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Tax Season Is Coming: Tips To Prepare And File Informational Reporting

Tax1099 will be at the Sage Transform 2022 conference. Ahead of the event, we provide tips to help you prepare and file your tax reports on time.

Sage Transform 2022
Sage Transform 2022

We’re heading into fall, which means the season of colorful leaves, gathering around the dinner table for holiday dinners, and marching towards a new year. This is the case for many. 

But for those in the world of accounting, it means preparing for the informational tax season that’s coming in January 2023. Every year, we think that we have all the time in the world, and then we realize on January 2nd that we have less than 30 days to file informational tax returns.

While many are prepared, some are still getting their tax reporting house in order.

What if we told you it’s easier than you think? Get ready for the 2022 Tax Season with Tax1099 as we share the five ways you can beat the traffic, and get your tax returns submitted to the IRS and your recipients on time.

1) Onboard Your Users & Validate Their Information

W-9 Solicitation

W-9 forms should be completed by independent contractors, vendors, and freelancers. The forms must contain valid tax information, such as the payee’s TIN and legal name. To accelerate vendor compliance, payers should conduct this step during the vendor onboarding process to avoid the last-minute rush in January

Verify your payees

Once you have obtained the name and TIN information from vendors, start checking the validity of those details with Tax1099’s real-time TIN Matching and verify the TINs and names per the IRS records. Businesses should properly verify payees as a part of the onboarding process. Each TIN discrepancy with the IRS can cost at least $250 in penalties (plus interest).

2) Verify Your Payments

Maintain accurate payment information

Gather the vendor payment data and figure out the tax withholdings. You will want to validate the vendor’s regulatory information before you make the payments in full. Before you report this data on your 1099s, verify the payment status with your accounts payable team. This way, your records will remain accurate and up to date.

Maintaining a comprehensive record of all vendor payments is crucial to the 1099 tax prep process. 

If you’re using tools like Sage Intacct, Tipalti, FreshBooks, or Bill.com, you can import your tax-sensitized data to Tax1099.

Consider the probability of penalties

Keep in mind that the penalties for late filing of 1099 forms can cost you $50 per form in penalties if it’s over 30 days late. And if you fail to file your returns or report inaccurate information, it can result in over $500 in penalties per form for intentional disregard.

3) Research The Upcoming Changes To IRS Guidelines

The IRS is always updating forms and reporting regulations. 

This can be seen with the most recent 1099-K, 1099-NEC, and 1099-MISC reporting changes. 

Accounting firms and small businesses were all left wondering about the reporting changes for nonemployee compensations, which are now reported on 1099-NEC instead of 1099-MISC. 

Be prepared now

This year, there is a change to Form 1099-K and a new 1099 form is in the cards for 2024, 1099-DA, that will drastically change the way independent contractors and those who report digital assets file the returns.

Making sense of the changes to Form 1099-K

Last year, vendors, with payments beyond $20,000 and a transaction volume of over 200 in a calendar year, were required to report with Form 1099-K

But when President Joe Biden signed the American Rescue Plan Act of 2021 (ARPA) into law on March 11th, 2021, reporting rules for third-party payment providers and credit card processors were updated. 

This means the way payments are taxed for Form 1099-K will be updated beginning with reporting for 2022.  

Previously, the IRS required third-party networks and payment card companies to file only if the gross transaction value amounts to $20,000 or more with a pre-conditioned threshold of 200 transactions. The new update scratches this rule and instead requires filers to report all transactions with a minimum gross total amount of $600 or higher, with no limit on transactions.  

Meet the new IRS tax form: 1099-DA

1099-DA is a proposed form by the IRS that will tentatively begin in the 2023 tax year. Its goal is to accurately report capital gains and losses from digital asset investments. The form will have similarities to 1099-B, which is used during the sale or exchange of stocks, cash, or other properties. 

Digital asset enthusiasts are already familiar with 1099-B as some are already using this form to report gains and sales. However, the language in the new Form 1099-DA will be more specific to digital assets.

Digital asset trading information is also reported on Form 1099-K which is traditionally used for reporting third-party network and payment card transactions. But this will soon change, and so will the complexities that come along with it, with the introduction of Form 1099-DA.

More changes ahead

As the global payments ecosystem finishes its transition from brick-and-mortar payment systems to digital payments, the IRS will update the rules to make sure payments are properly tracked and that taxes are assessed appropriately. Keep track of these changes and help your organization plan better by following the IRS and our blog. Even better, sign up to our mailing list and receive the latest and verified updates directly to your inbox.

4) Fill Out 1099s, Submit Returns On Time, And Send Copies To Recipients

Plan your 1099 filings with smart tools

Once you’re confident that your returns report accurate information, submit the forms online by filing ahead of the deadline. 

eFile your 1099s using Tax1099 and send copies by USPS Mail or email. 

Pay attention to filing deadlines to avoid late fees and penalties. 

Use Tax1099’s eSchedule Tool to schedule your eFiles, so you never miss a deadline again. 

You can use this tool to send copies to recipients by USPS mail or email, leaving you with enough time to fix any errors and conduct last-minute checks, such as TIN checks, before the forms are officially submitted to the IRS on the scheduled date. 

This saves your organization additional filing fees, penalties for late filings, and inaccurate information reporting.

Stay informed: 1099 due dates for the 2022-23 tax year

Here are the 1099 due dates for the 2022-2023 tax year, based on last year’s filing season.

IRS FormFiling TypeDue By Date
1099-MISCRecipient Copy (With Data in Box 8 or Box 10)Feb 15, 2023
Recipient Copy (Without Data in Box 8 or Box 10)Jan 31, 2023
IRS – eFile March 31, 2023
IRS – Paper FileFeb 28, 2023
IRS FormFiling TypeDue By Date
1099-NECRecipient Copy Jan 31, 2023
IRS – eFile Jan 31, 2023
IRS – Paper FileJan 31, 2023

For more information on other IRS form due dates, visit www.irs.gov

5) Use Tax1099 & Sage Intacct To Stay Ahead

Following these tips can be a breeze, thanks to Sage Intacct and Tax1099. Sage’s super simple setup and maintenance, which helps businesses and accounting firms automate their workflows, send and track invoices automatically, manage payments quickly, track expenses automatically, and manage cash flow confidently. 

Onboard vendors with our W9 collection and validate their TINs using Tax1099’s Real-Time TIN Matching feature ahead of the filing season. Export your 1099 report from Sage and import the data into Tax1099 with our authorized integration

Learn more about what Tax1099 can do for your business when you attend the Sage Transform conference in person from October 10-17, 2022. 

We will be on hand to further explain how our integration works with Sage Intacct and how Tax1099 can help you file 1099s, W2s, and other forms.