Preparing for W-2 and 1099 Season

The holidays are around the corner, and before we know it, January 2025 will be here! Let’s take a look at what we can do now to make the preparation of W-2s and 1099s go smoothly this coming January.

Preparing for the Process

If you’re doing your own forms this year, do you have a plan yet for e-filing or paper filing? If you’re 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 the 2023 W-2s and 1099s that were required to be filed by January 31, 2024, employers who file 10 or more of the affected forms will be required to file them electronically. This limit remains in place for the 2024 W-2s and 1099s that are required to be filed by January 31, 2025.

Both W-2s and 1099s must be included in determining whether the 10-form threshold has been met. For example, if you have eight W-2s and two 1099s to file, you must electronically file both form types as you have now met the 10-form threshold. If you’d like to prepare 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 are 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 preparation 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 are routed 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 W-9s

Every year, there are employees and vendors who move or change their mailing addresses and forget to tell employers and the businesses from whom they receive 1099s, and 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 any issues by confirming addresses with your vendor list and your employees to catch these changes before the year-end tax forms are generated and mailed out. While you are reaching out to your vendors, it’s also important to make sure you have a valid, up-to-date W-9 on file for each vendor.

Have Questions or Need Help Preparing Your 2024 W-2s or 1099s?

Contact your BMSS Professional today or give our front desk a call at (833) CPA-BMSS or visit our website at www.bmss.com.