Welcome back, to the next installment of our Coffee Break Blog Series! Grab your cup of joe, and let’s dive right in.
When it comes to tax season and IRS compliance in general, there are many moving parts and it can be a struggle to pin them all down. This is why TaxBandits has data validations built into the filing process, so you can file with confidence and avoid the common errors that result in rejected forms.
So, here is your espresso shot of information – a speedy overview of the data validations available from TaxBandits!
Pain Points of Traditional Tax Filing
Businesses often face common errors and inaccuracies during form preparation, including data entry mistakes, miscalculations, missing information, or incomplete forms. These issues not only compromise the accuracy of financial records but also have serious consequences for compliance and filings. Failing to address these inaccuracies promptly can lead to penalties, processing delays, and potential legal issues.
Businesses need to recognize and rectify these pitfalls in their form preparation processes to ensure compliance and the smooth operation of their financial activities.
TaxBandits’ goal is to help you capture these errors before forms are transmitted, saving you time, energy, and the risk of potential IRS penalties.
Steeping Correct Information using IRS Business Rules
The validation process begins when you start filing a form or bulk upload a file with form information. If there is missing information that is required, our system will identify it.
If you are in the manual filing process, you won’t be able to move to the next step of the form until the missing information or information that doesn’t fit with the IRS rules is resolved. Don’t worry, there is help text available to help you understand why the information needs to be added or recalculated.
When you bulk upload a file, any recipient records that don’t pass this validation will be shown as a “record(s) with errors”. You can either continue filing the accurate records and come back to resolve these later or you can export, correct, and upload these records before moving forward with any records. When you export the file containing the errored records, you will be able to see why each error occurred, making it easier to correct them.
TIN Matching Adds a Shot of Accuracy
Whether you’re a business owner or a tax preparer, you or your clients may need to file 1099s for anyone they engaged in business with throughout the year. It might be necessary to submit a 1099 Form to report payments made during these engagements.
It is best practice to request a Form W-9 from every new business or individual that you/your clients do business with. This form is a secure method of collecting the vendor’s TIN Number. This is the taxpayer identification number, usually an SSN for an individual, or an EIN for a business.
Without the TIN, it is impossible to file a 1099 form successfully. Even when businesses do collect a TIN from their vendors, there is always a chance that there is an error. Unfortunately, the business won’t realize this until the form is filed and processed by the IRS – this is why TIN Matching is so important!
TaxBandits validates the TIN your vendor provides and verifies that it matches what the IRS has in its database. If the TIN is verified, you’re good to file! If not, you can reach out to the vendor, get their correct TIN, and re-submit it for Matching.
Infusing Additional Filing Requirements – State Alerts
TaxBandits also helps ensure that you are aware of additional filing requirements with your state. State alerts are built-in to the filing process as well to give you a heads up about the 1099/W-2 requirements for your state and whether or not you are meeting them with TaxBandits. While these are meant to be helpful, you do have the option to decline the alerts and tackle state filing on your own as needed.
Orders Up! USPS Address Validations
TaxBandits also validates the addresses you provide for your employees and recipients to ensure that forms are mailed to a verified address. This ensures that all of your recipient copies end up where they need to go.
Postal Mailing services are another great benefit of TaxBandits, we can distribute any volume of forms from a secure, SOC 2 Certified printing location. Plus, we mask your recipient’s PII (personally identifiable information) for added security.
There you have it, a complete overview of validations from TaxBandits!
If you haven’t already, check out our last blog here to learn more about bringing your data into TaxBandits.
Keep an eye out for the next blog in our series, where we will share more tips for brewing accurate forms and serving them up to the IRS/SSA on time!