Late Filing Penalties for W-2 Forms and 1099-MISC Forms

How to Apply for an Extension of Time to File W-2s

w-2 1099 penalties
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Late Filing Penalties for W-2 Forms and 1099-MISC Forms

The bottom line: If you must file late, file as soon as possible, to avoid additional fines and penalties. 

UPDATE: New Earlier Filing Date for W-2 and 1099-MISC Forms

The IRS has announced that the filing deadline for 2016 W-2s and 1099 forms, including  W-2 forms, 1099-MISC forms, and the transmittal forms W-3 and 1096, is January 31, 2017. That's a month earlier than the former filing date, and it applies to both mailed-in forms and e-filed forms.

The new earlier date is in effect for tax years beginning with the 2016 tax year, in order to help prevent tax fraud. Read more about the new deadlines for W-2 and 1099 forms. 

New Requirements for Filing an Extension Application for W-2s

In addition to changes in the filing deadlines, the IRS has changed the regulations for applying for an extension for filing W-2 forms. The extension application is not guaranteed, and you must provide a detailed explanation for the extension request. Requests must be submitted on IRS Form 8809 by the January 31 deadline. The extension is for 30 days. 

Due Dates for W-2 Forms and 1099-MISC Forms 

Here are the due dates for year end payroll tax statements for employees and non-employees:

  • W-2s for the 2016 tax year must be given to employees by January 31, 2017
  • 1099-MISC forms for the 2015 tax year must be provided to contractors by January 31, 2017

Then,

  • W-2 forms must be received by the Social Security Administration by January 31, 2017. If you are not filing electronically, you must also submit transmittal form W-3 along with the W-2 copies.
  • 1099-MISC forms must be submitted to the IRS by January 31, 2017. If you are not submitting electronically, a 1096 transmittal form must also be submitted, along with 1099-MISC copies. This deadline applies to all submissions, including e-filing 1099-MISC forms. 

 Form 1099-MISC must be provided to the non-employee and submitted to the IRS for everyone to whom you paid at least $600 or more during the tax year.

Here is the list of individuals who must receive Form 1099-MISC.

Penalties for Late Filing of W-2s and 1099-MISC Forms

The IRS imposes penalties for failure to furnish W-2 statements to employees and for failure to file W-3 statements, along with copies of employee W-2's. Penalties may also be imposed for statements that are incomplete or inaccurate. If you can show "reasonable cause" for your failure, you may avoid the penalties, but don't count on the IRS accepting your "reasonable cause" excuse. If your failure is willful or it can be proved that you intentionally disregarded the law, the penalties are higher. Here are the details:

When Must I Furnish W-2s to Employees? 

You must furnish W-2 statements to employees by the end of January each year. These W-2 statements must be complete and accurate. If you fail to furnish the statements in a timely manner, or if your errors or omissions are "consequential," the IRS may impose a penalty on you. "Consequential," as defined by the IRS, means relating to a dollar amount, a significant item in the payee's address, or a missing or incorrect Taxpayer ID Number (TIN).

The penalty for a failure to furnish a W-2 is $50 per statement, no matter when the correct statement is furnished.

Filing with the Social Security Administration (SSA)

You may be liable for penalties if you fail to file Form W-3 with the SSA (along with W-2s for all employees) by the end of February for the preceding year. In addition, you may be penalized if the forms are incorrect, with errors or omissions. You can avoid penalties if you:

  • File in a timely manner, by the due date
  • Include all required information on the form
  • Make sure the information is correct
  • Make sure you file on the correct form (not a photocopied form for the W-3)
  • File electronically, if you are required to do so (that is, if you have 250 or more W-2 forms to submit

Carefully check the forms for completeness and accuracy. In particular, make sure you have correct TINs for employees, correctly spelled surnames, and that any money amounts are correct.

Other Filing Information
The amount of penalty is based on when you file. The lowest amount is $15 for returns correctly filed within 30 days of the due date.

Using a payroll service provider does not relieve you of the responsibility to ensure that the W-2 forms are filed correctly and on time. If your failure to file is intentional, the penalty is at least $100 per form, with no maximum.

Penalties for Small Businesses

Penalties are smaller for "small businesses" (those with $5 million or less in average annual gross receipts for the three most recent tax years).

Penalties for Late Filing of 1099-MISC Forms

If you fail to file a 1099-MISC form by the due date, you may be subject to a penalty, based on the lateness: If you correctly file within 30 days, the penalty is $30; $60 per return if you file more than 30 days late but by August 1, and $100 per return if you file after August 1 or you don't file at all. Returns must be filed completely and correctly to avoid penalties.

If you fail to provide 1099-MISC statements to payees on time, you may also incur a separate penalty. The amount is based on when you furnish the correct statement.

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