 Internal Revenue Service, IRS Tax News, IRS Reminds Employers of January 31st Deadline for Form W-2 Other Wage Statements. You know, reminder, huh? I mean, it kind of seems like they're framing this as if they're doing this out of some kind of kindness, like out of the goodness of their heart, you know? Rather than basically making a threat, does it not? Like reminding you just, you know, to brush your teeth at night because it's good for you. Or to turn off that mic when you go to use the restroom in the middle of a meeting. This portion of the Queen's American Goodwill Tour is coming through in our city business. But, I mean, come on, man. It's clearly more of a threat. I think the headline should be more clear, more honest, saying something like, give us your W-2 forms on time, or we'll claim your firstborn. I'm going to count to 10. You're going to tell me where the rabbit's foot is, or she dies. Okay, maybe that's a little extreme, a little over the top on that one. Okay, possibly like, give us those W-2 forms on time, ratting out your employees, or instead of going after them to collect our money, we'll take our taxes out of your testes, and then we'll sell the hormones to the pharmaceutical companies, who will then market them using the public school system to young girls injecting the testosterone directly into their left ovary for a sizable fee. The choice is yours. Either way, we're getting paid, dang it. Okay, that one seemed possibly even more extreme than the first. Sorry about that, but I mean, the point is, at the very least, they could be a little bit more honest by adding like the classic or else at the end, you know what I mean? They could give us the good old, give us those W-2 forms on time, or else. Whoops. IR2023-08, January 18, 2023, Washington. The Internal Revenue Service today reminded employers and other businesses to file Tax Year 2022 form W-2 and other wage statements by January 31, 2023. Employers must file their copies of Form W-2, Wage and Tax Statement, and Form W-3, Transmittal of Wage and Tax Statements, with the Social Security Administration by January 31. There's a link to those statements here. Additional information on how to file can be found in topic number 752, filing forms W-2 and W-3. There's a link to that here. Now, generally for most business owners, if you have employees, you usually want to follow the adage of measure twice, cut once, in other words, do it right the first time with regards to the payroll, as opposed to the strategy of kind of tinkering with something until you basically figure it out, because correcting errors on payroll can be costly and time consuming. So you usually want to try to pick it up and do it right the first time. That means hopefully getting a payroll provider that you can work with on a long term, so you don't have to switch payroll in the middle of the process, or if you're processing it yourself, setting it up with your software and trying to get it all set up correctly from the start so that at the end of the year, and that's usually when, if any problems happen, they come to light, because now you've got to file all these year-end reports, which are summary reports, reports, your financial statements, your W-2s, your W-3s, your 941s, your 940s, and they should all kind of tie out, and if they don't, that causes the problem. Also, employees unfortunately are the most likely people to cause legal problems into the future as well, so you want to have your records as clear as possible, and with regards to the withholdings that you're required to make from the employees, if you come into a situation where you have a cash flow issue, then we typically, you know, if we have to not pay taxes, usually we want to pay, not pay our own income taxes, because at least that's just our taxes if we have a cash flow issue and no other choice, because if you don't pay the payroll taxes, then it's kind of like, well, now it kind of looks like you took the money from the employees even though you were forced to, and then you didn't pay their payroll taxes, right, which causes more of a problem than just not paying your taxes that you owe because it's basically their taxes and that causes issues as well. So with the payroll, generally, you'd like to get it right the first time, file all the forms, make sure everything is as transparent as possible, so if there is any problems in the future, whether it be a lawsuit or taxes or whatever, you've got the records to deal with it. So the January 31st deadline also applies to Form 1099 NEC, Non-Employee Compensation, there's a link to that here, filed with the IRS to report Non-Employee Compensation to Independent Contractors. So clearly if you're paying someone that's a sole proprietorship, then you have a responsibility on that 1099 form. There are questions as to whether someone should be an employee or a contractor. The IRS generally tries to push people on the side you would think they're favoring trying to get everybody to be categorized as an employee, because then you, as the employer, are responsible for paying, you know, taking the money from your employees and paying it on their behalf. They have more control in that case. Therefore, if you're hiring non-corporate entities to do work, sole proprietors, for example, you want to make sure that you can make the argument that they are indeed properly classified as a contractor, and then even then you still got to file a form 1099 NEC, but that's a much easier thing to do typically. So you got to file that with the IRS to report Non-Employee Compensation. For more information on this and other due dates, see the instructions for form 1099 Miscellaneous and 1099 NEC. Now there's a link to that here. Now it's useful to just understand how the income tax works when you're looking at these types of forms. So obviously it's an income tax. They're going to get taxed on income. Income becomes bad for taxes because now if you have income that's reportable or taxable, you got to pay the taxes on it. The IRS's incentive then is to try to double check. They want to look over everybody's shoulders. It's supposed to be a self-reporting system, but more and more of course it's becoming automated where the IRS is trying to see everything on their end so they could basically file the tax return by themselves for a lot of people because they already have the information. How could they do that? Well, there's two sides of every business transaction. There's the payer and there's the recipient. So the recipient has income. The payer has an expense. An expense might be a deduction for taxes if it's a business expense. Therefore, the IRS has to leverage on the payer side of the transaction to leverage them to tell the IRS about who received the money. So the IRS then has the information to go after the people that have the income. So that means they would like to make everybody kind of an employer-employee situation so that they can force the employer not only to give them the W-2s and note the W-2s, the IRS is not so concerned with them going to the employee. The IRS is of course concerned with the W-2s going to the government so they can double check that the employee reported their taxes. So the 1099s is basically the same way. So the IRS, you can see they would have an incentive if they're trying to double check everybody and look over everybody's shoulder on the income reporting is going to want to try to get everybody, you would think, to be kind of the employees so they can force the employer through the leverage of allowing them to have a deduction to give them information and possibly do the withholdings themselves before the employee gets basically the wages. So that's generally the idea. So file now to avoid penalties. Automatic extensions of time to file for W-2 are not available. The IRS will only grant extensions for very specific reasons. Detail can be found in the general instructions on form 8809, application for time to file information returns. There's a link to that here. For more information, read the instructions for form W-2 and W-3 and the information return penalties page on IRS.gov. There's a link to that here. And be prepared. It's important to have everything prepared to file on time. Employers should verify or update employee information like names, addresses and social security numbers or individual taxpayer identification numbers. They should also ensure their company's account information is current and active with the Social Security Administration and order paper forms W-2 if needed. Helping with fraud detection. The filing date for W-2 and other wage statements allows the IRS to detect refund fraud and more easily by verifying income that individuals report on their tax returns. Employers can help support this process and avoid penalties by filing the forms on time and without errors. The IRS recommends E-File as the quickest, most accurate and convenient way to file these forms. For more information on E-File in form W-2, Employers can refer to Employer W-2 filing instructions and information. There's a link to that here on the Social Security Administration's website. So there's a link to all that stuff here. There'll be a link to this in the description.