Archive for November 2016

Urgent W-2 and 1099 filing changes for tax year 2016

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Congress recently enacted legislation changing W-2 and 1099-MISC filing dates for tax year 2016.

For this filing year, all W-2s and 1099-MISC forms need to be filed with the Social Security Administration before January 31, 2017.

In essence, the IRS and taxpayers will be on the same Jan. 31 schedule.

The purpose behind the tighter deadline is to allow the IRS to match W-2s and W-9s with tax returns as they’re filed to reduce tax fraud and identity theft. It’s a good change, but one that most employers are unaware of.

Previously, the filing deadline for W-2s with the SSA had been the last day in March, if filed electronically. But the IRS wasn’t very strict about that deadline.

In 2017, not only will the deadlines be enforced, there will also be a $250 penalty for each form that’s filed after Jan. 31, 2017. Keep in mind, if you have one W-2, you also have to issue one W-3, so that’s two $250 penalties.

Just a reminder—your employees have to fill out a W-4 form, and your contract service providers fill out a W-9. (If the contractor was paid less than $600 total, you don’t need to report it, unless they’re an attorney.)

With these new deadlines, it’s now more important than ever to be prepared by year-end for W-2 and 1099-MISC processing. Make sure you’re following these best practices:

  • Before paying any vendor, require them to complete Form W-9. Obtaining vendor information up front ensures you have their information during 1099 preparation.
  • Starting now and through December, review your vendor files to ensure you aren’t missing any data such as a legal name, address, employer identification numbers or Social Security numbers.
  • Review your employee files for missing addresses and Social Security numbers.
  • Request updated addresses from employees in December so W-2’s will be mailed to the correct address.
  • URGENT: If you don’t have W-9s for all your contractors, get them. This week.

I can’t stress how important it is to make sure you have complete and accurate W-9 and W-2 forms. That’s true every year, but the updated due date means you’ll need to have all your information together sooner than you may be used to. Those fines will add up quickly.

If you’re unsure of your paperwork, block our time this week to gather those forms from all your contractors and employees. Want to talk to someone about what you need to prepare? Give us a call; we’d be happy to help.

Changed business filing deadlines for 2016 tax returns

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In 2015, President Obama signed the Surface Transportation and Veterans Health Care Choice Improvement Act.

Given the title, it may be surprising that a bill primarily dealing with highway infrastructure funding has a large impact on tax returns (particularly business returns), but it does.

The new law changes deadlines for some businesses filing 2016 tax returns in 2017. The chart below shows a quick breakdown of who it affects and how.

The due date changes with the most impact will likely be those changes for Partnership tax returns (Form 1065) and C Corporation tax returns (Form 1020). Essentially, those due dates have swapped.

The significant reorganization of due dates is intended to assist individuals involved in pass-through entities in receiving information they need to prepare their individual returns in a more timely fashion.

These new dates might come as a surprise to unprepared businesses, but rest assured, we’ve got you covered. In fact, when filing deadlines approach each year and we haven’t heard from a client, we’ll go ahead and file an extension on their behalf. And there’s no downside to filing an extension.

If a company we file an extension for has gone out of business or chosen to file with another CPA, that extension won’t hurt them. But it does provide air cover if they’ve gotten a little behind or lost track of time.

That may not be standard practice, but we really do care about our clients. We do everything in our power to keep them from paying avoidable penalties!

If you need a tax preparer in your corner, call our office at 405-341-7044 to schedule a time to visit with us about your 2016 filings.