Tax Guru-Ker$tetter Letter
Monday, January 05, 2004
Take Your Time
It's only January 5th and I've already seen people panicking about getting their W-2s and 1099s prepared for last year. What's the big hurry? As I have seen all too often, mistakes are made on these forms when they are rushed without ensuring the accuracy of the figures. The forms aren't required to be given to the payees until February 2 (January 31 is a Saturday). A little known secret is that there is no actual penalty for payers missing this deadline. The real deadline, with minor potential penalties, is March 1 (Feb 29 is a Sunday), when the 1099 and W-2 forms need to be mailed in to IRS and SSA.
As I've said on many occasions, it's always wiser to take your time and make sure your tax forms are as accurate as possible than to rush something in that may or may not be able to be corrected. With erroneous W-2 and 1099 forms, what happens is that IRS and SSA will end up with two sets (the original and the corrected one) and will expect the combined amounts to be reported on the payees' 1040s.
One other reminder -- payments to corporations are not required to be reported to IRS on 1099s or any forms.
For tax pros who are preparing 1099s and W-2s for clients who don't have them set up on QuickBooks, I can't speak highly enough about the stand alone program from CFS Tax Software. This will be something like the 20th year I have used it.