We all grump and groan about paying taxes. But I don’t think it’s the taxes as much as it is the reporting. After all, if your business is paying taxes, that means you are probably making money. And that’s a good thing. It should make you smile.

That’s why I was glad to get this reminder from Greatland about the top W2 and 1099 tax filing pitfalls to watch out for this tax season in my email box. Here’s what they had to say.

Paper filing
While many businesses are electing to e-file their W-2 and 1099 forms with the Social Security Administration (SSA) and / or the Internal Revenue Service (IRS), the majority of businesses still rely on filing paper forms via mail. There are two common missteps businesses or tax preparers make when filing paper W-2 or 1099 forms:

>>> “Seeing red” – (The 1099 red ink form requirement) Businesses must file Copy A of form 1099 on a pre-printed red ink form. Only Copy A must comply with this requirement. All other copies of the forms can be printed with black ink.

>>> Perfecting perforation on W-2s and 1099s. Similar to the red ink form requirement, the IRS and SSA have a perforation requirement that specifies all paper forms contain no horizontal perforations separating forms on Copy A. However, all other copies must be perforated between the individual forms, and according to the IRS, the use of scissors to separate copies is not an acceptable method.

>>> It is important to verify with your tax form provider that all pre-printed paper forms comply with IRS and SSA requirements. Failure to comply with these requirements can result in substantial penalties.

Electronic filing or “e-filing”

>>> The e-filing requirement. Both the SSA and the IRS encourage e-filing of W-2 and 1099 forms, no matter how few forms need to be filed. However, if the number of forms of each type totals more than 250 (e.g. 250 1099-DIV 300 1099-INT, 250 W-2), the IRS and SSA require the forms to be filed electronically. The benefits of filing electronically are:

* The deadline for filing forms with the IRS and SSA is extended by one month, compared to paper filing
* Paper handling and mailing is reduced, resulting in possible cost savings
* Reduced environmental impact
* None of the federal copy paper form requirements (red ink, perforation, etc.)
* The submission status of your filing is provided (e.g. “Received”, “Not Yet Processed”, “Complete”, etc.)

The deadline for W-2 and 1099 forms to be provided to recipients is Feb. 1, 2010. This year’s deadline for W-2 and 1099 federal filing is March 1, 2010 (paper) or March 31, 2010 (electronic). You may request an automatic 30-day filing extension by completing form 8809. New for 2009: the due date for furnishing statements to recipients for forms 1099-B, 1099-S, and 1099-MISC (if amounts are reported in boxes 8 or 14) has been extended to February 16, 2010.

Greatland has an extensive 1099 and W-2 fact center located on its website with answers to many other filing questions. The company recently launched speedEfiler.com, a new web-based wage-reporting tool that enables small and mid-size businesses to file their W-2 and 1099 forms online, and have copies printed and mailed directly to employees or recipients.

If you need help getting your “smiles” together, you might want to pay them a visit. I’m curious about how you file your forms. Are you still the paper type or do you take advantage of the e-filing option? Let’s talk about it.

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