Heed These 2025 Federal Information Reporting Considerations
A Time and Place for Everything
By Mary C. Walsh
As the tax filing season looms, employers must ensure compliance with federal information reporting requirements, including payroll and payment reporting to the government, employees, and other income recipients. Most of forms are required to be electronically filed. In 2026, there are new requirements for reporting employee tips and overtime. This article provides details regarding these reporting obligations.
General Federal Year-end Information Return Filing Requirements for Forms W-2, W-3, and 1099 (INT, NEC, and MISC)
• Electronic filing is required if at least 10 of the following forms, combined, are required to be filed: W-2, 1094, 1095-B, 1095-C, 1097-BTC, 1098, 1098-C, 1098-E, 1098-Q, 1098T, 1099, 3921, 3922, 5498, 9027, W02G, and 499R-2/W-2PR. In some cases, electronic filing is given more time to file with the IRS than paper filing.
• Filing and due date information is set forth in IRS Publication 509, Tax Calendars for use in 2026 (www.irs.gov/pub/irs-pdf/p509.pdf). See also IRS Publication 1220, Specifications for Electronic Filing of Forms 1097, 1098, 1099, 3921, 3922, 5498, and W-2G, which sets forth electronic filing format specifications.
• Typically, due dates fall at the end of a month. However, if a due date is a weekend day or holiday, the next business day becomes the due date. Also, Congress or the president may specify a different due date, e.g., if there is an emergency. In 2026, Jan. 31 is a Saturday, making Feb. 2 the next business day, and Feb. 28 is a Saturday, making March 2 the next business day.
“For 2025, the IRS encourages employers to provide some accounting so employees can claim the deduction on their federal tax returns. The IRS has stated that employers may report the amounts of qualified tips and overtime to employees through secure methods, including an online portal or additional written statements provided to employees.”
Information Reporting Due Dates for 2026
• W-2, Wage and Tax Statement: File with Social Security Administration (SSA), electronic and paper, by Feb. 2. Provide to employees by Feb. 2.
• W-3, Transmittal of Wage and Tax Statements: File with SSA, electronic and paper, by Feb. 2.
• 1099-INT, Interest Income and 1099-DIV, Dividend Income: File with IRS, electronic, by March 31. File with IRS, paper (must be accompanied with IRS Form 1096, Annual Summary and Transmittal of U.S. Information Returns) by March 2. Provide to recipients by Feb. 2.
• 1099-NEC, Non-employee Compensation: File with IRS, electronic and paper, by Feb. 2. Provide to recipients by Feb. 2.
• 1099-MISC, Miscellaneous Income: Nothing reported in box 8 (substitute payments in lieu of dividends or interest) or box 9 (crop insurance proceeds): File with IRS, electronic, by March 31. File with IRS, paper (must be accompanied with IRS Form 1096, Annual Summary and Transmittal of U.S. Information Returns) by March 2. Provide to recipients by Feb. 2.
• 1099-MISC, Miscellaneous Income: Amount reported in box 8 (substitute payments in lieu of dividends or interest) or box 9 (crop insurance proceeds): File with IRS, electronic, by March 31. File with IRS, paper (must be accompanied with IRS Form 1096, Annual Summary and Transmittal of U.S. Information Returns), by March 2. Provide to recipients by Feb. 2.
Special Issue: Tips and Overtime
The One Big Beautiful Bill Act (OBBBA), enacted this past July, allows certain employees to deduct tips and overtime compensation. One area of uncertainty, affecting both employers and employees, regards 2025 payroll reporting for tips and overtime.
Under the OBBBA, from 2025 to 2028, certain employees who receive qualified tips may deduct up to $25,000 of those tips, and those who receive overtime pay may deduct up to $12,500 of qualified overtime compensation ($25,000 for joint filers).
To enable employees to report their deduction, the OBBBA requires employers to provide separate accounting of the total amount of cash tips and overtime. Employers failing to comply with these reporting requirements may be subject to penalties.
Although the IRS has released a draft version of Form W-2 for 2026 reflecting OBBBA changes, the 2025 version of the form will not be updated, creating a challenge for employer reporting compliance. As a result, for tax year 2025, the IRS announced that employers will not face penalties for failing to provide required tip and overtime accounting to employees (Notice 2025-62). This relief only applies to tax year 2025 because the IRS recognizes that employers might not have the information required to be reported.
For 2025, the IRS encourages employers to provide some accounting so employees can claim the deduction on their federal tax returns. The IRS has stated that employers may report the amounts of qualified tips and overtime to employees through secure methods, including an online portal or additional written statements provided to employees.
When reporting these amounts, employers should not stop at the maximum of $25,000 (tips) or $12,500 (overtime). The full amounts of qualified tips and overtime should be reported. It is up to employees to determine the maximum deductible amount when preparing their federal income tax returns.
With little authoritative guidance and difficulty getting full information from existing systems and payroll providers, employers must do their best in providing employees with this information. Employers could, for example, provide the information by separate letter or use W-2 Box 14 (Other). For the most current guidance (updated as issued), visit www.irs.gov/newsroom/one-big-beautiful-bill-provisions and click on “No tax on tips (Section 70201)” and “No tax on overtime (Section 70202).”
Massachusetts, Connecticut, Maine, Rhode Island, Vermont, and New Hampshire do not allow employees to deduct tips or overtime; thus, this reporting issue largely does not impact New England and New York payroll reporting.
Finally, remember that this article is intended to serve only as a general guideline. Your personal circumstances will likely require careful examination. You should schedule a meeting with your adviser to assist with all your tax planning needs.
Mary C. Walsh is a senior manager at Meyers Brothers Kalicka, P.C. She holds an MS accounting and an MBA from Northeastern University, an LLM in taxation from Boston University School of Law, a JD from the University of Connecticut School of Law, and a BA from UMass Amherst. She is a CPA licensed in Florida and an attorney licensed in Massachusetts. She is a member of CPAmerica and the American Institute of Certified Public Accountants.
