Here are the 5 best practices for a successful tax season + tips for easy IRS compliance + useful resources.
Tax season is on full speed. Businesses, both and small and large, are focused on gathering the required information to file 1099 tax forms.
The most common theme across all businesses, regardless of their type and size is that business owners and their accounting teams are apprehensive about the new changes to the 1099 series.
With the re-introduction of Form 1099-NEC, redesigned Form 1099-MISC, redesigned W-2 form, and more such minor and major changes, business taxpayers have to keep a lot of things on their checklist before they proceed to draft the forms for validation.
But since you’re already here, you are already a step above the rest because we will inform you about some of the best practices for a hassle-free and compliant 1099 season + you will find some useful links, guides, resources, tips, and more, which you can use at your discretion for a successful tax season.
Please note to refer to this guide before you prepare your tax forms so you don’t have to worry about the details at the last minute.
Start with sending W-9 forms to your vendors
Before you start filling the forms with relevant details, it is important to send the W-9 forms to vendors to get the required vendor information. Do not plan vendor information timelines right before the deadlines. Plan these things at least a week or two prior to the IRS due date. Once the vendor sends their information, you can replicate the useful information in your 1099 forms, more specifically in Form 1099-NEC.
Also Read: Why Did The IRS Restore Form 1099-NEC?
Send copies of relevant 1099 forms to recipients
Speaking of vendors; be sure to draft and send copies of 1099 forms to the required recipients, state departments, and of course, the IRS. If you do not send the copies of your forms to your recipients, it creates room for foul tax practices by your recipients. And if the information filed by your vendors doesn’t match the information in your forms, things would become even complicated. Maintain a healthy dialogue with your recipients and send relevant copies of 1099 forms to the required parties.
Pay attention to TINs, EINs, SSNs
Tax Identification Numbers, Employee Identification Numbers, and Social Security Numbers of your recipients must be checked against the IRS records through TIN Matching services. You can do this on the official portal of the IRS here or choose Tax1099’s TIN Matching service from your Tax1099 dashboard.
Don’t ignore penalties, fines, and dues owed to state & federal authorities
When you are entering the information in your tax forms, don’t forget to declare the amounts that you have withheld from your recipients, and of course specify the local, state, and federal taxes that you have withheld. Apart from backup withholdings and tax withholdings, it’s important to also specify the dues/penalties/fines that you owe to local, state, and federal authorities, including the IRS to ensure compliance.
Check state filing requirements
Different states have different filing requirements. With the reintroduction of Form 1099-NEC, the IRS is focusing on businesses that previously have had a record of misclassifying their employees.
If your business is operating within the California state limits or if your workers are operating from California, then you need to be all the more careful when classifying them as employees or independent contractors.
Useful Blog Links
Bonus Tips: If you are Paper Filing
- Order forms by the U.S. Mail from the IRS here
- Download scannable forms only. Non-scannable forms will be rejected by the IRS.
- Put the right address on the mail file. Check addresses here
- Do not fold the forms
- Postmark your mail file
- Don’t send duplicate emails to the IRS. Once is enough
Bonus Tips: If you are E-Filing
- Register with FIRE to e-file
- Sign Up to IRS-compliant, secure e-filing platforms like Tax1099
- Validate the information to ensure accuracy of reporting
Also Read These Below Tax1099 Blogs
- State Filing Requirements For Business Owners
- 5 Common Mistakes to Avoid When Reporting Your 1099 Forms
- ‘Ultimate Box-Wise Guide To Form 1099-MISC
- ‘Ultimate Box-Wise Guide To Form 1099-NEC
- Ultimate Box-Wise Guide To Form W-2
Use Tax1099 To Bulk E-File Your Tax Forms In 2021
Tax1099 offers bulk e-filing services to businesses of all sizes and types. You can easily integrate any of your in-house accounting or data management tools with Tax1099 or use one of our most-used integrations to sync your data securely and start preparing your forms.
Don’t like manual data processing? Don’t worry. Tax1099’s powerful platform will pull the required data from your chosen application and enter the data in your selected forms, automatically.
All you have to do is check the forms for accuracy before you instantly e-file them to the IRS.
Alternatively, you can schedule your e-files with Tax1099.
Plan your schedules at least a week before the due date.
Not sure how to do that? No worries.
Tax1099 will automatically schedule all your e-files at least a week before the IRS deadline.
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