News & Updates

The due date to file 2022 Form W-2, Form W-3, and Form 1099-NEC is January 31, 2023. Employers and other businesses should be sure to make this important deadline.

Form W-2, Wage and Tax Statement and Form W-3, Transmittal of Wage and Tax Statements

Employers must file copy A of Form W-2 and Form W-3 with the Social Security Administration by January 31. Businesses can find filing information on the Topic No. 752, Filing Forms W-2 and W-3 webpage.

Form 1099-NEC, Nonemployee Compensation

The Jan. 31 deadline also applies to Forms 1099-NEC filed with the IRS to report non-employee compensation to independent contractors. Employers and payers can review the Instructions for Forms 1099-MISC and 1099-NECPDF for details and other due dates.

Filing on time helps avoid penalties

Automatic extensions of time to file Form W-2 and Form 1099-NEC are not available. The IRS will grant extensions only for very specific reasons. The general instructions for Form 8809, Application for Time to File Information Returns has details.

Employers should also read the Form W-2 and W-3 instructions and the Information Return Penalties page at IRS.gov.

Businesses should be prepared

It's important to have everything prepared to file on time. Employers should verify or update employee and payee information such as names, addresses and Social Security numbers or Individual Taxpayer Identification Numbers. They should also ensure their company's account information is current and active with the Social Security Administration and order paper Forms W-2 if needed.

Timely filing helps detect fraud

The filing date for Form W-2 and other wage statements allows the IRS to detect refund fraud more easily by verifying income that individuals report on their tax returns. Employers can help support this process and avoid penalties by filing the forms on time and without errors. E-filing is the quickest, most accurate and convenient way to file these forms.

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Most of the common errors taxpayers make on their tax returns are easily avoidable. By carefully reviewing their return, taxpayers can save time and effort by not having to correct it later. Filing electronically also helps prevent mistakes. Tax software does the math, flags common errors and prompts taxpayers for missing information. It can also help taxpayers claim valuable credits and deductions. Taxpayers who qualify may use IRS Free File to file their return electronically for free.

Here are some of the mistakes to avoid:

• Filing too early. While taxpayers should not file late, they also should not file prematurely. They should wait to file until they're certain they've received all their tax reporting documents, or they risk making a mistake that may lead to a processing delay.
  
• Missing or inaccurate Social Security numbers. Each SSN on a tax return should appear exactly as printed on the Social Security card.
  
• Misspelled names. The names of all taxpayers and dependents listed on the return should match the names on their Social Security cards.
  
• Inaccurate information. Taxpayers should carefully enter any wages, dividends, bank interest and other income they received to make sure they report the correct amounts. This includes any information taxpayers need to calculate credits and deductions.
  
• Incorrect filing status. Some taxpayers choose the wrong filing status. Publication 501 has detailed information about filing statuses.
  
• Math mistakes. Math errors are some of the most common mistakes. They range from simple addition and subtraction to more complex calculations. Taxpayers should always double check their math. Better yet, tax prep software will check it automatically.
  
• Figuring credits or deductions. Taxpayers can make mistakes figuring things like their earned income tax credit, child and dependent care credit and child tax credit. Tax software will calculate these credits and deductions and include any required forms and schedules.
  
• Incorrect bank account numbers. Taxpayers who are due a refund should choose direct deposit. This is the fastest way for them to get their money. However, taxpayers need to make sure they use the correct routing and account numbers on their tax return.
  
• Unsigned forms. An unsigned tax return isn't valid. In most cases, both spouses must sign a joint return. Exceptions may apply for members of the armed forces or other taxpayers who have a valid power of attorney.
  
• Disreputable tax preparers. Taxpayers should remember they, not the tax preparer, are responsible for the information on their tax return The IRS has resources to help taxpayers find someone to prepare their tax return. Some taxpayers may even be able to get free help from IRS-certified volunteers. Certified public accountants, enrolled agents or other tax professionals can also help taxpayers avoid errors.

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The adoption tax credit lets families who were in the adoption process during 2022 claim up to $14,890 in eligible adoption expenses for each eligible child. Taxpayers can apply the credit to international, domestic, private and public foster care adoptions.

Things to know about claiming the credit

• To claim the adoption credit, taxpayers complete Form 8839, Qualified Adoption Expenses and attach it to their tax return. They use this form to figure how much credit they can claim.
• There are income limits that affect the amount of the credit.
• The adoption tax credit is non-refundable. It will reduce a tax bill but won't result in a refund, even when the amount of credit is greater than the tax bill. However, a taxpayer can carry their leftover credit forward and apply it to future tax returns for up to five years.

Who is considered an eligible child

An eligible child is an individual who is under the age of 18 or is physically or mentally incapable of caring for themself.

Qualified expenses

Qualified adoption expenses include such things as:

• Adoption fees
• Court costs and legal fees
• Adoption related travel expenses like meals and lodging
• Other expenses directly related to the legal adoption of an eligible child

Expenses may be deductible even if the taxpayer pays them before an eligible child is identified. For example, some future adoptive parents pay for a home study at the beginning of the adoption process. These parents can claim the fees as qualified adoption expenses.

Qualified adoption expenses do not include expenses that a taxpayer pays to adopt their spouse's child. They may, however, include adoption expenses paid by a registered domestic partner if that partner lives in a state that allows a same-sex second parent or co-parent to adopt their partner's child.

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In recent years, the gig economy has changed how people do business and provide services. Taxpayers must report their gig economy earnings on a tax return – whether they earned that money through a part-time, temporary or side gig. The IRS Gig Economy Tax Center provides information and resources to help this group of entrepreneurs and workers understand and meet their federal tax obligations.

Here are key things for individuals involved in the gig economy to remember as they get ready to file in 2023.

Gig economy income is taxable

• Taxpayers must report all income on their tax return unless excluded by law, whether they receive an information return such as a 1099 or not.
• Individuals involved in the gig economy may also be required to make quarterly estimated tax payments to pay income tax and self-employment tax, which includes Social Security and Medicare taxes. The last estimated tax payment for 2022 is due January 17, 2023.

Workers report income according to their worker classification

Gig economy workers who perform services, such as driving a car for booked rides, running errands and other on demand work, must be correctly classified. Classification helps the taxpayer determine how to properly report their income.

• If they are employees, they report their wages from the Form W-2, Wage and Tax Statement.
• If they are an independent contractor, they report their income on a Schedule C (Form 1040), Profit or Loss from Business (Sole Proprietorship).

The business or the platform determines whether the individual providing the services is an employee or independent contractor. The business owners can use the worker classification page on IRS.gov for guidance on properly classifying employees and independent contractors.

Expenses related to gig economy income may be deductible

Individuals involved in the gig economy may be able to deduct expenses related to their gig income, depending on tax limits and rules.

• Taxpayers may be able to lower the amount of tax they owe by deducting certain expenses.
• It is important for taxpayers to keep records of their business expenses.

Pay the right amount of taxes throughout the year

An employer typically withholds income taxes from their employees' pay to help cover taxes their employees owe.

Individuals involved in the gig economy have two ways to cover their taxes due:

• If they have another job where they are considered an employee, they can submit a new Form W-4, Employee's Withholding Certificate to their employer to have more taxes withheld from their paycheck to cover the tax owed from their gig economy activity.
• They can make quarterly estimated tax payments throughout the year.

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One of the first decisions taxpayers must make when completing a tax return is whether to take the standard deduction or itemize their deductions. There are several factors that can influence a taxpayer's choice, including changes to their tax situation, any changes to the standard deduction amount and recent tax law changes.

Generally, most taxpayers use the option that gives them the lowest overall tax.

As taxpayers begin to think about filing their tax return, here are some things they should know about standard and itemized deductions.

Standard deduction

The standard deduction amount increases slightly every year. The standard deduction amount depends on the taxpayer's filing status, whether they are 65 or older or blind, and whether another taxpayer can claim them as a dependent. Taxpayers who are age 65 or older on the last day of the year and don't itemize deductions are entitled to a higher standard deduction.

Most filers who use Form 1040 can find their standard deduction on the first page of the form. The standard deduction for most filers of Form 1040-SR, U.S. Tax Return for Seniors, is on the last page of that form.

According to the Instructions for Form 1040 and 1040-SR, not all taxpayers can take a standard deduction, including:

• A married individual filing as married filing separately whose spouse itemizes deductions - if one spouse itemizes on a separate return, both must itemize.
• An individual who files a tax return for a period of less than 12 months. This is uncommon and could be due to a change in their annual accounting period.
• An individual who was a nonresident alien or a dual-status alien during the year. Nonresident aliens who are married to a U.S. citizen or resident alien, however, can take the standard deduction in certain situations.

Itemized deductions

Taxpayers who choose to itemize deductions may do so by filing Schedule A (Form 1040), Itemized Deductions. Itemized deductions that taxpayers may claim can include:

• State and local income or sales taxes.
• Real estate and personal property taxes.
• Home mortgage interest.
• Personal casualty and theft losses from a federally declared disaster.
• Gifts to a qualified charity.
• Unreimbursed medical and dental expenses that exceed 7.5% of adjusted gross income.

Some itemized deductions, such as the deduction for taxes, may be limited. Taxpayers should review the instructions for Schedule A (Form 1040) for more information on limitations.

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