Preparing for W-2 and 1099 Season

The holidays are around the corner, and before we know it, January 2023 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 by getting 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, but the IRS has not yet issued the formal regulation on the implementation. The tentative schedule lists that by midnight on January 31, 2023, employers who file 10 or more W-2s or W-2Cs will have to send W-2s or W-2Cs to SSA electronically. The official IRS guidelines still list this threshold as 250 returns, rather than 10. At this time, it is unclear whether the IRS will enforce the 10-form threshold or the 250-form threshold. If you’d like to prepare to e-file this year to get ahead of these potential new thresholds and aren’t sure where to start, let us know and we can help you get a plan in place.

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 preparation easier at the end of the year. Now is a great time to review your vendor list to ensure 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 businesses from whom they receive 1099s. They then have to request duplicates of their year-end tax forms when the originals are mailed to their 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 W-9 on file for each vendor.

Have questions or need help preparing your 2022 W-2s or 1099s?

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