How to Successfully File Information Returns in 2020: A Comprehensive Guide for Businesses
As businesses move towards digitization and remote working, filing information returns accurately and on time becomes even more crucial. Filing information returns is essential for businesses as it helps them report payments made to independent contractors, employees, and suppliers. However, many businesses struggle with filing information returns and face penalties for incorrect or late submissions. In this guide, we will cover the steps for successfully filing information returns and avoiding common errors.
Step 1: Gather Required Information
Before filing information returns, it is essential to gather all the necessary information. This includes the payee’s name, address, and tax identification number (TIN). If you’re filing Forms 1099, ensure that you’ve collected the payee’s Social Security number or TIN. Additionally, you’ll need to record the gross amount paid, the federal income tax withheld, and any state tax withheld. Ensure that all the information is accurate, and double-check for any errors.
Step 2: Choose the Right Forms
The IRS provides various forms for reporting different types of payments. Ensure that you choose the correct form for each payment type. For instance, if you’ve made payments to a freelancer or independent contractor, you’ll need to file Form 1099-NEC or Form 1099-MISC. If you’ve made payments to employees, you’ll need to file Form W-2. Ensure that you’ve downloaded the latest forms, which are updated every year.
Step 3: Check for Deadlines
Information return deadlines vary depending on the form type. For most forms, the deadline is on January 31st of each year. However, the deadline for certain forms, such as Form 1099-NEC, has changed for the 2020 tax year. This year, the deadline for filing Form 1099-NEC is February 1st instead of the usual January 31st. Ensure that you’re aware of the deadlines and submit the forms on time to avoid penalties.
Step 4: Submit Forms Electronically
To avoid errors and save time, consider electronic filing. Many businesses prefer electronic filing as it eliminates manual entries and errors. Additionally, electronic filing is secure, as it encrypts data and ensures the protection of sensitive information. The IRS offers various online platforms for electronic filing, such as the FIRE System, which accepts various information returns.
Step 5: Verify and Correct Errors
Before submitting the forms, verify the information entered and correct any errors. Ensure that you’ve checked the forms for any incorrect TINs or misspelled names. Additionally, verify the amounts entered, including federal and state income tax withheld. Double-checking for errors will save you time and penalties in the long run.
Conclusion
Filing information returns doesn’t need to be complex. By following these steps, businesses can successfully file information returns, avoid penalties, and maintain compliance with the IRS regulations. Remember to gather all the necessary information, choose the right forms, check for deadlines, submit forms electronically, and verify and correct any errors. By doing so, businesses can streamline the filing process and focus on their core operations.
