Filing your tax returns for income, employment, and excise tax purposes is only a small part of your reporting obligations. Being in business puts a number of tax-related information return requirements on your shoulders. These information returns—and there are billions filed annually—allows the IRS to match income reported by third parties (e.g., employers, businesses, and banks) with income reported on taxpayers’ income tax returns. If you fail to comply with information reporting, you can be penalized. January is the season for much, but not all, of information reporting. Here are some of the information returns you need to file…and when.
Form W-2
If you have any employee (including yourself if your business is incorporated), you must report annual compensation and benefits to the employee and to the Social Security Administration. Furnish Form W-2, Wage and Tax Statement to each employee. Also file a copy of each W-2, along with Form W-3, Transmittal of Income and Tax Statement, with the Social Security Administration.
Form 1099-NEC
If you have an independent contractor and paid $600 or more in total in 2024, you must file Form 1099-NEC by January 31, 2025. Furnish the form to the contractor and send a copy accompanied by Form 1096 to the IRS. If you need additional time to file, you can request a 30-day extension by submitting Form 8809, Application for Extension of Time to File Information Returns. You must give a reason why you need more time to file. The IRS will grant an extension only in extraordinary circumstances or catastrophe.
Form 1095-B and 1095-C
If you are an applicable large employer (ALE) subject to the employer mandate, you are subject to annual information reporting on your group health plan or lack thereof. Whether you are a small or large employer, if you have a self-insured plan such as a health reimbursement arrangement, you must report this annually as well. ALEs file Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, for each covered employee. Copies of this form, along with transmittal Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information, are filed with the IRS. Similarly, those with a self-insured plan must file Form 1095-B, Health Coverage, for each responsible person (e.g., an employee who has coverage for him/herself as well as a spouse and dependent). Copies of this form, along with a transmittal Form 1094-B, Transmittal of Health Coverage Information Returns, are filed with the IRS. But there’s relief due to the Paperwork Burden Reduction Act, which was signed into law on December 23, 2024. You don’t have to furnish forms to employees unless they request them. To rely on this reduced burden, you must:
- Provide clear, conspicuous, and accessible notice to applicable individuals of their right to request a form, and
- You provide the form by the later of January 31 of the year following the 1095 reporting year, or 30 days after receiving a request.
The due date for filing the 1094s with the IRS is February 28 for paper filers and March 31 for electronic filers. Again, if you need additional time, you can request it as explained above. The due date for furnishing 2024 forms to employees who request them is January 31 or 30 days after the date of the request, whichever is later. Note: The Employer Reporting Improvement Act, which was also signed into law on December 23, 2024, makes other changes for forms due after December 31, 2024, including an extension of 90 days for employers to respond to IRS Letter 226-J about a notice of proposed assessment and setting a 6-year statute of limitations for collecting penalty assessments.
Large cash transactions
If you receive more than $10,000 in cash in one or more related transactions in the course of your business, you must report the transaction to the IRS. You must also report to the party that paid you. “Cash” for reporting purposes does not mean only currency; it includes cashier’s checks, money orders, bank drafts, and traveler’s checks having a face amount of $10,000 or less received in a transaction used to avoid this reporting requirement. File Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, by the 15th day after the date the cash was received. For example, if you receive a payment of $12,000 on February 1, 2025, you must report it by February 15, 2025. If the deadline falls on a Saturday, Sunday, or legal holiday, file by the next business day. You must give a written statement to the party who paid you, but you have until January 31 of the year following the year in which the cash was received to do so. For example, on that February 1, 2025, cash payment, your written statement must be furnished by February 2, 2026 (January 31, 2026, is a Saturday).
Final thought
With limited exceptions, forms must be e-filed. But you don’t have to do it alone. Consider using a tax professional, a payroll company, or other third party that can handle the preparation and submissions of the forms for you. If you do outsource your information returns, it’s still up to you to gather the information needed for these forms.
