When employee pay, contractor payments and your records don’t line up at year-end, it can be hard to know which tax forms to prepare.
It doesn’t have to be. After reviewing your records, determine which forms you will need to prepare and work backwards from your filing deadlines. You can use tax preparer software to complete these forms for you.
Start by doing the following.
What you’ll learn:
- Get Your Financial Records in Order
- Know Who Needs a W-2 or 1099
- Understand the 2026 Reporting Changes
- Keep Track of Filing Dates
- Pick Software That Fits the Job
- Check Everything Before You File
Get Your Financial Records in Order
Your tax forms are only as accurate as your books.
Compare your books to bank and credit card statements. Find any missing transactions and duplicate payments. A loan or owner capital should not be recorded as income.
Make sure your expenses are properly categorized as well. Office supply, equipment and personal payments should each have their own categories.
Review outstanding accounts receivable, payable and inventory if applicable to your business. This will depend on your method of accounting. Consult a tax professional if you are unsure how to categorize something.
Retain all invoices and payments so that you can reconcile your books when needed. Your books support your business tax return, while your payroll and payment records also support the amounts reported on W-2s and 1099s.
Know Who Needs a W-2 or 1099
Just because you pay someone does not mean you need to send them the same type of form.
Form W-2 is issued to employees. The W-2 will report wages and certain taxes that were deducted during the year. Employers are responsible for reporting this information to the Social Security Administration (SSA). When you pay someone for services they may need to receive a 1099-NEC form.
Don’t assume someone is a contractor because their invoice lists them as “Freelance.” You’ll want to familiarize yourself with the laws and guidelines that pertain to this situation.
Ensure you are collecting W-4 forms from your employees and W-9 forms from your contractors. It’s much easier to ask for a missing tax ID and correct legal name at the beginning of the year, rather than at the end.
If you pay several contractors, software for 1099 forms can help you enter payee details, review payment information and prepare the relevant forms.
Understand the 2026 Reporting Changes
As you begin to prepare your forms for the 2026 tax year, be aware of this new rule.
The amount of qualifying payments you made during 2026 that need to be reported on a federal 1099-NEC form has changed. Previously you were required to report $600 or more in payments, but as of 2026 you need to report $2,000 or more. A contractor paid $1,500 during 2026 would generally fall below that reporting threshold, unless an exception applies. Payments made subject to backup withholding still need to be reported on a form.
The Treasury Department has stated that they believe 19.54 million fewer 1099-NEC forms will be filed in 2027.
You shouldn’t automatically assume that you won’t need to issue a form for payments under $2,000. Some forms, such as the 1099-MISC, include additional types of payments that require different minimum amounts to be issued.
Payment type can also affect if you need to send someone a 1099-NEC. If your payments were made with a card or qualified third party network, they may be reported on a 1099-K by the payment processor.
Remember, your contractor still needs to report income if you did not issue them a 1099 form.
Keep Track of Filing Dates
Even if your form is filled out correctly, filing it late can cause you problems.
When you’re reporting payments made in 2026, you will need to issue your Forms W-2 to your employees by February 1, 2027. This is also the date you must file them with the SSA. Most Forms 1099-NEC are due on this same date. Due to the standard January 31 deadline falling on a Sunday, this date has moved.
Other information returns may have different deadlines to keep in mind. Form 1099-MISC has a longer deadline to file with the IRS and some statements have special rules. Always research each form you plan to file to make sure you are aware of your due dates.
Some businesses are required to file electronically. If you will be submitting 10 or more information returns you may need to submit your forms via e-file, depending on certain exemptions. This will include the sum total of applicable returns, including W-2s and 1099s.
Did you know that IRS Information Returns will no longer be accepted through the FIRE system in 2027? Instead, you will be required to submit through IRIS, which stands for Information Returns Intake System. Make sure your software is updated and allows you to submit to the IRS through IRIS. This does not apply to W-2 forms, those will continue to be submitted to the SSA.
Make sure to check the reporting requirements in your state. Filing a federal form does not always cover all of your states reporting requirements.
Pick Software That Fits the Job
Each piece of tax software can do different things for you.
Bookkeeping software is used to keep track of your business’s money flow. Business income tax software can be used to prepare your tax return based on your books. Then you’ll need a program that can prepare W-2s and 1099s for your employees and contractors and file the forms with the appropriate agencies.
Make sure to check if software offers electronic filing and/or printing of forms, some programs will charge extra for these features.
Research your options before selecting tax preparer software. Does the program allow you to pull your current data into it? Will it let you prepare the forms you know you’ll need? Are there tools to double check your work before submitting? Do you have multiple businesses? Can you keep payer data separated? Where will your data be stored?
Also, verify how your software files. Did they update to accept information returns through IRIS? And will it send your W-2 forms to the SSA? If you used the program in the past, that doesn’t guarantee that your filing options will still work the same way.
Using software to prepare your forms can save you time, but it won’t solve issues with your payments, tax ID numbers and payee classifications.
Check Everything Before You File
After you’ve completed your forms, take some time to review everything before you file.
Some tips to remember when reviewing your forms:
- Review your payee information. Ensure that your recipient’s name matches the W-4/W-9 that you collected.
- Review the amount. Make sure the wages and deductions on your W-2 align with your payroll records. Check to see if any of your contractor payments need to be reported on a form.
- Verify your filing location. Submit your forms to the appropriate agency and make sure your payee receives the correct statement.
- Retain your filings. Save copies of your filed forms and delivery confirmations with your bookkeeping records.
Did you make a mistake? Consult your software or file instructions for corrections. Do not submit an original return, that’s not considered a correction.
Give yourself enough time to resubmit any rejected filings as well. Submitting doesn’t always mean your form has been accepted.
Wrapping It Up
There are many steps to take when preparing your year end forms for your business.
After getting your books in order, figure out which forms you need to prepare, what minimum payments apply and allow yourself time to meet your due dates. Tax software can help ease this process, but don’t forget to review your work before submitting.
Doing these steps can save you from headaches down the road.
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