Monthly Archives: January 2018

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Reminder: Jan 31 Filing Deadline Now Applies to All Wage Statements and Independent Contractor Forms

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This went into effect last year, but it seems some folks missed that announcement, or thought it was only for last year, or just plain forgot. Because I’m getting a lot of surprised, blank stares when I remind folks that information returns are due by January 31st.

This most often refers to W-2 and 1099-MISC forms, because they report income and withholding to recipients, and the IRS needs this information to be able to accurately process (and computer-check) their individual returns that declare the income and withholding as part of their tax liability computations. The IRS hopes to catch folks in the first month of the filing season who misstate these items, and this way, they can compare the information submitted by payers to the information declared on returns by filers.

The application to extend these return due dates is no longer automatic.  There is a new address, and faxes will not be accepted anymore.

The IRS will only grant extensions for very specific reasons — such as: records being lost in a disaster; or, the person responsible for filing the returns has an unavoidable absence; or other inescapable scenario.

The best advice I can give for meeting this challenging deadline is:

  1. Do not pay anyone for services rendered, rent, royalties, or a settlement without first obtaining a signed W-9 form (or W-4 form in the case of an employee or household employee); this form is where they tell you whether they are incorporated or not (if they are, you do not need to send a 1099), and they give their address and tax ID number.
  2. Have your books reviewed by a professional accountant or bookkeeper each quarter. My staff accountant looks at our clients’ books for missing payee information, as well as folks that may be contractors for whom we do not have a W-9 already on file from the previous year. She reviews transactions in accounts that often have service providers’ activity tracked in them, such as: Repairs & Maintenance, Professional Services, Leasehold Improvements, Contracted Services, Legal & Accounting, Independent Contractors, Temporary Help, Cleaning, Payouts, Miscellaneous, and so on. That way we can have business owners inquire early-on for W-9 information (if they’ve forgotten to obtain it when payment was rendered).
  3. Order your 1099 forms early so they get to you on-time, if you’re preparing them yourself. If your accountant is preparing them, inform them asap that you’d like for them to do so, and reconcile your books as quickly as possible after the year-end.

Source: Reminder to Employers and Other Businesses: Jan. 31 Filing Deadline Now Applies to All Wage Statements and Independent Contractor Forms | Internal Revenue Service

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Tax Relief for Victims of Wildfires, Flooding, Mud and Debris Flows in California

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The IRS announced that victims of the recent federally-declared disasters in California counties of Los Angeles, San Diego, Santa Barbara and Ventura may qualify for tax relief. Per their recent news release:

The declaration permits the IRS to postpone certain deadlines for taxpayers who reside or have a business in the disaster area. For instance, certain deadlines falling on or after Dec. 4, 2017 and before April 30, 2018, are granted additional time to file through April 30, 2018. This includes 2017 individual income tax returns normally due on April 17, 2018. It also includes the fourth quarter estimated tax payment normally due on Jan. 16, 2018.

If an affected taxpayer receives a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment or deposit due date that falls within the postponement period, the taxpayer should call the telephone number on the notice to have the IRS abate the penalty.

The IRS automatically identifies taxpayers located in the covered disaster area and applies automatic filing and payment relief. But affected taxpayers who reside or have a business located outside the covered disaster area must call the IRS disaster hotline at 866-562-5227 to request this tax relief.

Source: Tax Relief for Victims of Wildfires, Flooding, Mudflows and Debris Flows in California | Internal Revenue Service

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IRS Urges Travelers Requiring Passports to Enter into Payment Agreements

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Signed into law in December 2015, the FAST Act requires the IRS to notify the State Department of taxpayers the IRS has certified as owing a “seriously delinquent” tax debt, and requires the State Department to deny their passport application or renewal of their passport. (In some cases, the State Department may revoke their passport entirely.)

Taxpayers affected by this law are those with a seriously delinquent tax debt — someone who owes the IRS more than $51,000 in back taxes, penalties and interest (indexed yearly for inflation) for which the IRS has filed a Notice of Federal Tax Lien and the period to challenge it has expired or the IRS has issued a levy.

Taxpayers can request a payment agreement with the IRS by filing Form 9465. Taxpayers can download this form from IRS.gov and mail it along with a tax return, bill or notice. Some taxpayers can use the online payment agreement to set up a monthly payment agreement for up to 72 months.

Some financially distressed taxpayers may qualify for an offer in compromise. This is an agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed. The IRS looks at the taxpayer’s income and assets to determine the taxpayer’s ability to pay. To help determine eligibility, use the Offer in Compromise Pre-Qualifier, a free online tool available on IRS.gov.

More here from the IRS newsroom: IRS Urges Travelers Requiring Passports to Pay Their Back Taxes or Enter into Payment Agreements; People Owing $51,000 or More Covered

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Updated 2018 Withholding Tables Available

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The IRS released Notice 1036 on January 11th, updating the income tax withholding tables for 2018 to reflect changes made by the recent tax law passage.

In the recent news release, the IRS states:

Employers should begin using the 2018 withholding tables as soon as possible, but not later than Feb. 15, 2018. They should continue to use the 2017 withholding tables until implementing the 2018 withholding tables.

The new withholding tables are designed to work with the Forms W-4 that workers have already filed with their employers to claim withholding allowances. This will minimize burden on taxpayers and employers. Employees do not have to do anything at this time.

The new tables reflect the increase in the standard deduction, repeal of personal exemptions and changes in tax rates and brackets.

To help people determine their withholding, the IRS is revising the withholding tax calculator on IRS.gov. The IRS anticipates this calculator should be available by the end of February. Taxpayers are encouraged to use the calculator to adjust their withholding once it is released.

The IRS is also working on revising the Form W-4. The calculator and new Form W-4 can be used by employees who wish to update their withholding in response to the new law or changes in their personal circumstances in 2018, and by workers starting a new job. Until a new Form W-4 is issued, employees and employers should continue to use the 2017 Form W-4.

For the full news release: Updated 2018 Withholding Tables Now Available; Taxpayers Could See Paycheck Changes by February | Internal Revenue Service

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IRS Extends Due Date to Issue Health Coverage Forms to Individuals

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Yet again, the IRS has extended the deadline for “insurers, self-insuring employers, other coverage providers, and applicable large employers to send out 1095 forms to individuals.”

They now have until March 2, 2018, to provide Forms 1095-B or 1095-C to individuals, which is a 30-day extension from the original due date of Jan. 31… This 30-day extension is automatic. Employers and providers don’t have to request it.

For individual taxpayers and the accountants that prepare their returns, this is pretty frustrating news. Those responsible for providing health insurance (insurance companies, self-insuring employers, and applicable large employers, etc.) are required by the ACA to furnish statements to employees and other covered individuals regarding the health care coverage offered to them. Individuals use this information to determine whether, for each month of the calendar year, they may claim the premium tax credit on their individual income tax returns.

Because accountants are required by law to confirm with their clients that they had insurance that meets the requirements of the mandate, not having Form 1095 in-time to prepare 2017 tax returns is a challenge. Therefore, the IRS has provided guidance indicating that other sources can be used to confirm coverage — such as insurance cards or bills — but obviously those documents don’t provide information on which months the taxpayer may not have had coverage, so relying on them or on a taxpayer’s memory of which months they are covered can be a costly mistake.

Source: IRS Extends Due Date for Employers and Providers to Issue Health Coverage Forms to Individuals in 2018 | Internal Revenue Service

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2018 Tax Season Begins Jan 29; Tax Returns Due Apr 17

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Big news — The IRS has finally announced the day they will begin accepting e-files: January 29th. And Tax Day is April 17th — making it a shorter-than-usual season, based on the number of days in-between.

Therefore, we encourage getting your books and tax prep docs together ahead-of-time, making fourth-quarter estimates based on these reconciled books, and getting in-line with your tax preparer asap, so as to avoid any bottlenecks. Your tax accountant can prepare your return ahead of the due date and simply check for new form updates the day filing opens — then your return will be one of the first in the queue.

More here: 2018 Tax Filing Season Begins Jan. 29, Tax Returns Due April 17; Help Available for Taxpayers | Internal Revenue Service