Preparing for W-2 and 1099 Season

The holidays are around the corner, and before you know it, January 2024 will be here! Let’s take a look at what you can do now to make the preparations for W-2s and 1099s go smoothly this coming January.

Preparing for the process

If you are preparing your own forms this year, do you have a plan yet for e-filing or paper filing? If you are paper filing, make sure you are ready and get those forms and envelopes ordered so there’s no last-minute January scramble when everyone is out of stock!

The Taxpayer First Act (2019) lowered the thresholds at which electronic filing of W-2s with the Social Security Administration became mandatory. Effective with 2023, W-2s and 1099s are required to be filed by January 31, 2024. Employers who file 10 or more total of the affected forms will be required to file them electronically. W-2s and 1099s must both be included in the determination of meeting the 10-form threshold. For example, if you have eight W-2s and two 1099s to file, you must electronically file both form types as you’ve met the 10-form threshold. If you’d like to prepare yourself to e-file this year and aren’t sure where to start, let us know and we can help you get a plan in place. More information can be found here: https://www.irs.gov/forms-pubs/new-electronic-filing-requirements-for-forms-w-2

Payroll items/Vendor setup

Did you add new vendors or new payroll items this year? Make sure they’re set up correctly in your system now while there’s still time to fix them. Some accounting systems allow you to mark vendors as 1099 eligible to make prep easier at the end of the year. Now is a great time to review your vendor list to make sure everyone is properly categorized!

Now is also a great time to make sure all payroll items are properly mapped in your payroll system so that W-2 generation is a breeze in January. Many payroll items route to a specific box on the W-2, and some have specific codes associated with them. Make sure your mapping setup is correct to help ensure accurate W-2s for your employees.

Addresses and W9s

Every year there are employees and vendors who move or change their mailing addresses and forget to tell their employers and the businesses they receive 1099s from. They then have to request duplicates of their year-end tax forms when their originals are mailed to an old address. It’s a ‘best practice’ to get ahead of this by confirming addresses with your vendor list and your employees to try to catch these address change omissions before the year-end tax forms are generated and mailed out. While you’re reaching out to your vendors, it’s also important to make sure you have a valid and up-to-date W9 on file for each vendor.

Have questions or need help preparing your 2023 W-2s or 1099s?

Contact your BMSS Professional today or give our front desk a call at (833) CPA-BMSS!