Information return season is one of the few filing deadlines that lands on every client at once, regardless of year end. The work is mechanical, which is why errors are expensive. A wrong taxpayer identification number, a form filed under the wrong type or a late filing each carry a per-return penalty, and the totals scale with the number of payees. This article covers the workflow a firm should run for W-2 and 1099 clients. Reporting thresholds are covered separately in Form 1099 thresholds for 2026.
Deadlines
The IRS employment tax calendar sets January 31 as the due date for Form W-2 to employees, for filing Forms W-2 with the Social Security Administration along with Form W-3, and for Form 1099-NEC to both the IRS and the recipient. When January 31 falls on a weekend, the next business day applies. For 2025 forms that meant Monday, February 2, 2026. For 2026 forms, January 31, 2027 is a Sunday, so the due date is Monday, February 1, 2027.
Other information returns follow other dates. Publication 1099 states that the recipient statement for Form 1099-MISC amounts in boxes 8 or 10 is due February 15, moving to the next business day when that date falls on a weekend or legal holiday. February 15, 2027 is Presidents Day, so the 2026 statements are due Tuesday, February 16, 2027. The IRS also states that information returns generally are due by the last day of February on paper, or March 31 if filed electronically, with exceptions such as 1099-NEC. Confirm each form type in the Guide to Information Returns in Publication 1099 before setting the client calendar.
The e-file rule
Publication 1099 states the rule directly: if you are required to file 10 or more information returns during the year, you must e-file. Treasury Decision 9972 lowered the threshold to 10, counted across all information return types in aggregate, for returns required on or after January 1, 2024. A payer with a handful of W-2s, a few 1099-NECs and some 1099-MISCs can cross the line without any single form type reaching 10. Check the aggregate count when scoping the engagement, and keep a record of it.
E-filers submit through the IRS filing system by 11:59 p.m. on the due date. Paper filers must be postmarked by the due date.
Penalty tiers for 2026 and 2027
The IRS page on information return penalties lists three per-return tiers for failure to file a correct return or furnish a correct statement. For returns due in 2026 (tax year 2025):
- $60 per return when filed up to 30 days late.
- $130 per return when filed 31 days late through August 1.
- $340 per return when filed after August 1 or not filed.
Intentional disregard carries $680 per return or statement with no annual maximum. Annual maximums for small businesses are $239,000, $683,000 and $1,366,000 for the three tiers, and for large businesses $683,000, $2,049,000 and $4,098,500.
For returns due in 2027 (tax year 2026, including the February 1, 2027 Forms W-2 and 1099-NEC) the three per-return tiers stay at $60, $130 and $340. Intentional disregard rises to $690. The annual maximums for small businesses are $244,500, $698,500 and $1,397,000, and for large businesses $698,500, $2,095,500 and $4,191,500.
The IRS says it may remove or reduce a penalty when the filer acted in good faith and shows reasonable cause. For missing and incorrect names or TINs, the IRS points to Publication 1586.
Prevention workflow
- Collect Forms W-9 before the first payment. A vendor file without a W-9 is the root cause of most missing-TIN penalties.
- Run TIN matching before filing. The IRS TIN Matching program lets payers who file forms reporting backup-withholdable income, including 1099-MISC and 1099-NEC, check name and TIN combinations against IRS records. The IRS expects it to reduce backup withholding notices and penalty notices. Program guidelines are in Publication 2108-A.
- Reconcile to the general ledger. Tie total 1099-NEC reporting to the contractor and professional fee accounts, and tie W-2 box 1 wages to the payroll reports and the 941 filings. Differences are findings, not rounding.
- Classify workers before year end. A contractor who is really an employee turns a 1099 problem into an employment tax problem. See worker classification: employee or independent contractor.
- File early. The penalty tiers reward early correction, and an early file leaves time to fix TIN mismatches.
Backup withholding
When a payee fails to provide a TIN or the IRS notifies the payer of an incorrect TIN, the payer may have to withhold on reportable payments. The backup withholding obligation is deposited and reported separately. The firm should confirm the rate and procedure in the Publication 1099 text, and the glossary entry on backup withholding summarizes the concept.
Corrections
Publication 1099 sets these rules for corrections:
- Check the CORRECTED box only when correcting a form already filed with the IRS or furnished to the recipient.
- When the wrong form type was filed, such as a 1099-DIV instead of a 1099-INT, file two returns: a zeroed-out correction of the wrong form and a new original of the right one.
- When the original was filed electronically, the correction must also be filed electronically.
W-2 corrections follow the separate corrected-form procedures in the W-2 instructions. Document the cause of each correction. If the same error recurs across clients, the cause is a process gap in the firm's intake, not a client mistake.
Reconciliation points an auditor will check
For audit and review clients, the year-end information returns are also evidence. Auditors compare 1099-NEC totals with professional fee and contract labor expense, look for payees paid above the reporting threshold without a form, and test whether payroll liabilities reconcile to filed 941s and W-2 totals. A clean information return process supports the completeness assertion for payroll and operating expenses. See form W-2 and 1099 terms in the glossary.
FAQ
Do I count W-2s toward the e-file threshold?
Yes. The threshold counts all information returns in aggregate, and the IRS publication lists W-2 among the returns.
Does a corrected return reset the penalty clock?
No. Penalties are measured against the original due date, and the tier depends on when the correct return is filed.
Can an extension be requested?
Publication 1099 says Form 8809 gives an automatic 30-day extension when filed by the due date, but no automatic extension is available for Forms W-2 and 1099-NEC. Check the form instructions before relying on any extension.
CORAA prepares ready-to-review audit files for US CPA firms; see /us.
Sources
- IRS, Employment tax due dates: https://www.irs.gov/businesses/small-businesses-self-employed/employment-tax-due-dates
- IRS, Information return penalties: https://www.irs.gov/payments/information-return-penalties
- IRS, Publication 1099 (2026), General Instructions for Certain Information Returns: https://www.irs.gov/publications/p1099
- IRS, About Form 8809, Application for Extension of Time to File Information Returns: https://www.irs.gov/forms-pubs/about-form-8809
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