Many e-filing services provide TIN checking as an additional service to e-filing and paper filing. But what is the service? And is it necessary? Many of our customers ask these questions when they use eFile360 to file their 1099s and related forms for the first time. Most customers want to be informed before they complete their order while others are suspicious of add-ons in general. So we wanted to clear the air: TIN checking isn’t necessary to file your 1099s, but this service can save you a lot of headaches. What is a TIN? A TIN is a Taxpayer Identification Number. It is also called a “95-number” or “tax-ID” number. A TIN is an umbrella term that means the following: Social Security Number (SSN) Employer Identification Number (EIN) Individual Taxpayer Identification Number (ITIN) Adoption Taxpayer Identification Number (ATIN) Preparer Tax Identification Number (PTIN) Business owners typically use their EIN to file business taxes and their SSN to file their personal taxes, but this may differ based on your unique situation. When it comes to filing 1099s, 1098s, ACA forms, and W-2s, business owners need to know the TIN for each employee, freelancer, and independent contractor that works for them. Tip: While you may only need to file a form if you pay that employee or contractor $600 within a calendar year, it’s always best to document their TIN before they start working for you. This way, you know that you have their TIN on file way before tax season. What is the TIN Error Reconciliation Process? When it comes to tax reporting, it’s vital that all of the information you file is accurate – including the TINs of your employees and contractors. This is where the TIN error reconciliation process comes into play. This process is three-fold: Check your records Use a TIN checking service, which efile360 offers File Form 1095-C when you find TIN errors The first portion of this process involves you double-checking …
I Received A “B Notice.” Now What? + How To Avoid Them
To avoid receiving B Notices, it’s important to be proactive whenever you onboard a new non-employee. What Is A “B Notice”? A “B Notice” is part of the IRS’s Backup Withholding Program, which provides notices to payers (such as businesses) who file certain information returns with incorrect Taxpayer Identification Numbers (TINs), which includes Social Security Numbers (SSNs) and Employer Identification Numbers (EINs). These notices begin the backup withholding process. “Backup withholding” means withholding income tax from independent contractors or other non-employees. As a business owner, you receive the notice, but it is up to you to inform your independent contractor or other non-employee that they provided the wrong TIN number to you. The IRS cannot contact your contractor (the payee) because they have the wrong TIN number on file. What To Do With A B Notice When you inform the payee about this situation, you must do a few things: Send a copy of the B Notice to the payee and request that they fill out an updated W-9 form with their correct TIN and full name. It’s best if you provide them with the W-9 form. Begin withholding taxes immediately at the rate of 24% if: the IRS says the taxpayer ID is missing. you cannot find the payee. the payee refuses or fails to provide a TIN. the TIN is obviously incorrect (e.g. it’s not 9 digits). Double-check that the new W-9 form has a different TIN than the old form. At this point, the payee should send the W-9 to the IRS. If you receive a second B Notice, continue withholding income taxes. The payee is responsible for resolving the issue with the IRS directly. The IRS will inform you when the payee’s TIN has been corrected. At that point, you can stop withholding income taxes. What To Do After the TIN Is Updated After the matter is resolved, you need to pay the withheld taxes to the IRS, report them to the IRS using Form 945, and include the backup withholding …
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Staying accurate on your forms with TIN Checking
No-match letters are also known as “Employer Correction Requests,” and they are sent whenever there is an issue with TIN during filing. TIN numbers are an employee's social security number (SSN) or Employer Identification Number (EIN), information that is collected from the employee. The SSN has begun sending no-match letters to businesses after a seven-year hiatus from doing so. This means that you’ll want to be extra cautious in assuring that you’re accurate on TIN matching when filing taxes this year. Simple errors can lead to much larger problems. By carefully taking information from employees through W-2s during the onboarding process, this will help to smoothly file forms. It’s simple information, but sometimes human error causes slip-ups. Unfortunately, when it comes to the IRS, those simple flubs can bring about much bigger issues. When no-match letters are sent or you are alerted to TIN issues, this doesn’t always mean that you or an employee has done something incorrectly. But since the SSA reports information to government agencies, filing 1099 forms with the correct independent contractor data is crucial to fluidly file. Read more about the Reasonable Cause Regulations and Requirements for missing TINs from the IRS. How to prevent delays and potential penalties A service that can alert you to any TIN issues can also prevent serious problems related to government agencies like ICE. Throughout the tax filing process, small matters can lead to much bigger problems Benefits of e-filing delivery services Preventing errors related to TIN verification is easy when using an e-filing service. Reducing the risk of notifications from the IRS should be strongly considered when it comes to tax filing season. Luckily, there are simple methods for ensuring TIN accuracy when filing taxes. When filing electronically with eFile360, the TIN Checking box is simply marked, and a TIN check automatically runs when taxes are filed through the eFile360 …
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