Tax Advice: What Steps Should You Take if You Didn’t Receive a W-2 or 1099?
Tax season is here, and with Tax Day set for April 18, 2023, you might be starting to gather paperwork. By law, 1099 forms for independent contractors need to be mailed or distributed electronically by January 31.
Similarly, 1099-K forms showing earned interest and other income, along with W-2 forms, must be in taxpayers’ hands by January 31 — either delivered via mail or distributed electronically.
Such guidance doesn’t mean every company adheres to the deadlines or that forms aren’t lost in the mail or held up by email filters. If you haven’t received your form, first check your “other” or spam folders. Then, check in with the company that paid you in 2022 and see if they sent the form. A friendly reminder can go a long way in fixing an oversight and preserving the business relationship.
Also, remember that the deadline of January 31 is the date 1099 forms must be mailed, not necessarily received. On the other hand, W-2 or 1099-R forms must be made available to the taxpayer by January 31. In either case, make allowances for postal delays and give it a few more days before you panic.
If you haven’t received your 1099 or W-2 form by the end of February, the IRS says you can report the oversight by calling 800-829-1040. You’ll need to provide your name, address, phone number, taxpayer identification number and dates of the work, along with the payer’s name, address and phone number.
The IRS can send you a “Substitute for Form W-2 or Form 1099-R,” which is a Form 4852, so that you can file your taxes. You’ll need to estimate your income or wages on Form 4852. If the 1099-R or W-2 arrives after you’ve filed and the information is different, you will need to file Form 1040-X, an Amended U.S. Individual Income Tax Return.
Make Requesting Substitute Forms a Last Resort
However, requesting a substitute form should be a last resort. Your employer will face fines of up to $30 for every late W-2 form that is less than 30 days late, and $100 per late form that is submitted beyond 30 days. Total penalties may not exceed $250,000 for forms less than 30 days late, and $1.5 million for forms that are more than 30 days late. You should definitely get in touch with your employer’s accounting department or human resources department before requesting a form 4852, especially if you are still working for the company.
For 1099 independent contractors, you can report the income without a 1099 or a substitute form. Contractors don’t have to submit 1099 forms to the IRS. They are just meant for your records to confirm the income you received. Again, if your 1099 arrives and the amount is different than your estimates, you can file an amended return using Form 1040-X.
If your client never filed the 1099 form, you will not get in trouble for reporting (and paying taxes on) more income than was reflected on your 1099s. You will pay taxes on that income just like any other earned income.
If you aren’t sure how much income you earned from your job or contract position, you can check your bank statements for deposits, look at pay stubs, or request a transcript from the IRS.
Before you report an employer or client to the IRS for failing to send your 1099 form, you may want to keep in mind that hefty fees are tied to missing IRS deadlines for these forms. Large businesses that don’t file a 1099 may incur penalties starting at $50 per statement, up to $3.3 million total. If the IRS proves the company intentionally disregarded the 1099, it could face penalties of $550 per instance with no limit.
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There’s a lot at stake for reporting someone for failing to send your 1099. And independent contractors aren’t protected by the same laws that protect employees from being fired without due cause in some states. A company can simply stop working with an independent contractor at any time.
Bottom line: Don’t leave it to your employers or clients to track your income. Keep records of your income and expenses throughout the year to make tax time easier.
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