibility is to print a sample form and use it to compare when shopping.

Preprinted W2 Forms are for software that prints the only the employee data. Boxes are preprinted on the form and employee instructions are preprinted on the back.

Blank W2 paper is for software that prints the boxes and data. Employee instructions are often printed on the back. If they aren't, you must supply them per IRS regulations.

Don't Forget W2 Envelopes

Use compatible envelopes to ensure the employee and return addresses show through the windows correctly.

W-3 Transmittal Forms

When mailing W2 Copy A forms to the SSA, include one W3 form for each payer. This form summarizes all of the W-2 forms submitted by the employer.

2up W-2 Forms

2 Forms per page; ideal for 4pt forms
Print 1 sheet for each employee: Copies B & C

NOTE** All Government Copies MUST be printed in 2up layout.

3up W-2 Forms

3 Forms per page; ideal for 6pt forms
Print 1 sheet for each employee: Copies B, C, 2

4up W-2 Forms

4 Forms per page; ideal for 8pt forms
Print 1 sheet for each employee: Copies B, C, 2, 2