If you need to correct a W-2 or 1099, here’s a heads-up on changes

As you’re prepping to file Forms W-2 or Forms 1099 for TY 2023, you know it’s tough to avoid all errors. So, it helps to be prepared to file corrections, too.

By way of reminder, the deadline for submitting Forms W-2 to SSA is January 31, 2024, whether you’re filing on paper or electronically.

Likewise, the due date for sending Forms 1099-NEC to IRS – whether on paper or electronically – is January 31, 2024.

You have a little more time with Form 1099-MISC. The deadline is February 28, 2024, if on paper and by April 1, 2024, if filing electronically.

If you discover errors on any of these forms after you file them, here’s what you should be aware of before you submit your corrections.

Form W-2 fixes

With Form W-2 corrections, you’ll need to follow suit when it comes to the filing method. In other words, if you’re required to electronically file W-2s, then corrections for that form will need to be submitted electronically as well. If you end up filing W-2s on paper, then any Forms W-2c would also need to be filed on paper.

This change is connected to the lower e-filing threshold (of 10 returns in aggregate) that takes effect for tax year 2023.

As for the forms you’ll use to make corrections – i.e., Form W-2c and Form W-3c – IRS stated as part of its November Payroll Industry Call it’d finalized revisions during 2023.

The previous revisions go back a few years – to 2014 for Form W-2c and to 2015 for Form W-3c.

On the W-2c, you’ll find a caution on the final page that’s similar to information on the first page – i.e., you can’t print Copy A of the W-2c or W-3c from the IRS website in order to submit the forms to SSA. Reason: SSA won’t be able to scan them.

On the W-3c, the form’s instructions explain where to file paper forms if you’re using the U.S. Postal Service. They go to SSA’s Direct Operations Center (previously, it was the Data Operations Center). In a note, IRS adds where to send the forms if you’re using certified mail or an approved private delivery service and that you can see Publication 15 for details.

Form 1099 fixes

Although you can still use the Filing Information Returns Electronically (FIRE) system to e-file original and corrected 1099s, you now have another option. It’s called Information Returns Intake System (IRIS), and it’s been up and running since last year.

To use either FIRE or IRIS, you’ll need a Transmitter Control Code (TCC). Be careful: The TCCs for the systems aren’t interchangeable. Also, the process for obtaining a TCC for FIRE has changed. As of January 2024, you won’t be able to use your legacy TCC to electronically file 1099s and other forms via FIRE.

Another point of consideration when making corrections to Forms 1099 is the Combined Federal/State Filing (CF/SF) program.

You can save yourself a step at year-end by taking advantage of the CF/SF program – at last count, more than 30 states were participating and 11 forms were accepted.

Thanks to the CF/SF program, you can file original returns, such as forms 1099-MISC and 1099-NEC, to IRS, and then the Service will forward the forms to your state(s).

You can even make corrections through the CF/SF program. But there’s a little exception which causes big headaches.

As the Internal Revenue Service Advisory Council (IRSAC) pointed out in its November 2023 Public Report, only certain types of corrections can be made. They are:

• federal fields only (yes)
• federal and state fields (yes), and
• state fields only (no).

So, if you find an error that appears only in a state field, such as amount of state income tax withheld, you’ll have to quickly register with the state so you can directly submit the corrected information returns.

In its report, IRSAC recommended that IRS lift that restriction and instead begin accepting information return corrections of state-only fields.

But for tax year 2023, and perhaps beyond, you should be ready to spring to action if you use the CF/SF program and need to correct a 1099 mistake that appears only in a state field.