Mark the calendar: Important backup withholding deadlines

Issue Number: Tax Tip 2022-05

Mark the calendar: Important backup withholding deadlines

Some businesses and other payers take backup withholding from payments they made to certain people. These entities should remember their upcoming filing deadlines.

What is backup withholding?
The person or business paying the taxpayer doesn’t generally withhold taxes from certain payments. They don’t do this because it’s assumed the taxpayer will report and pay taxes on this income when they file their federal tax return. There are, however, situations when the payer is required to withhold a certain percentage of tax to make sure the IRS receives the tax due on this income. This is what’s known as backup withholding. If a payer does backup withholding, they are required to deposit that withholding on those payments with the IRS.

Form 945, Annual Return of Withheld Federal Income Tax
Businesses and other payers must report backup withholding and any other federal income tax withheld from nonpayroll payments on Form 945. The deadline for filing Form 945 for tax year 2021 is Monday, January 31, 2022. However, if the payer made deposits on time and in full, the deadline is Thursday, February 10, 2022.

Information returns
The information returns listed below are used to report backup withholding for tax year 2021. They’re generally due to the IRS on, Monday, February 28, 2022, for paper filers and Thursday, March 31, 2022 for electronic filers.

These information returns are:

Except for Form 1099-NEC, information returns generally must be filed with the IRS on or before Monday, February 28, 2022, for paper filers and Thursday, March 31, 2022, for electronic filers. Taxpayers should review Publication 1220 for help electronically filing information returns.

1099-MISC and nonemployee compensation
There’s a different filing due date for Form 1099-MISC when reporting nonemployee compensation. When this form is used to report this in box 7 of the 1099-MISC, it’s due to the IRS by January 31. This due date applies whether the payer is submitting the form on paper or electronically.

A Form 1099-MISC has two possible due dates when filed electronically:

  • Friday, January 31 to report nonemployee compensation payments
  • Thursday, March 31 to report all other payments

The payer should separate the transmission of nonemployee compensation from other payments.

Information return filing extensions
A payer can request a 30-day extension to file any of the information returns listed above by filing Form 8809, Application for Extension of Time to File Information Returns. An extension is usually granted automatically. However, the IRS does not automatically grant an extension for someone filing Form 1099-MISC reporting nonemployee compensation payments. Payers who need a 30-day extension to file this form must meet one of the criteria listed on line 7 of Form 8809.

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