Some of the most important payroll forms you'll deal with each year are those you give to employees and nonemployees, detailing what you paid them and what taxes were withheld from employees' pay. They'll need this information to prepare their income tax returns, and you must submit copies to the IRS as well.
All these reports can be filed online, and some businesses must do so.
Deadlines for Giving Forms to Payees
Employees must receive their Forms W-2 showing their taxable income, income taxes withheld, and other information by January 31 of the year following the tax year. Nonemployees must receive 1099-NEC forms showing the taxable payments your business made to them during the year by the same date.
IRS Form 1099-NEC replaces Form 1099-MISC effective the 2020 tax year, at least for some taxpayers. Form 1099-MISC is still used for other purposes, but independent contractors and nonemployees have their own form, the 1099-NEC, beginning in 2020.
Filing Reports With Federal Agencies
The deadline for giving forms to payees and for filing with federal agencies is the same. W-2 forms must be filed with the Social Security Administration by January 31 of the year following the tax year. Send 1099-MISC forms to the IRS by January 31 as well.
The deadline can change slightly from year to year if this date falls on a holiday or a weekend. The deadline would then be the next business day.
Try to give these forms to recipients early in January so there's time to correct any errors before you file them with the proper federal agencies.
Businesses That Must File Online
You must file W-2s and 1099-NEC forms online for calendar years through 2020 if you file 250 or more of any one type of form for the year. You can be penalized if you don't. This rule, too, is in the process of changing.
Starting with 2021 information returns, you must file online if you have just 100 W-2s or 1099-NEC forms to file. That's 100 of each type of form, not 100 overall. Beginning with tax years after 2021, you must file online if your business has 10 or more W-2s or 1099-NEC forms to file.
You can request a waiver from this requirement for both 1099 forms and W-2 forms by filing Form 8508 with the IRS, however. You must do so at least 45 days before the due date for Forms W-2, or 45 days before you file your first Form W-2c.
There are no automatic extension requests for Forms W-2 or Forms 1099-NEC.
E-Filing W-2 Forms With the SSA
The SSA's Business Services Online (BSO) is the place to go for e-filing W-2s. You must sign up with this service first, however.
The SSA has a Frequently Asked Questions page to help you with questions about filing W-2 forms.
E-Filing 1099 Forms With the IRS
You can submit all 1099 forms, including Form 1099-NEC, to the IRS by mail or online, using the Filing Information Returns Electronically (FIRE) system. You must register with the FIRE system by filing an online application.
The Benefits of Filing Online
E-filing saves time and effort and it helps ensure accuracy. The IRS strongly recommends it.
You don't have to calculate and submit a W-3 transmittal form if you e-file W-2 forms, and the Social Security Administration generates a W-3 automatically when you use its BSO service. Likewise, you do not need to calculate and submit a 1096 form for each type of 1099 form if you e-file those forms, including 1099-MISC forms.
You can use the BSO site to verify Social Security Numbers for wage reporting purposes as well. This ensures that wages are reported correctly, and it avoids dealing with W-2c (corrected) forms to correct errors on W-2s. But you can also submit W-2c forms online if you do find a mistake in one or more W-2 forms after you've submitted them.
Some states participate in the FIRE system, which means you can avoid a separate state filing.
You can verify that your files have been received and check the status online when you e-file. The BSO site also offers a tutorial, handbooks, a checklist, and a good deal of other useful information to help you e-file.
What If You Don't File on Time?
You can be subject to penalties for failing to file online when this is required, for failing to submit forms to the proper agency on time, for failing to give forms to employees or nonemployees, and for failing to give the right form to the right person. Penalties increase with the lateness of the filing.