As we begin 2024, it’s crucial to start assembling all the essential information required for accurate filing of W-2 and 1099 information forms. The IRS mandates that any entity — be it a corporation, partnership, individual, estate, or trust — involved in a trade or business and engaged in reportable transactions throughout the calendar year must file information returns. These returns serve to report these transactions to the IRS and require providing statements to the other involved party.

New for the 2023 tax year, if you have 10 or more information returns (such as W-2s and 1099s), you must file them electronically. The following information return forms must be added together for determining electronic filing requirements: Form W-2, the Form 1099 series, Form 1042-S, the Form 1094 series, Form 1095-B, Form 1095-C, Form 1097-BTC, Form 1098, Form 1098-C, Form 1098-E, Form 1098-Q, Form 1098-T, Form 3921, Form 3922, the Form 5498 series, Form 8027, and Form W-2G.

For example, filing 4 W-2s and 7 1099-NEC forms would total 11 information returns, therefore meeting the requirement to have to file electronically.

When determining whether to file a 1099, there are a couple of key factors to bear in mind. First, any payment or series of payments totaling over $600 for non-employee services necessitates a 1099. Some common services include contract work, maintenance and repair services, professional services, and rental payments. However, if these services were paid for using a credit card, the responsibility for filing the 1099 rests with the payment processor, not with you. It’s worth noting that payments made exclusively for purchasing merchandise or inventory items do not need to be reported on a 1099. This covers expenses involving materials and supplies that will become a part of merchandise.

Second, payments to an incorporated entity typically do not mandate a 1099 filing. Nevertheless, there are two notable exceptions to this guideline. Attorney fees and medical payments, regardless of the entity’s corporate status, require the filing of a 1099.

To assist with the new filing requirements, the IRS has created a new, free online taxpayer portal used to file the Form 1099 series information returns electronically. Those who typically paper file their 1099 forms may also find this portal useful. The portal, known as the Information Returns Intake System (IRIS), can be utilized to create, upload, edit and view information, and download complete copies of 1099-series forms.

In reference to IRIS, it’s important to note that obtaining a Transmitter Control Code (TCC) is necessary. Please be aware that this process may take up to 45 days, so prompt action is advised without delay. For more information or to begin the application process, visit: Application For TCC.

Note that it is not necessary to sign up for a TCC if Ketel Thorstenson is filing your information returns. If there are questions regarding the new e-filing requirements for information returns make sure to contact your KT advisor.