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3 final-hour moves to master this year's shorter tax-filing timeframe

January 24, 2017

By Rick Roddis, president of ComplyRight Tax Solutions

The countdown clock is ticking, as the accelerated deadlines to file your W-2s and 1099s loom large. Whereas employers used to have until March 30 to file electronically, you now must distribute 1099 and W-2 copies to recipients AND file with the IRS or SSA by Jan. 31. (For 1099-MISC filings, the new deadline applies if you're entering non-employee compensation in Box 7.)

New for 2017, the end-of-January deadline is the same regardless of whether you file by paper or electronically. This is a big deal because it means you have up to two less months to complete your filings this year.

As a responsible business owner, you've most likely marked your calendars and are in full prep mode with your 1099 and W-2 filings. That's good news! But that's not all that should be on your radar right now. Here are three additional considerations to better manage your filings and avoid complications:

1. Be aware of higher fines. Filing your information returns accurately and on time is more important than ever. Also new for this year's tax-filing season, the penalties are higher if you fail to file correct returns by the due date. The amount of the penalty is based on when the correct form is filed:

• If you correctly file within 30 days of the deadline — $50 per form ($532,000 maximum)
• If you correctly file more than 30 days after the due date but by August 1 — $100 per form ($1,596,500 maximum)
• And if you file after Aug. 1, corrections aren't filed or the form isn't filed at all — $260 per form ($3,193,000 maximum)  

Note, too, the new process for W-2 extensions, which are no longer automatic. For filings due on or after Jan. 1, 2017, one 30-day extension may be requested. However, you must use the application Form 8809, as well as provide a detailed explanation of why you need additional time. The IRS has stated it will only grant extensions in cases of "extraordinary circumstances or catastrophe." (This doesn't affect extensions to furnish W-2 forms to employees.)

2. Double check your information. Avoid the typical mistakes that trip up employers. Many of these errors are easily prevented, which can save you the time and cost of making corrections later. Verify and double check:

• Dollar amounts.
• Look for transposed numbers.
• Omit the decimal point and cents from entries.
• Names.
• Addresses.
• Social Security numbers
• Tax Identification Numbers (TINs)

3. Take advantage of cloud-based e-file services. E-filing is becoming increasingly more popular with restaurants and other small businesses. Rather than get bogged down with time-consuming and cumbersome paper or software-driven filing, businesses can handle their filings faster, easier and more securely online. It's the smartest choice for mandatory 1099 and W-2 filings – this tax season and beyond.