New Deadlines for Forms W-2 and 1099-MISC – Earlier Filing in 2017

2017 Deadlines

Tax filing dates for 2016 Forms W-2 and 1099 has changed. The latest notification from IRS states that the filing deadline for 2016 W-2 and 1099 forms (incl. Form 1099-MISC) is January 31st, 2017. Evidently, this is a month earlier than the filing date of last year.  But, this doesn’t change the deadline for furnishing W-2 forms to employees and 1099-MISC to other workers for 2016. Also, the dates for E-Filing and paper filing remain the same.

“Many states in the US are now using earlier filing dates to cut down on tax fraud and identity theft.” – Bloomberg BNA

IRS has also revised and increased the penalties associated –

  1. With late filing;
  2. Filing with incorrect forms by the due dates;
  3. Intentional disregard for filing requirements;
  4. Failing to furnish W-2s to the employees.

January 2017 –Month for Annual Payroll Tax Reports

All the related payroll tax reports viz; – Annual wage and tax reports, unemployment tax reports and Form 941 are due on January 31, 2017

Furnishing of W-2 Forms and 1099-MISC Forms to your Employees and Contractors

Employers are also supposed to hand-over annual wage and tax reports to their respective employees and contractors who have rendered their services in the year 2015. These tax reports are nothing but W-2s for employees and 1099-MISC for contractors.

W-2 Forms to SSA and 1099-MISC forms to IRS

  • Submit transmittal forms for W-2s to the Social Security Administration by January 31, 2017. That’s Form W-3, along with all W-2s and Form 1096, along with all 1099 forms. This deadline includes forms filed electronically.
  • Submit transmittal forms for 1099s to the IRS by January 31, 2017.

Automatic Social Security Extension?  Well, not anymore…

Formerly provision for extension of time with filing the Form W-2 with social security administration (SSA) was there, it has changed now. To get an extension now you have to explicitly fill out Form 8809 which is a request for an extension in filing time. The application requesting extension should also include a detailed explanation for the reasons of extension. The IRS is very selective in granting the extension and once granted it won’t be for more than a month. As per IRS guidelines extensions will only be granted under special circumstances and not to everyone.

Unemployment tax forms: 

  • The monthly payment on federal unemployment (FUTA) taxes is due January 31, 2017
  • Federal Unemployment Tax Report for 2016 is due January 31, 2017

Form 941 – Quarterly Federal Tax Form is due on or before January 31, 2017.

For a more detailed info, check  https://www.irs.gov/pub/irs-pdf/iw2w3.pdf.

10 Tips on how to Amend your Tax Returns and Fix Filing Errors

Amend your Tax Returns

Worried and Flummoxed over errors in filing your tax returns with the IRS. Don’t be. You can still go ahead and amend your returns. Below are top 10 tips from the IRS that you can do to amend your tax returns –

  1. Do you really need to amend and when? – You should amend your tax return if there were errors in the filing information: viz- Total earnings, income related information, information regarding non-earning members etc. Amendments should also be filed with the IRS to claim tax credits, deductions which the filer might have missed during original return filing. Refer Form 1040X from the IRS; it showcases many other reasons that are eligible for amendments. 
  1. You should not file an amendment – This is why? – If you have committed calculation mistake, in most cases don’t worry – IRS will take care of the incorrect math part. Also, if for filing you have used incorrect forms or time periods – IRS will send you the intimation with the correction required.
  1. Which Form should you use for filing? – You should use Form 1040X to make amendments on the federal tax return that you filed earlier. While doing so, be sure to mark the appropriate year at the very top of the Form denoting the year of the amendment. Also, please note that you cannot e-File 1040X amendments; you could fill in the Form paper and send it to IRS by mail. 
  1. Amendments for more than one year – If you are making amendments to more than one year of tax information filing, be sure to use separate Forms for each year and mail them individually to the IRS for processing. 
  1. Form 1040X – What is it anyways? – Form 1040X has three columns namely A, B, and C each serving specific purposes. While column A is used to mark the original return value that was incorrect, column B is used to denote clearly the net increase or decrease of the amount. And finally, column C is used to show the new/corrected amount. 
  1. What about other Forms and Schedules? – Simply put, if your changes involve other Forms and Schedules, please attach those Forms along with Form 1040X at the time of filing the amendments. If you miss out attaching, it would result in processing delays. 
  1. Waiting for the refund from original tax return? – This is what you should do – For all the cases of additional refund which is based on the amendment of the original returns filing, please wait till you receive the original refund. You may no doubt go ahead and cash the original refund check. 
  1. I have additional tax to pay – Post amendment – How to do it? – If you have additional taxes to pay to the IRS based on the original return amendments, it is highly advised that you file in Form 1040X and pay away the additional amount as soon as possible. It would wave off any accruing interests or penalty. 
  1. When is the best to file for a refund? – You should file Form 1040X within three years’ from the date of original tax filing if you want to claim a refund or within two years from the date of paying your taxes. 
  1. I did make amendments – But I don’t know what happened – For tracking information about your amended tax returns – you may use the tool from IRS (Where’s my Amended Return?) You may also call up at 866-464-2050 and know the status telephonically.

 You may also call 800.444.9922 (toll-free) or email us at support@checkmark.com if you have queries, we would be more than happy to help you.

IRS – ACA Information Returns May Continue To Be Filed After June 30, 2016

ACA Information Returns

As per the deadline given by the IRS – for all Applicable Large Employer (ALE) and Self-Insured Employer, the last date for e-filing ACA information returns is midnight June 30, 2016.

For all those who couldn’t submit the information by June 30, 2016, it is important for them to know the following –

  • The AIR system will continue to run as usual even after June 30, 2016, and the filer can still go ahead and file the ACA information returns. You may also carry out system testing after June 30, 2016 – if there was any legitimate error.
  • For all rejections in the process of filing information returns with the AIR, the submitter has 60 days from the day of rejection to resubmit and their rejected submission will be treated as timely filed. It means that there won’t be any penalties associated with resubmission of the information returns.
  • For all the submitters who received “Accepted with Errors” message, they can still go ahead and submit after June 30, 2016.

News release from IRS (June 30, 2016) –

The IRS is aware that some filers are still in the process of completing their 2015 tax year filings. As is the case for other information returns, penalties may be associated with the submission of the ACA information returns for failure to timely file required returns. As the IRS has publicly stated in various forums in recent months, filers of Forms 1094-B, 1095-B, 1094-C and 1095-C that miss the June 30, 2016, due date will not generally be assessed late filing penalties under section 6721 if the reporting entity has made legitimate efforts to register with the AIR system and to file its information returns, and it continues to make such efforts and completes the process as soon as possible. In addition, consistent with existing information reporting rules, filers that are assessed penalties may still meet the criteria for a reasonable cause waiver from the penalties.

It simply means that those who have missed filing ACA information returns by June 30, 2016, can still go ahead with their respective filing but would be liable for penalties.
Filers who genuinely tried to submit their information returns with the AIR system and it ended in “Accepted with Errors” will not be liable to any penalty. Additionally, filers with reasonable cause for failing to submit information returns within Jun 30, 2016, will get a waiver in their respective penalty.

IRS has also, on many of its forums and news channels, emphasized on paper filers who have missed May 31, 2016, for filing their returns and to complete their proceedings as soon as possible.

For more information and an expert voice on this, please feel free to write to us at support (at) checkmark.com or call us toll-free at 800.444.9922

Health Insurance Providers Must Report Certain Information to the IRS and Covered Individuals

Health Insurance Providers

With the new directives from the IRS, providers of minimum essential coverage are required to report certain information not only to the individual about their health coverage but also to the IRS, starting 2016.

To stay in-line with the individual shared responsibility criteria Taxpayers use the information stated in Form 1095-B, Health Coverage Information Return Form 1095-C, Employer-sponsored health offer and coverage whenever they file their tax returns. IRS would use this information to ascertain the number of months the individual has health coverage.

Self-insured group health plans details are to be reported by the Employers individually to the IRS. This would include all employers of any workforce size who are sponsoring a self-insured group health plan. Employers falling in the category of ALE (Applicable Large Employer) are supposed to file Form 1094-C and Form 1095-C for transmittal of employer-sponsored health insurance coverage information returns and for reporting information of the employees who got enrolled in the employer-sponsored health coverage plan. Employers not falling in the category of ALE are not supposed to file Form 1094-C and Form 1095-C but are supposed to file Form 1094-B and Form 1095-B for the same purposes to the IRS. The deadlines for 2015 filing are February 29, 2016, for manual filing with the IRS and March 31 for Electronic filing.

Apart from this, any other entity that provides the essential coverage will file Form 1094-B and form 1095-B. For all such categories, the deadline for filing the forms with the IRS are February 29, 2016, and March 31, 2016, for manual and electronic filing respectively. To make things further clear the filed form must include name and identification number of the taxpayer. It should also clearly describe the details of the months for which the individual was covered.

Health coverage providers should also send out the Form 1095-B to the responsible individual. IRS defines a responsible individual as the one who enrolls one or more individuals into the coverage program.

To know more information, please read the deadlines for 1095 filing for the year 2016.

New E-Mail Phishing Scheme Targeting Large Organizations Exposed

phishing scheme

Since a lot of phishing schemes are exposed every now and then by IRS and other concerned government departments, hackers, and cyber criminals are finding new and innovative ways of committing fraud. The latest phishing scheme, which is specially targeted towards large organization, works something like this:

One of the employees responsible for finances in the organization receives an email from higher management directing them to immediately wire funds to a certain client for their services. The employee will release the funds normally without any doubt. Eide Bailey, one of the most reputed tax accountant and CPA firms, admits several cases has been reported where the email recipients have routinely processed the funds to the hacker’s account without any uncertainty or hesitation.

However, you will be thinking how the perpetrators are able to create an email ID of the organization and that to of a higher management and supervisors. The truth is hackers are clever and smart enough to successfully exploit the power of Typoglycemia, which was recently neologized by the Cambridge University.  The study says that the mind will be able to read the words as long as the first and last letters remain the same. The cybercriminals have used this trick to their fullest potential in order to commit the employees in transferring the funds without an iota of doubt.

Accordingly, they create an email ID, which resembles to be a legitimate one, but upon the closer review, the email address will have one different single character and the font will be changed to make it appear to look similar. In addition, the email will have the same signature, organization logos and contact information to ensure that the employees are committed to releasing the funds to their accounts.

Below is an appropriate example from Eide Baily:

Real@eidebailly.com vs. Fake@eidebailIy.com

The first web address is undoubtedly correct but the second web address is the fake one wherein the last L character has been deliberately changed to I. Even the font has been changed to hide the character change and believe me or not, it appears real and legitimate email address. This is how they are able to commit the fraud and get away with a large amount of money.

How to Recognize Phishing Email Messages

  • Email address will be slightly different. Check carefully for any character change or an extra letter
  • Signature will be different from the standard signature of the organization
  • There will be misspelling and typos in the body of the email
  • There will be a request to release the fund “immediately” or “urgent”
  • There will be request to provide sensitive information such as usernames, account numbers, and passwords

Tips for Protecting your Organization

  • Immediately educate your employees especially accounting and technology department about this phishing scam
  • Revise the procedures and policies about releasing the payments for any management officials whether it is CEO, CFO, CMO or CTO
  • Any email with urgent payment release request should be verified with higher officials
  • Create a double verification process for releasing payments for new vendors
  • Verify the department by calling them over the phone. Don’t use the phone number furnished in the email, instead, search your organization’s directory
  • Create a filter to flag the emails, which arrive from outside of the network
  • Any payment releasing request should be verified from higher management via email. Don’t reply to the same email, instead, send a new email
  • Change the default email system fonts so that there should be clear difference between every character
  • Notify the IT or concerned department if you receive any suspicious emails

CheckMark encourages you to proceed cautiously when you receive any suspicious emails from external networks. The above-mentioned simple steps will not only reduce the risk of falling victim to a number of different phishing scams but also helps the organization from losing money. In case, if you have been a victim of a phishing scam, notify your bank and contact your local police immediately.

Lately, IRS warned of a new email phishing scheme falsely claiming to be from the taxpayer advocate service, which is a legitimate organization working under IRS to help taxpayers resolve their federal tax issues. The email contained false case number and the recipients were persuaded to click the links in the email and solicit their personal information. Here a list of dozen scams highlighted by IRS way back in 2014.

As a reputed solution provider in the world of finance technology (FinTech), CheckMark always ensures our applications and software are invulnerable and safe from any kind of data hack or cyber-attacks. We feel it’s our moral responsibility to make organizations aware of current phishing schemes that could target them any day if they are unprepared.

IRS Announced 2016 Standard Mileage Rates for Business, Medical and Moving

standard mileage rates

It’s here – standard mileage rates for deductible costs of using automobiles for business, medical, moving and charitable purposes. IRS announced the standard mileage rates for the year 2016.

To be brought to practice from Jan. 1, 2016, the standard mileage rates will be:

  • 54 cents per mile for business purpose drives, it is 57.5 cents in 2015
  • 19 cents per mile for medical or moving purpose drives, it is 23 cents 2015
  • 14 cents per mile for any charitable organizations drive

As clearly seen the mileage rate has decreased by 3.5 cents for business and 4 cents for moving and medical purpose drives in comparison to 2015.

IRS furthers makes clear that the standard mileage rate for business purpose drives is based on the fixed and variable costs in operating an automobile. This is in contrast to the medical and moving purpose where the mileage rate is purely based on the variable cost.

Even though these rates and their usage is well defined, Taxpayers can use the actual costs in using their automobile rather than the standard mileage rates.

If the Taxpayer has used Modified Accelerated Cost Recovery System (MACRS) or even by claiming Section 179 deduction as a depreciation method, he may not use business standard mileage. Also, as per IRS guidelines, business standard mileage rate should not be used if more than 4 vehicles are used at one time.

Other details of the standard mileage are available in IRS  website.