Penalties for filing W-2 and 1099-MISC forms late

What are the Penalties for Filing a W-2 or 1099-MISC Late?

Forms 1099-MISC with an amount in Box 7 and W-2 are due by January 31 to the IRS, Social Security Administration (SSA), and the forms’ recipients. If you don’t file your forms by January 31, you run the risk of facing some hefty penalties. The longer you wait, the higher the fine could be, so try to get your forms done sooner rather than later.

When return is filed Penalty per return 1099-MISC Max Penalty W-2 Max Penalty
Not more than 30 days late $50 $191,000 $191,000
Between 31 days late and August 1 $100 $547,000 $545,500
After August 1 or not at all $270 $1,094,000 $1,091,500
Intentional disregard $540 No maximum No maximum

You might face these penalties for not giving the form to its recipient if

  • you don’t provide the correct statement by the due date without reasonable cause.
  • the required information is not all included on the form.
  • incorrect information is included on the statement.

You could also face penalties for not filing with the IRS or SSA if

  • you don’t file the form by the due date.
  • the required information is not all included on the statement.
  • incorrect information is included on the form.
  • you report an incorrect taxpayer identification number (TIN).
  • you fail to report a TIN.
  • a corrected statement is not filed in a timely matter.
  • you file by paper when you’re required to file electronically.
  • you didn’t file a form that was machine readable.

If you knew you were supposed to file forms and did not, then you run the risk of being fined for intentional disregard.

Are there exceptions for filing late?

Penalties are up to the IRS’s discretion, so there are some cases where you might be able to avoid a fine.

Reasonable Cause

You might be able to avoid late fees if you’re able to show that the failure to file was due to reasonable cause and not willful neglect. It could be because of events beyond your control or significant mitigating factors, but you will need to prove that you acted responsibly and took necessary precautions to avoid the mistake.

Inconsequential Errors

An inconsequential error is any mistake or omission that does not hinder the IRS or SSA from processing the form, connecting the information on the form to the information on the recipient’s tax return, or using the form as intended.

According to the IRS, an error will never be inconsequential if it’s related to

  • a TIN,
  • the recipient’s surname,
  • any dollar amounts, or
  • a significant part of the recipient’s address.

De Minimis Rule

If you filed a form on time but did not include all the required information or provided incorrect information, you might be able to avoid the penalty on a certain number of forms if you file corrections by August 1. If you meet the requirements, then the penalty won’t apply to either 10 information returns or one half of 1% of the total number of forms you were required to file, whichever is greater.

Safe Harbor Rule

You might be able to avoid penalties for some incorrect dollar amounts if

  • no amount differs from the correct amount by more than $100 and
  • no tax withheld amount differs from the correct amount by more than $25.

If the IRS determines that the safe harbor rule applies, you typically won’t have to file a corrected form to avoid the penalties. The form recipient, however, can decide that the safe harbor rule does not apply, and you would need to file a corrected return.

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