Preparing for Year-end 1099/W-2/94x/ACA Filings — A Checklist to CPAs

Certified Public Accountants (CPAs) help businesses make informed choices throughout the year to feel confident about their financial future. CPAs play a crucial role in ensuring compliance with tax laws and maximizing tax efficiency when tax filing for businesses.

Before every tax season, CPAs may assist businesses in planning their tax requirements and minimizing their tax liabilities.

As the calendar inches towards the end of the year, CPAs gear up for a crucial period — year-end tax filings. This time marks a culmination of preparation and strategic thinking to ensure clients navigate tax regulations seamlessly.

Here is a checklist for the Tax Professionals to prepare for year-end tax filings, shedding light on the strategies contributing to a successful tax season.

1. Understanding Business Structure

The business structure has the most significant impact on which tax forms the business uses. Typically, CPAs begin by knowing their client’s business structure (e.g., sole proprietorship, partnership, corporation). Based on that, CPAs assist businesses in determining the tax forms to use for filing.

2. Organizing Financial Records

An efficient way to prepare taxes is to have well-maintained financial records. So, before the year-end rush, CPAs rigorously evaluate and arrange financial documents. Income statements, balance sheets, and receipts are carefully examined to guarantee correctness and completeness.

3. Payroll Records

The CPAs are required to collect the clients’ employees’ payroll database, like pay information, withholding information, and tax documents that help clients file payroll tax forms like 94X (940, 941, 943, 944, & 945) and W2 Forms, respectively.

Also, the CPAs may be required to file aggregate forms such as 940/941 Schedule R, reporting the aggregate data of their clients. Having the payroll data organized for each client can be extremely helpful while preparing these forms.

4. Health Coverage Records

While the 1099s, W-2, and 94x forms are more about payments, the ACA forms primarily rely on health coverage information. So, the CPAs required to prepare 1095-B or 1095-C forms for their clients must have the health coverage data available.

Furthermore, the 1095-C forms require specific ACA codes, and the CPAs must know which code to enter for each client’s recipient.

5. Compliance Check

CPAs must be seasoned in financial rules, tax codes, and reporting obligations. With complete adherence to all current federal, state, and local rules, they must competently produce business taxes, financial statements, and government filings. A CPA must stay up-to-date about the IRS rules and forms, 1099 requirements, W-2 regulations, 94x requirements, and more.

6. Data Required for Filing

Here comes the most significant challenge — gathering data! To ensure seamless tax preparation and filing, CPAs should gather all their necessary financial documents, TIN information, income statements, balance sheets, tax records paid, and every other document vital for tax filing.

Let’s say a CPA has a client whose business primarily involves working with independent contractors. In this case, the CPA will be required to prepare and file a lot of 1099-NEC Forms for the client.

To file form 1099 NEC for their client, the CPA must gather the following information:

1. Basic Business Data — This includes the Name, Business name, and Address of the independent contractor to complete the Form W-9.
2. W-9 Data — The client’s recipient (in this case, independent contractors) must provide the TIN information through Form W-9. To file Form 1099-NEC for independent contractors, the W-9 data is essential in this case. It is also crucial to confirm whether the client’s recipient is subjected to Backup withholding or not.
3. Payout data — This information provides how much payouts the independent contractor receives for its business for a year. This is to ensure that the client has paid at least a $600 threshold to file form 1099-NEC.

7. Deadline Management

CPAs should be well-versed in tax filing deadlines. From submitting tax returns to providing client documents, they must meticulously manage timelines to avoid lapses. Furthermore, timely filings prevent penalties and contribute to a positive client experience.

8. Finding a reliable tax filing solution

Last but not the least! The CPAs must get started with a tax filing solution that could satisfy their clients’ tax compliance requirements. And this is when TaxBandits can prove to be their go-to solution!

TaxBandits, the IRS-authorized e-file service provider, supports various federal and state tax forms, including W-2, the 1099 series, the 94x series (payroll forms), ACA 1095 forms, etc. TaxBandits also support aggregate forms such as 941/940 Schedule R. The CPAs can also distribute recipient copies of 1099s and W-2s efficiently using TaxBandits either via postal mail or online.

How does TaxBandits simplify tax Filing for CPAs?

TaxBandits is an all-inclusive E-filing Application for CPAs with numerous exceptional features, from bulk upload templates for data collection to TIN Matching for information verification.

1. Team Management: CPAs can efficiently let their team handle the filings through TaxBandits. They can invite their unlimited team members, provide them access to their TaxBandits account, assign them specified roles as ‘Preparer,’ ‘Approver,’ or ‘Transmitter,’ and the businesses to handle and oversee their activities.

2. Client Portal: TaxBandits provides a secure client portal for each CPA client. This lets them have their clients review and approve their tax returns before transmission, ensuring transparent communication throughout the tax filing.

3. Flexible Data Import: To make sure the data integration process is seamless, TaxBandits offers multiple import options. The CPAs who have data from various systems can use the customized Excel templates provided by TaxBandits to upload clients’ filing data. Furthermore, TaxBandits also allows for data import from popular accounting software such as Xero, Zoho Books, QuickBooks, and FreshBooks. Also, we are the exclusive e-file partner for Sage Intacct.

4. Improved Security: With TaxBandits, CPAs can never have to worry about the security of their client’s data, as the e-filing solution has necessary security measures in place to protect client data and uphold confidence by giving them an improved security solution.

5. User-friendly Dashboard and Reports: Taxbandits’ Dashboard allows CPAs to keep track of the status of their clients’ tax filings. Based on clients, payments, filing status, etc., TaxBandits can also provide informative reports.

Conclusion

No matter the number of clients they have and the number of tax forms they need to deal with, navigating through the year-end tax season can be hectic for the CPAs. But having a solution like TaxBandits with them can take all the hassles and pressure off them, making the tax season a breeze.