IRS FIRE File Types

There are four types of files that you submit to the IRS FIRE; a test, original, replacement and amended or corrected file.
Test
Testing season lasts from November 1 to February 15.  You are not required to submit a test file, but testing is a great way to get some experience with the electronic filing process for information returns.
Original
An original file is an information return that has never been reported.
Replacement
If you file something and it comes back as BAD, then log into the IRS FIRE System and at the Main Menu, you can check the File Status as follows:

1. Click on "Check File Status".
2. Enter your TCC.
3. Enter you EIN.
4. Click "Search".

Click on the file that is BAD to reveal the errors associated with that file. Correct those errors and submit a replacement file. Continue filing a "replacement" file until it comes back as GOOD and do so within the deadline due dates.  When you are electronically submitting a replacement file, you have the option to select which file you want to replace.


Correction
If you file something and it comes back as GOOD, then the file has been processed.  Let's say later you discover that some of the records contained erroneous data.  You may have
transmitted a missing or incorrect TIN, payee name or address, the amounts or amount codes may have been wrong or other common errors. Then you need to submit a corrected file which contains just the records that need to be amended. If you filed 400 1099-MISC records and found out later that 25 of those records contained erroneous data, then you need to put together a corrected file of just those 25 records and submit.
If your corrected file is BAD, correct the file and resubmit as a replacement, not another correction.
File Status
If the file status indicates:
"Not yet processed".  Then you just need to wait and check back in a few days.  Typically, a file will be reviewed within 1-2 days, but as deadlines approach, the IRS FIRE system tends to get bogged down and there may be delays in processing a file.  Some files such as the 8955-SSA or IRS Form 8027 take up to 5-7 days to process.
If the file status indicates "Good, Not Released" and you agree with the "Count of Payees", then you are finished with this file. The file with be automatically released after 10 calendar days.
"Good, Released". Then the file has been released to the IRS for processing.

IRS 1099-MISC Form For Contract Workers

Contract workers, or freelancers, are workers who are hired on a project-by-project basis.  The IRS 1099-MISC form is used by employers to document the earnings of contract workers.

More and more businesses are hiring contract workers because their costs are generally lower than W-2 employee costs.
This is because contract workers' earnings do not require deductions of social security, income and state tax, unemployment, health insurance, or any other type of deferred compensation.  Contractors are required to calculate any tax deductions and pay any taxes owed to the IRS on their own.
At the end of the tax year, the 1099-MISC form is sent by employers to any contractors hired during the year, and it is also submitted to the IRS for income tracking purposes.
Some examples of workers that would receive a 1099 form at the end of the tax year include freelance writers, artists, contract IT specialists, temporary laborers, and more.
Form 1099-MISC is a 5 page form where Copy A is sent to the IRS, Copy B is given to the payee or recipient and Copy C is retained by the filer or payer.  Copy A has the look and feel of  a normal sheet of paper while the other copies are almost like tissue paper. The 5-pages are connected together by a perforated edge.


The IRS requires that Copy A be submitted on their special paper with red ink if you are submitting less than 250 filings a year.  Otherwise, the IRS encourages you to submit electronically. Filing Information Returns electronically is very cost-effective, is easier than filing on paper, and is more accurate. Filing status is available within 2 business days for Forms 1098, 1099 and W2-G and electronic filers receive a later due date for most returns. When you file electronically, you are exempt from using pre-printed forms.  You can just print the Copy B on plain paper with black ink, email a PDF file to all recipients, fax Copy B to the recipients or just print it out and hand it to the recipient.
The 1099-MISC form is the most popular form to report contract worker earnings.  The other variations of the 1099 form are used to show interest and other types of earnings.

About IRS forms 5498, 5498-ESA and 5498-SA

IRS Form 5498 reports IRA contributions.  For those who participate in an individual retirement account, the account's trustee or issuer must report your contributions to the IRS on an annual basis.  You will receive a 5498 for each Traditional IRA or Roth IRA in which you made contributions. Form 5498 is not required by the IRA account holder to be used for his or her tax returns.


Some of the types of contributions that would be shown include: IRA contributions and year end Fair Market Values made to a traditional IRA, Roth IRA, SEP-IRA, or SIMPLE IRA account, any type of conversions made to these accounts, contributions that have been recharacterized from one IRA type to another, and more.
IRA account holders who made contributions to an IRA, performed a 60-day rollover of funds from one plan to another, converted to a Roth IRA, or did a recharacterization should receive a 5498 form.
IRS Form 5498-ESA reports Coverdell Education Savings Account (ESA) Contributions.

IRS Form 5498-SA reports contributions made to an Archer Medical Savings Account(s). 

Unlike the 1099's which are due in the beginning of the year, 5498 Forms are due in the summer.  Copy B of Form 5498 and Form 5498-SA should be mailed by the end of May.  Form 5498-ESA needs to be distributed to the beneficiary by late April.  All of the 5498 forms need to be paper or electronically filed with the IRS by the end May.
You can request an automatic 30-day time extension online through the IRS FIRE System.
5498 software at the site 1099fire.com software creates files in the format required by the IRS for electronic transmission. The system is updated each year to reflect the format changes that are made by the IRS.
Filing Information Returns electronically is very cost-effective, is easier than filing on paper, and is more accurate. Filing status is available within 2 business days for Forms 1098, 1099, 5498 and W2-G and electronic filers receive a later due date for most returns.
When you file electronically, you are exempt from using pre-printed forms.  You can just print the return in regular paper or email a PDF file to all recipients.
 

How can I file for an extension of time for my information returns?

You can request more time to file any information return.  Its easy to do and you will automatically receive an additional one month time extension.

Its important to remember that you can attain an automatic 30-day extension for filing Copy A by paper or electronically with the IRS (or SSA if you are filing Form W-2).  This extension option does not give you additional time to distribute Copy B to the payees. You can not request additional time for distributing Copy B.
The steps are below:

1. Log into the IRS FIRE System.  Click on Continue to reach the main menu.
2. At the main menu, click on "Extension of Time Request".
3. You will see four (4) options.  Click on "Fill-In Extension Form".
4. Click Continue.
5. You will see a form that asks various questions.  You select how the information returns will be filed, whether by paper or electronically.  You select which types of returns you are requesting more time to file.  The return types include W-2, 1098/1099/W-2G, 5498, 5498-SA, 5498-ESA, 1042-S and 8027.

While the W-2 is filed with SSA, you can select a time extension through the IRS FIRE System.
You also type in the payer TIN, name, address, city, state, zip code, contact name, phone number and transmitter control code (if applicable).  If you dont have a TCC number, you can leave that box blank.  You also select whether this payer address is in a foreign country.  If you select no (which is the default), then the payer resides in the United States.
Click Submit and a 30-day time extension will automatically be granted.
The FIRE (Filing Information Returns Electronically) system is set up for financial institutions and others to file Information Return Forms 1042-S, 1098, 1099, 5498, 8027 or W-2G. An Information Return is a tax document used to report certain types of payments made by financial institutions and others who make payments as a part of their trade or business as required by Internal Revenue Code regulations.
Filing Information Returns electronically is very cost-effective, is easier than filing on paper, and is more accurate. Filing status is available within 2 business days for Forms 1098, 1099 and W2-G and electronic filers receive a later due date for most returns.

Printable 1099 and W-2 Tax Forms

You can download any 1099 tax form from the IRS website.  This first page of the form goes out of the way to say
"Do not file copy A downloaded from this website. The official printed version of this IRS form is scannable, but the online version of it, printed from this website, is not.  A penalty may be imposed for filing forms that can't be scanned."

There are a few key points to take from this paragraph:
1. Copy A is a red-ink form. It is a special red-ink.  If you try to print Copy A with store bought red-ink, its not the same type of red-ink that the IRS uses to print out the 1099 forms. The IRS is asking you to not print Copy A and try to submit because store-bought red-ink forms will not scan correctly.
2. You can print Copy B or C to plain paper with black ink.  Copy B and C is the payee and payer copies.  You don't even have to print and mail Copy B to the recipient.  You can convert to PDF and email or just print it out and hand the form to the recipient.

Form W-2 is different.  While Form W-2 is developed by the IRS, you paper or electronically file with the Social Security Administration (SSA).  SSA developed substitute Copy A forms for the W-2.  Software developers will receive a PDF of the substitute W-2, W-3, W-2C and W-3C forms in June or July.  Then can build those substitute forms into their software application and then mail the forms to SSA for review.  SSA will test to see if the forms will align with their scanners.  If they do, then that software developer will receive a letter of approval letting them know that their substitute forms can be read by SSA scanner equipment.  You receive on letter of approval for the W-2, W-3 forms and another for the W-2C, W-3C forms.
An employer can print Copy A of a substitute Form W-2 on plain paper with black ink.  Its a great feature and service offered by SSA.

Form W-2: Box 12 code

Box 12 of Form W-2 shows a code followed by a value.  The code indicates the type of payment. This is a listing of the codes for that box.
A: Uncollected social security or RRTA tax on tips. Include this tax on Form 1040.

B: Uncollected Medicare tax on tips.  Include this tax on Form 1040.
C: Taxable cost of group-term life insurance over $50,000 (included in boxes 1, 3 (up to social security wage base) and 5)
D: Elective deferrals to a section 401(k) cash or deferred arrangement .
E: Elective deferrals under a section 403(b) salary reduction arrangement
F: Elective deferrals and employer contributions (including non elective deferrals) to a section 408(k)(6) salary reduction SEP
G: Elective deferrals and employer contributions to a section 457(b) deferred compensation plan
H: Elective deferrals under a section 501(c)(18)(D) tax exempt organization plan
J: Nontaxable sick pay

K: 20% excise tax on excess golden parachute payments
L: Substantiated employee business expense reimbursements
M: Uncollected social security or RRTA tax on taxable cost of group-term life insurance over $50,000
N: Uncollected Medicare tax on taxable cost of group-term life insurance over $50,000
P: Exclude-able moving expense reimbursements paid directly to employee
Q: Nontaxable combat pay
R: Employer contributions to an Archer MSA
S: Employee salary reduction contributions under a section 408(p) SIMPLE

T: Adoption benefits
V: Income from the exercise of non statutory stock options
W: Employer contributions to an employee's Health Savings Account
Y: Deferrals under a section 409A non qualified deferred compensation plan
Z: Income under a section 409A on a non qualified deferred compensation plan
AA: Designated Roth contributions to a section 401(k) plan
BB: Designated Roth contributions to a section 403(b) salary reduction agreement
DD: Cost of employer-sponsored health coverage
EE: Designated Roth contributions under a governmental section 457(b) plan.
Forms W-2 provide information to your employees, social security, the IRS, and state and local governments.
Employers must file Form W-2 for wages paid to each employee from whom:

• Income, social security, or Medicare tax was withheld or
• Income tax would have been withheld if the employee had claimed no more than one withholding allowance or had not claimed exemption from withholding on Form W-4, Employee's Withholding Allowance Certificate.

Also, every employer engaged in a trade or business who pays remuneration for services performed by an employee, including non-cash payments, must file a Form W-2 for each employee even if the employee is related to the employer.
Form W-2C is filed to correct a previous Form W-2 submission. File a Form W-3C whenever you file a Form W-2C with Social Security, even if you are only filing Form W-2C to correct an employee's name or Social Security number (SSN).

What is IRS Form 1099-B?

Form 1099-B is an information return that the Internal Revenue Service requires to be filed for the gross proceeds of the sales of option shares in non-retirement accounts minus or including a contingent deferred sales charge (CDSC) and redemption fees.  Most commonly, mutual fund withdrawals and stock sales are reported with Form 1099-B.  However, several other stock related transactions should be reported on Form 1099-B.  Form 1099-B is not used however to report capital gains or losses.  The 1099-B information return is used to complete Schedule D on Form 1040 which requires the reporting of option shares.


Generally an employee's broker will complete the 1099-B after the sale of option shares and send it to the payment recipient.  The broker may choose to report the transaction amount including transaction fees or excluding transaction fees.  If the broker chooses to report the proceeds including transaction costs, the person receiving the 1099-B form should add the fees to their cost basis on their Schedule D.
IRS Form 1099-B consists of 3-pages with 2 forms per page.  Copy A is a red-ink form that the broker can paper file with the IRS.  Do not download Copy A from the Interal Revenue Service website and print and submit.  Even if your printer can print in a red-colored ink, it's not the same ink that the IRS uses to create Copy A.  The official printed version of the IRS form is scannable, but the online vrsion of it, printed from a website, is not. A penalty may be imposed for filing forms that can't be scanned. Copy B can be printed on plain paper with black ink and is sent to the recipient.  Copy C is retained by the broker.


For brokers, each recipient of option shares must receive a 1099-B.  The form must be sent by the broker to the payment recipient by January 31 of the year after the calendar year in which the transactions being reported occurred.
Form 1099-B must be paper filed to the IRS by the end of February along with Form 1096, Annual Summary and Transmittal of U.S. Information Returns.  If you file electronically, you have until the end of March.  You can go online and file for an extension taking the due date to the end of April if you need more time.
If the recipient of the proceeds is a nonresident alien, you may have to withhold federal income tax.