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IRS reminds employers, other businesses of Jan. 31 filing deadline for wage statements, independent contractor forms

IRS reminds employers, other businesses of Jan. 31 filing deadline for wage statements, independent contractor forms

WASHINGTON — The Internal Revenue Service today reminds employers and other businesses of the Jan. 31 filing deadline that applies to filing wage statements and independent contractor forms with the government.

The Protecting Americans from Tax Hikes (PATH) Act requires employers to file their copies of Form W-2, Wage and Tax Statement, and Form W-3, Transmittal of Wage and Tax Statements, with the Social Security Administration by Jan. 31. The Jan. 31 deadline also applies to certain Forms 1099-MISC, Miscellaneous Income, filed with the IRS to report non-employee compensation to independent contractors. Such payments are reported in box 7 of this form.

This deadline makes it easier for the IRS to verify income that individuals report on their tax returns and helps prevent fraud. Failure to file these forms correctly and timely may result in penalties. As always, the IRS urges employers and other businesses to take advantage of the accuracy, speed and convenience of filing these forms electronically.

An extension of time to file Forms W-2 is no longer automatic. The IRS will only grant extensions for specific reasons. Details can be found on the instructions for Form 8809, Application for Extension of Time to File Information Returns.

The IRS noted that some employers who ordered paper information and employer returns may not receive them in time to meet the Jan. 31 deadline and should consider an alternate source for these forms. The IRS is filling these orders as quickly as possible. Click here for more information.

For more information, read the instructions for Forms W-2 & W-3 and the Information Return Penalties page at IRS.gov.

THE simple DIFFERENCE BETWEEN WHO ARE EMPLOYEES AND WHO ARE INDEPENDENT CONTRACTORS

THE simple DIFFERENCE BETWEEN WHO ARE EMPLOYEES AND WHO ARE INDEPENDENT CONTRACTORS

It has been declared that with a recent court decision with a popular transportation company the differences between employment and contractor designations and their classifications are important because it determines if an employer must withhold income taxes, pay Social Security, Medicare and unemployment taxes on wages paid to an employee. Businesses “normally” do not have tax withholding on payments to “independent contractors”. This is because the 1099 recipients of 1099’s known as independent contractors are subject to self-employment taxes and are filed with their individual income taxes at year end. Classification errors can cause penalties and additional expense for business owners that had no basis to report as such and can create higher employer liabilities and accounting expenses for the mistake.

The rule is that an individual is an independent contractor if the payer can tell them what to do as a result of the work performed, not what will be done and how it will be done. Small businesses should look up online who is an employee as there are many free tools at our disposal Whether a worker is an independent contractor or employee depends on the facts with each situation. State law can sometime be different but is suggested to follow federal rule, as federal “Trump’s” state, as federal laws allows for the degree of control the employer controls over its workers, and the type of work performed.

In particular,

The organizations appropriate to direct and control the work performed by the specialist
Ideal to direct or control the budgetary and business parts of the laborer’s activity; and
Regardless of whether the work performed is a key part of the business.

Wage and Tax Statements due January 31

Wage and Tax Statements due January 31

The IRS reminds employers and other businesses that January 31 remains the filing deadline for wage statements and independent contractor forms.

Employers are required to file their copies of Form W-2, Wage and Tax Statement, and Form W-3, Transmittal of Wage and Tax Statements, with the Social Security Administration by January 31. Certain Forms 1099-MISC, Miscellaneous Income, filed with the IRS to report non-employee compensation to independent contractors, are also due at this time.

Visit IRS.gov and read the instructions for Forms W-2 & W-3 and the Information Return Penalties page for more information.

Not too early: Here are steps to get ready to file their taxes in 2019

Not too early: Here are steps taxpayers can take now
to get ready to file their taxes in 2019

The IRS reminds taxpayers there are steps they can take now to make sure their tax filing experience goes smoothly next year. Taking these steps will also help them avoid surprises when they file next year.

To help get people the information they need, the IRS just updated a special page on IRS.gov with steps to take now for the 2019 tax filing season.

Check withholding – do a Paycheck Checkup soon
Since employees typically only have one or two pay dates left this year, checking withholding soon is especially important. Because of the many changes in the tax law, refunds may be different than prior years for some taxpayers. Some may even owe an unexpected tax bill when they file their 2018 tax return next year. To avoid these kind of surprises, taxpayers should do a Paycheck Checkup to help them decide if they need to adjust their withholding or make estimated or more tax payments now.

Gather documents
The IRS urges all taxpayers to file a complete and accurate tax return by making sure they have all the needed documents before they file their return. This includes their 2017 tax return and:

Year-end Forms W-2 from employers,
Forms 1099 from banks and other payers and
Forms 1095-A from the Marketplace for those claiming the premium tax credit.

Taxpayers should confirm that each employer, bank or other payer has a current mailing address or email address. Typically, these forms start arriving by mail – or are available online – in January. Check them over carefully, and if any of the information shown is inaccurate, the taxpayer should contact the payer right away for a correction.

Taxpayers should keep a copy of any filed tax return and all supporting documents for at least three years. Also, taxpayers using a software product for the first time may need the adjusted gross income amount from their 2017 return to properly e-file their 2018 return.

Choose e-file and direct deposit for a faster refund
Electronically filing a tax return is the most accurate way to prepare and file. Errors delay refunds, and the easiest way to avoid them is to e-file. Using tax preparation software is the best and simplest way to file a complete and accurate tax return. The software guides taxpayers through the process and does all the math. Combining direct deposit with electronic filing is the fastest way for a taxpayer to get their refund. With direct deposit, a refund goes directly into a taxpayer’s bank account. They don’t need to worry about a lost, stolen or undeliverable refund check.

Filing extensions for Forms W-2 and 1099-MISC are not automatically approved

Filing extensions for Forms W-2 and 1099-MISC are not automatically approved

Treasury Decision 9838, Extension of Time to File Certain Information Returns (found in Internal Revenue Bulletin 2018-34), is the final ruling and clarifies that extension requests for Forms W-2 and 1099-MISC will not be automatically approved.

Requests for extensions must meet specified criteria and be requested on Form 8809, Application for Extension of Time to File Information Returns, before the January 31 deadline to file. This will deter identity theft and refund fraud. Requests for extensions of the filing deadline have no effect on the deadline to furnish forms to recipients.

The IRS will create a revised Form 8809 for the 2019 filing season that will provide checkboxes for employers to show the reasons they’re asking for an extensions.

Stay tuned to e-News for Payroll Professionals for an announcement of the revised Form 8809 expected sometime in late fall of 2018.

A summer job in sharing economy may affect taxes

A summer job in sharing economy may affect taxes

A college student wanting to do something other than wait tables. A teacher needing to make a little extra money. A family wanting to rent out their home while they’re on vacation. These are just a few examples of taxpayers making money from the sharing economy who should consider how this income affects their taxes.

Here are some key things for taxpayers to know about participating in the sharing economy:

Taxes. Sharing economy activity is generally taxable, including

Part-time work
A side business
Cash payments received
Income stated on a 1099 or W-2

Rentals. Special rules apply to a taxpayer who rents out a home or apartment, but who also lives in it during the year.

Withholding. Taxpayers involved in the sharing economy as an employee might want to review their withholding from that job and any other jobs they might have. They can often avoid making estimated tax payments by having more tax withheld from their regular paychecks. These taxpayers can file Form W-4 with their employer to request additional withholding. They can also use the Withholding Calculator on IRS.gov. This tool helps them check if they’re having too much or too little tax withheld from their income.

Estimated Payments. Taxpayers can pay as they go, so they don’t owe. One way that taxpayers can cover the tax they owe is to make estimated tax payments during the year. These payments can help cover their tax obligation. Taxpayers use Form 1040-ES to figure these payments.

Payment Options. The fastest and easiest way to make estimated tax payments is through IRS Direct Pay. Taxpayers can also use the Treasury Department’s Electronic Federal Tax Payment System.

Tax Reform: Changes to Depreciation Affect Businesses Now

Tax Reform: Changes to Depreciation Affect Businesses Now

As employers across the country celebrate National Small Business Week, the IRS reminds businesses that the passage of the Tax Cuts and Jobs Act may affect their depreciation deductions and taxes.

Business taxpayers can generally depreciate tangible property except land, including buildings, machinery, vehicles, furniture and equipment.

Changes to depreciation and how they will affect businesses may include:

Businesses can immediately expense more under the new law; taxpayers may elect to expense the cost of any property and deduct it in the year the property is placed in service.
Maximum deduction increased from $500,000 to $1 million.
The phase-out threshold increased from $2 million to $2.5 million.
The new law allows taxpayers to elect to include improvements made to nonresidential property. The improvements must have been made after the date the property was first placed in service.

These improvements include:

Any improvement to a building’s interior
Roofs
Heating and air conditioning systems
Fire protection systems
Alarm and security systems

Improvements that do not qualify:

Enlargement of the building
Service to elevators or escalators
Internal structural framework of the building

These changes apply to property placed in service in taxable years beginning after December 31, 2017.

For Small Business Week, IRS highlights key business tax topics

For Small Business Week, IRS highlights key business tax topics

WASHINGTON — In recognition of National Small Business Week, April 29 to May 5, the Internal Revenue Service is highlighting several resources to help small business owners and self-employed individuals understand and meet their tax obligations. The new tax law changes enacted in December 2017 make it especially important for these groups to know about new provisions affecting them.

During this week, the IRS will highlight various products including:

A series of news releases on various topics including the sharing economy, home office deduction, cybersecurity and the Work Opportunity Tax Credit.
Tax tips about business provisions under the new tax reform law. Topics will include tax law changes to depreciation rules and the employer credit for family and medical leave and how it benefits employers. Tax tips are written in plain language and can be subscribed to using the IRS’s Tax Tips email-subscription program.
Information for small businesses is also available through IRS social media channels including tax tips and other resources. Stay informed following the hashtag #IRSsmallbiz and help us spread these messages by sharing the @IRSnews, @IRSTaxPros and @IRSenEspanol tweets.

Other small business resources

The IRS encourages business owners to check out other webinars on the IRS video portal. The portal has presentations on a variety of small business topics. Business owners may also be interested in these sites:

Small Business and Self-Employed Tax Center — an online resource featuring links to a variety of useful tools, including Small Business Taxes: The Virtual Workshop, a downloadable tax calendar and common forms with instructions. The Center provides help on everything from how to get an Employer Identification Number online to information and tips about IRS audits.
Self-Employed Individual Tax Center — a resource for sole proprietors and others who are in business for themselves. This site has many useful tips and references to tax rules a self-employed person may need to know.
IRS YouTube Video Channel — watch videos for small businesses on the Small Business playlist.
Online Learning and Educational Products — a page with tools to help taxpayers learn about taxes on their own time and at their own pace. For example, the IRS Tax Calendar for Businesses and Self-Employed has important tax dates for businesses.
E-News for Small Businesses — a free electronic mail service that offers tax information for small business owners and self-employed individuals, including reminders, tips and special announcements.

More information

Major tax reform was approved by Congress in the Tax Cuts and Jobs Act (TCJA) on December 22, 2017. The IRS has been working to implement its provisions and give information and guidance to taxpayers, businesses and the tax community as it becomes available.

IRS Uses YouTube to Provide Tax Information to Small Business Owners

IRS Uses YouTube to Provide Tax Information to Small Business Owners

During National Small Business Week – and any time of the year – small business owners can visit the IRS channel to watch a series of videos that can help them navigate tax topics that affect their business.

The small business playlist on the official IRS YouTube channel features several videos that might be short, but that pack in a lot of helpful information. The videos walk business owners through topics such as:

Estimated Taxes – covers who needs to make quarterly estimated tax payments and how people can make them.
Some Taxpayers Can File their Employment Taxes Annually – discusses when and how to report to the IRS employment taxes withheld from employee paychecks.
How to Voluntarily Correct the Classification of Your Workers – covers how to reclassify workers as employees who were initially considered independent contractors.
Your Taxes in the Sharing Economy – reviews the tax responsibilities of people who participate in the gig economy, including people who use an app or website to rent out a spare room or offer rides in their car.

YouTube is just one social media website the IRS uses to share important information about taxes. Visit the Social Media page on IRS.gov to connect with the IRS through other sites and apps.

Share this tip on social media — #IRSTaxTip:IRS Uses YouTube to Provide Tax Information to Small Business Owners. https://go.usa.gov/xQKek

Small Business Week Webcasts for Employers and Self-Employed Individuals

Small Business Week Webcasts for Employers and Self-Employed Individuals

The IRS is hosting daily webcasts during National Small Business Week through Friday May 5. The presentations are geared for small business owners and self-employed individuals to help them navigate common tax situations.

Each day’s topic is covered in two 30-minute sessions each day. The first begins at 11 am EST, with the second at 1 pm. Closed Captioning will be available only during session two.

Here are the topics for the rest of this week along with registration information:

May 1: Employee vs. Independent Contractor
Explains the difference between a common-law employee and an independent contractor, a situation frequently encountered by small businesses.
Register for Session 1
Register for Session 2

May 2: Pay Now? Pay Later? Can’t Pay?
This webcast will discuss IRS payment options.
Register for Session 1
Register for Session 2

May 3 – Small Business Resources
Learn how to find information quickly using the IRS Small Business and Self-Employed Tax Center.
Register for Session 1
Register for Session 2

May 4 – Paycheck Checkup
The Tax Cuts and Jobs Act of 2017 could affect how much tax someone should have their employer withhold from their paycheck. Speakers will discuss who should perform a Paycheck Checkup.
Register for Session 1
Register for Session 2

Continuing education credit is not offered for these webcasts. Those with questions can email them to: SBSE.SL.Web.Conference.Team@irs.gov

Share this tip on social media — #IRSTaxTip: Small Business Week Webcasts for Employers and Self-Employed Individuals. https://go.usa.gov/xQkfZ