The year is quickly coming to an end, and businesses need to start preparing for a new tax deadline which goes into effect in 2017. Submitting government copies of Forms W-2 and 1099 must be done by January 31st. Previously, businesses could file as late as February 28th.
What it means for your business
Not only are businesses required to provide employees with Forms W-2, and contractors 1099 by January 31st, they must, also, now file the Federal Copy A (Forms W-2, 1099-R, and/or 1099 – MISC if appropriate) with the IRS and the Social Security Administration by January 31st as well.
Start Planning Now
December is the perfect time to ensure that employee and vendor files are updated to reflect address and name changes to avoid penalties.
Congress passed the Trade Preferences Extension Act of 2015 which included several tax provisions, among them was an increase in the penalty for failure to file information returns. The information returns impacted include Forms W-2, 1099 and the new Forms 1095-B and 1095-C required to report health insurance. The penalties for these forms are as follows for 2016:
- Failure to file an information return on or before the due date will result in a $530 penalty per return.
- Failure to include all required information or the inclusion of incorrect information will also result in a $250 penalty per return. The maximum amount that can be imposed during any calendar year is $3,193,000.
- The penalty will be reduced to $50 per return when the failures are corrected within 30 days. The maximum amount imposed for corrections within 30 days during any calendar year is $532,000.
Again, both the recipient copies of the information returns and the copies that go to the IRS are due by January 31st. If the number of information returns you are filing is greater than 250 for a specific type (W-2, 1099, 1095), you are required to file them electronically.
Affordable Care Act reporting:
The new filing deadline does not apply to the government copies of Forms 1094-B and 1094-C. These transmittals, along with copies of the employee forms, are due to the IRS February 28th if paper filed or by March 31st if filed electronically.
The IRS did, however, extend the deadline for furnishing Forms 1095-B and 1095-C to employees and covered individuals. The deadline for delivery of these forms was extended from January 31st to March 2nd.
A few other reminders to prepare for 2017:
- The social security wage base that is taxed at 6.2% will increase to $127,200 up from $118,500 for 2016.
- The annual maximum that can be contributed to 401(k) and 403(b) plans remains unchanged from 2016 at $18,000. The maximum catch-up contribution for participants age 50 or over remains the same at $6,000.
- The dollar limitation for contributions to §125 flexible health spending arrangements increased to $2,600.
For more information on the new filing deadlines contact your MarksNelson professional.