Tax Deadlines for Small Businesses: Unemployment Reports, W2s, and 1099s

New tax forms and deadlines are quickly approaching. To prevent fines, make sure your W-2 and 1099 forms are completed and filed on time.

What you’ll discover:

When must firms provide W2s and 1099s to workers, contractors, and the federal government?
When must employers submit federal unemployment tax returns to the IRS?
Is it possible to submit unemployment tax returns, W2s, and 1099s online?
What are the penalty for submitting late, and are there any exceptions?
Prepare ahead of time to meet all applicable filing deadlines.

The year-end rush that many small companies experience may come to an end when the calendar flips from 2022 to 2023. Small company owners and managers must then focus on fulfilling year-end small business tax filing requirements. It is critical for firms that have workers or independent contractors to fulfill deadlines for generating, distributing, and reporting W2s, 1099s, and federal unemployment tax filings.

When must firms provide W2s and 1099s to workers, contractors, and the federal government?

If your company employs workers who are classified as employees and earned wages during the year for which income taxes, Social Security tax, or Medicare tax was withheld, or for whom income taxes would have been withheld if the employee did not claim a withholding exemption or claimed no more than one withholding allowance, you must prepare, distribute, and file a W2 form by the January 31, 2023 deadline.

Business owners must instead submit the relevant 1099 form with the IRS and send the form to employees who are categorized as independent contractors who earned at least $600 in 2022 for services supplied. Form 1099-NEC (Nonemployee Compensation) will be used in most circumstances instead of form 1099-MISC for the 2022 tax year.

When must employers submit federal unemployment tax returns to the IRS?

Most small firms that employ non-household or agricultural workers must pay federal and state unemployment taxes. You must submit IRS Form 940, Employer’s Federal Unemployment Tax (FUTA) Report, if your firm paid compensation of $1,500 or more to workers in any calendar quarter or had one or more employees for some portion of a day in 20 or more distinct weeks throughout the year.

The deadline for submitting federal unemployment tax returns for 2022 is also January 31, 2023. Employers with a federal unemployment tax due of $500 or more for the 2022 calendar year, on the other hand, must make at least one quarterly contribution throughout the year. You have until February 10, 2023 to submit your return if you paid all FUTA tax when it was due throughout the calendar year.

Is it possible to submit unemployment tax returns, W2s, and 1099s online?

You certainly can. Employers are urged to electronically submit W2s, 1099s, and unemployment tax reports.

Small companies may electronically submit W2s using the Social Security Administration’s BSO website, which offers several options for producing and uploading completed forms based on the number of workers’ forms you need to prepare. You may use the IRS Filing Information Returns Electronically (FIRE) system to file 1099-NEC or 1099-MISC forms.

Employers who are obliged to file federal unemployment tax returns may also e-file form 940 and make payments electronically using the Electronic Federal Tax Payment System (EFTPS.)

What are the penalty for submitting late, and are there any exceptions?

The IRS examines pay and income information supplied by employers using W2s and 1099s to verify the accuracy of income information claimed by workers and independent contractors on their tax forms. Since employees rely on these reports, there are no automatic filing extensions for W2 or 1099 forms available for employers, but the IRS may allow extensions in certain instances.

Financial penalties for small firms that file after the deadline may rapidly build up. Small firms will incur fines of $50 per return submitted within 30 days of the deadline for the 2022 tax year. This rate climbs to $110 for returns submitted between 31 days after the deadline and August 1, and to $290 for returns filed after August 1 or not filed at all, up to a maximum of $1,177,500.

Late filing of your federal unemployment tax report may result in a tax penalty and interest on the amount of unpaid taxes for each month tax payments are late. The penalty amount is determined by how late you submit and pay your federal unemployment tax due.

Prepare ahead of time to meet all applicable filing deadlines.

Leaving your tax reporting and filing duties till the last minute may result in mistakes or unforeseen delays that may cost your company money in the long term. Entrepreneurs and small business owners may prevent this sort of situation immediately by validating workers’ names, residences, Social Security numbers or Taxpayer Identity numbers, and ensuring the company’s information on file with the IRS and Social Security Administration is true and comprehensive.