The Drastic Change in IRS E-Filing Requirement for 1099/W2/94x/ACA Forms in 2024!
The emergence of e-filing has brought a significant revolution by overtaking the traditional method of tax filing by paper. That’s understandable, considering the many benefits offered by e-filing when compared to paper filing. Even the IRS always encourages taxpayers to choose e-filing and has placed many e-file mandates in place.
Starting the 2023 tax year, a business that files ten or more information returns (formerly more than 250) must submit them electronically. This blog gives a deeper understanding of the electronic filing requirements of Form 1099/W2/ACA in 2024.
Importance of Electronic Filing
In recent years, there has been tremendous growth in the usage of electronic filing services across the tax filing spectrum. Approximately 82% of all corporate income tax filings and over 90% of partnership tax returns were electronically submitted in 2021. Furthermore, lowering the amount of submitted paper returns frees human resources and resources to improve taxpayer services. Additionally, it decreases postage, printing, shipping, storage, and other related expenses and hassles while increasing overall efficiency.
The IRS anticipates receiving around 5 billion information returns by 2028, up from the current yearly total of about 4 billion. Thus, the 2024 IRS electronic filing of Form 1099/W2/ACA 1095 aims to limit the number of paper returns by increasing the number of people who must e-file.
What’s the new IRS E-file Mandate for 2024 for 1099/W-2/ACA Forms?
“Organizations filing ten or more returns in 2024 must choose Electronic Filing.”
Before regulations were introduced, under the previous IRS rule, the 250 return threshold was applied individually to each information return type. In simpler terms, the rules applied separately to each specific kind of form without a set limit for all types combined. For example, under the previous regulation, a business submitting 200 Forms W-2, 200 Forms 1099, and 200 Forms ACA 1095 was exempt from filing electronically since each form fell under the 250-return threshold.
However, the new IRS regulations reduced the 250-return threshold to 10. Starting in 2024, the taxpayers must e-file if the total information returns they’re filing equals ten or more. With the new aggregation rule, businesses add the number of Forms W-2, 1099, and ACA 1095 together to check if they have reached the threshold.
The following information return forms must be added together for electronic filing purposes:
Form 1042-S, the Form 1094 series, Form 1095-B, Form 1095-C, Form 1097-BTC, Form 1098, Form 1098-C, Form 1098-E, Form 1098-Q, Form 1098-T, the Form 1099 series, Form 3921, Form 3922, the Form 5498 series, Form 8027, and Form W-2G.
Failing to keep up with new e-file requirements will cost businesses penalties.
Electronic filing Mandate for 94X Forms:
Though the electronic filing mandate by the IRS for information returns forms doesn’t have the same effect on payroll 94X Forms, the IRS has set certain e-filing requirements specifically for reporting agents.
A reporting agent can be an accounting service provider, bank, franchiser, or an individual obtaining reporting agent authorization from the IRS and their clients. These authorized reporting agents must electronically sign and file all the forms listed on Form 8655 (including 940/941 Forms) unless the e-filing option isn’t available for that particular Form 94X form. They can use other methods if electronic filing is unavailable for a specific form. Learn more
State Electronic Filing Requirements:
The electronic filing requirements mentioned above for Form 1099/W2 are relevant to the Federal electronic filing requirements. However, each state may have different e-filing requirements.
For Example:
For the 2024 calendar year, if taxpayers submit 250 or more returns in California, the state says they must file 1099 forms electronically.
Meet Your E-file Mandate with TaxBandits!
Remember that electronically filing has several benefits. Many benefits come with filing taxes electronically, including fewer numerical errors or missing information, more accurate tax computations, speedy processing, quicker repayments, more accessible access to fiscal documents, and much more.
The process of preparing the forms (1099/W2) for electronic filing is faster than that of paper filing. Additionally, businesses may cut costs on printing and delivery.
A vital point that the IRS registered about the E-file Mandate has made taxpayers (businesses) look for an authorized E-file provider solution. Here is where TaxBandits becomes a real game-changer!
TaxBandits, a leading e-file service provider, helps businesses, CPAs, and reporting agents meet their e-file mandate efficiently!
By providing exclusive solutions to file information returns Forms 1099, W2, payroll tax 94X Forms, and ACA forms, TaxBandits makes the e-filing experience easier than ever.
The IRS-authorized e-file provider supports e-filing with both federal and state agencies and offers an easy way to distribute the recipient copies digitally or via postal mail.
With the comprehensive e-filing solution offered by TaxBandits is here to help, complying with these e-file mandates will not be a big deal for the filers!
