Businesses must prepare tax reporting forms for all of their employees as part of their tax filing obligations. Generally, W-2 forms are used for full-time workers and Form 1099-NEC is used for contractors and other non-employees. Businesses must also file a Form W-3 or Form 1096 as a summary of their W-2 and 1099 reporting unless they file the documents online.
Beginning with the 2020 tax year, Form 1099-MISC has changed. It is no longer being used to record payments to non-employees. Instead, it is used to report several different miscellaneous forms of income, including payments for prizes, fees, rents, royalties, and medical/health care payments.
For 2020 payments reported in 2021, use Form 1099-NEC to report payments to non-employees.
Annual Payment Reports to Payees
For the 2020 tax year, employers must provide employees with a Form W-2 by February 1, 2021. The same deadline applies for completing and providing the 1099-NEC. Both W-3 and 1096 summation forms are also due to the appropriate government agency by February 1, 2021, unless you file online.
You must also give 1099-NEC forms to non-employees you paid $600 to in 2020. These reports must be given to recipients by February 1, 2021
The reporting deadlines and the date for submitting forms to employees are the same. Try to give forms to employees and non-employees before the end of January so there is time for any errors to be corrected.
If you aren't sure whether to send a W-2 or a 1099-NEC to someone, read about who should receive a W-2 or a 1099-NEC.
Submitting W-2s and 1099 Forms to Federal Agencies
You may want to file your W-2s and 1099-NEC forms online. In 2021 you must file online if you have 100 or more forms of each type. Beginning in 2022, you must file online if you have 10 or more forms of each type.
W-2 forms must be submitted to the Social Security Administration by February 1, 2021. To file W-2s online, you can use the Social Security's Business Services Online portal.
1099-NEC forms must be submitted to the IRS by February 1, 2021. To file 1099-NEC forms online, you can use the File Information Returns Electronically (FIRE) system, or use tax accounting software or a payroll service.
If you file these returns online, you don't need to include transmittal forms (W-3 for W-2 forms or Form 1096 for 1099-NEC forms).
Penalties for Late Filing
The IRS has set penalties for employers who do not comply with tax filing deadlines with the IRS and Social Security Administration deadlines. Penalties may be imposed if you do one of the following:
- Fail to file the correct forms by the due date
- Have intentional disregard of filing requirements
- Fail to furnish W-2 or 1099 to workers
- File the wrong form for a worker (giving a 1099-MISC to someone who should receive a W-2)
Penalties can be charged on a per return basis with a maximum level set by the IRS
Filing Dates for States
The W-2 and 1099-NEC are used by workers on both their federal and state taxes. Some states may have an earlier filing date requirement so it can also be important to check individual state deadlines for payroll filings. Check on the filing date and other requirements for your state by going to your state tax division.
Other Payroll Tax Reports Due in January 2021
In addition to the annual wage and tax reports for employees and non-employees, you have several other payroll tax reports due normally on January 31.
- The Federal Unemployment Tax Report on Form 940 for 2020 is due February 1, 2021.
- Form 941 (Employer's Quarterly Federal Tax Form) for Fourth Quarter 2020 is due February 1, 2021.
Help With Preparing and Filing Wage and Tax Reports
If this is your first time filing W-2 forms and 1099-MISC forms, learn the process of preparing, filing, printing, and sending W-2 forms. For 1099-MISC forms, read more about what to do before you prepare these forms, and then follow the step-by-step directions for completing the forms.