The IRS recently reminded taxpayers who paid employees or independent contractors in 2021 to file all required payment reporting forms by January 31. Missing this deadline may result in IRS penalties.
If you operate a business and pay employees, you generally must file a Form W-2 for each employee with the Social Security Administration (SSA) by January 31. You must also send each employee a copy of their W-2.
In addition, if you have business income, including earnings from gig economy work or other self-employment activities, you may need to file 1099 forms by January 31. Generally, you must file Form 1099-NEC anytime you pay $600 or more to an independent contractor in a calendar year. Common situations that trigger a 1099-NEC filing requirement include subcontract arrangements, along with paying a freelance designer, writer, photographer or musician.
You may also need to file Form-1099 MISC if you paid $600 or more in rent for a workspace, or paid any amount in royalties. You should submit 1099 forms to the IRS, not the SSA. As with W-2s, you must also provide a copy of each 1099 to the person who received the payments reported on the form.
Taxpayers who deduct business expenses must declare on their returns whether they have filed required 1099s. A business tax professional can help you determine whether you need to file W-2 or 1099 forms, and may also be able to help you submit the forms electronically. E-filing can prevent delays from having to order and complete paper forms.