What’s Involved in E-filing 1099 Forms and W-2 Tax Returns?
E-filing 1099 and W-2 forms is done for a variety of reasons. If you are filing taxes for a business that employs more than 250 employees, you are required to e-file your W-2 forms to the Social Security Administration (SSA), although there may also be exceptions granted by the IRS if your business is unable to e-file the forms. If you employ fewer than 250 employees, you do not have to e-file those forms, but it is still strongly encouraged for processing time. Each state has its own different tax laws and methods that they use for filing W-2s and 1099 forms, so you will have to visit your state’s tax department website to see what they require for e-filing.
Format Requirements for Submitting W-2s to the SSA
The SSA has a set of standards that they use for submitting e-filed W-2s (EFW2), and they do have documents on their website that specify in detail how to format your document. Using the SSA Business Services Online (BSO) feature, you have a number of different options you can use for filing a W-2 or wage report with the SSA. The BSO allows you to create W-2 forms for your employees by simply filling in the required fields, submitting the finished files to the SSA, printing copies for your employees, and checking the validity of the form data with AccuWage, a data-checking software.
Submitting a 1099 Form to the IRS
If you are self-employed; own stock, an IRA, or a 401(k); or have another form of income that would not apply to a W-2 form, you will usually submit a 1099 form directly to the IRS. There are multiple ways to e-file these forms with the IRS. There are some services that you can sign up for where you simply answer questions about your business or income information, such as the IRS’s own Freefile feature, if your business or personal income is $58,000 or less. If you’re using your own software to prepare your taxes, it will usually send the completed e-file through a secure channel, and you have the option to pay the IRS directly via credit card, electronic bank transfer, or by check through the mail.
Submitting W-2s and 1099s to the State Tax Department
Many states that have W-2 e-filing for businesses, or let you file 1099 online on their website will follow the same standard and formats set by the SSA. Some states may have more specific requirements for file formats, some may allow text and spreadsheet files to be submitted, or some others may only allow text files. Some states may even have downloadable forms that can be filled in and submitted in an upload section on the state’s tax department website.
Other Useful Tips and Notes for Submitting W-2s and 1099s
• If you’re submitting W-2 forms, you will want to make sure your business has an Employer Identification Number (EIN), given by the IRS, as that will be required when you submit your W-2s to the SSA.
• If you’re filing a 1099 as self-employed or a business that does not have other employees, you usually do not need an EIN; however, if you operate as a partnership, file certain returns, withhold taxes to a NR employee, or meet any of the criteria as specified here, you will need an EIN.
• It’s generally recommended that you submit a wage report, usually generated by the software your payroll department uses, over the BSO if you employ more than 20 employees, but, again, make sure that this wage report meets the SSA format standards.