Is Your Business Prepared for the New 2017 Filing Deadlines For W-2 and 1099 Forms?

A reminder to employers and small businesses of the new January 31 filing deadline for Form W-2. A new federal law, aimed at making it easier for the IRS to detect and prevent refund fraud, will accelerate by a month the W-2 filing deadline for employers from February 28 to January 31.

The Protecting Americans from Tax Hikes (PATH) Act, enacted last December, includes a new requirement for employers. They are now required to file their copies of Form W-2, submitted to the Social Security Administration, by January 31. The new January 31 filing deadline also applies to certain Forms 1099-MISC reporting non-employee compensation such as payments to independent contractors. As it relates to Form 1099-MISC, the new filing deadline will only impact filers that report nonemployee compensation payments in box 7.

In the past, employers typically had until the end of February, if filing on paper, or the end of March, if filing electronically, to submit their copies of these forms. Also, there are changes in requesting an extension to file the Form W-2. Only one 30-day extension to file Form W-2 is available, and this extension is not automatic. If an extension is needed, a Form 8809 Application for Extension of Time to File Information Returns must be completed as soon as you know an extension is necessary, but by no later than January 31.

The new accelerated deadline is intended to help the IRS improve its efforts to spot errors on taxpayer filed returns. Receiving W-2s and 1099s earlier will make it easier for the IRS to verify the legitimacy of tax returns and properly issue refunds to taxpayers eligible to receive them. According to, the IRS it will make it easier to release tax refunds more quickly.

The January 31 deadline remains unchanged and has long applied to employers furnishing copies of these forms to their employees. We anticipate the new deadline will increase your businesses workload. To minimize stress, we recommend the following steps:

• Verify your employee filing status and confirm their mailing addresses before December 31, 2016.
• Verify form W-9 information (for your 1099-Misc contractors) is completely up-to-date and accurate.
• Collect all the necessary information to ensure your forms are “good-to-go” on or about Monday, January 2, 2017.

The professionals in our office can answer any questions you may have about the new filing deadlines and how they will impact your business, call us today at 858.481.7702

Taxpayers rejoice – after years of advocating for change, congress has finally passed legislation that modifies the deadlines of several common tax returns. The new due dates will go into effect for the 2017 Tax Filing Season (Tax year 2016). Many of our Law Firm clients will be positively affected by these changes.

The new dates have been a long time coming for taxpayers who have struggled to file accurate returns in a timely manner. Their tax advisors would often miss deadlines when forms (such as Schedules K-1,) would arrive behind schedule. The illogical flow of information not only impacted the punctuality but also the accuracy of returns. Tax advisors would often resort to using estimates because information from a flow through business was not available before the taxpayer’s income tax return was due.

With the modified dates, it is expected that owners of partnerships will be able to file their tax returns without requesting an extension. Below is a summary of the changes.

Calendar Year Businesses

For tax years that begin after December 31, 2015, returns of calendar year

• C corporations will be due April 15 rather than March 15
• partnerships will be due March 15 rather than April 15
• S corporations will continue to be due March 15

Fiscal Year Businesses

• Most C corporations returns are due on the fifteenth day of the fourth month following the end of their fiscal year
• S corporations and partnerships due on the fifteenth day of the third month
• Exceptions for C Corps with a fiscal year ending on June 30 – changes are delayed until the first taxable year beginning after December 31, 2025.

The new law also modifies the time allowed for extension of time to file for the following returns:

For calendar year taxpayers

• Form 1065: Six month period ending on September 15
• Form 1041: Five and a half month period ending on September 30
• Form 5500: Automatic three and a half month period ending on November 15

There may be initial pushback, but looking at the bigger picture the new filing and extension dates will improve the flow of information for both advisors and clients.

If you have questions about the new tax return due date changes, please contact one of our professionals today.

The Internal Revenue Service (IRS) has released the annual contribution limitations for health savings accounts (HSAs) and the minimum deductible amounts and maximum out-of-pocket expense amounts for high-deductible health plans. These limitations are updated annually to reflect cost-of-living adjustments. Business owners should inform employees of the HSA contribution limits increase for 2017.

Employers commonly offer employees HSA contributions as part of their healthcare benefit packages. HSAs are a popular option because of its dual purpose. Employees can utilize HSAs to save for the future or pay for qualified medical expenses tax free.

Under Sec. 223 of Rev. Proc. 2016-28, individuals who participate in a health plan with a high deductible are permitted a deduction for contributions to HSAs set up to help pay their medical expenses. To be eligible to contribute to an HSA you must participate in a high deductible health plan.

The following chart summarizes the contribution and out-of-pocket limits for HSAs and high-deductible health plans for 2017. There was only one minor change between 2016 and 2017.

	2016	2017	Change
HSA contribution limit	Self: $3,350 Family: $6,750	Self: $3,400 Family: $6,750	Self: $50 Family: No Change
HSA catch up contribution (age 55+)	$1,000	$1,000	No Change
HDHP minimum deductible	Self: $1,300 Family: $2,600	Self: $1,300 Family: $2,600	No Change
HDHP maximum out of pocket	Self: $6,550 Family: $13,100	Self: $6,550 Family: $13,100	No Change

Employers should remind employees who are contributing to or using their HSA:

• They have until April 15, 2018 to make contributions for the 2017 tax year.
• Unqualified medical expenses are subject to a 20% tax penalty
• Withdrawing from your HSA for nonqualified purposes are subject to income tax

There are other options available that employers can offer which take advantage of tax-free medical spending and reimbursement. The professionals in our office can clarify any questions you may have on HSAs. Call on us today.

In July of 2015, Congress passed and President Obama signed a Highway Funding Bill that extended financing for transportation infrastructure. Section 2006 of that bill modifies the tax filing due dates for tax years beginning after December 31, 2015.  The filing deadlines for a variety of entities, including partnerships and C corporations, will change.

The revised filing deadlines is a long time coming for the AICPA, who has been advocating for years for more logical due dates. The current structure makes it is difficult for taxpayers and preparers to submit timely, accurate returns. With the help of state CPA societies, the AICPA lobbied congress to:

• address the complaints from taxpayers and professionals,
• improve the overall tax return filing process through a logical flow of information,
• reduce the reliance on extensions by encouraging earlier filing, and
• ease the administrative burden for the government, taxpayers and practitioners.

What the new filing deadlines mean for business owners
As a business owner and taxpayer, it is important to be aware of the new filing deadlines to make sure you are submitting timely information. The following two questions will determine your due date:

1. What entity is your business considered?
2.  When is your tax year end date?

The new due dates are effective for tax years beginning after December 31, 2015 with the exception of C Corporations with fiscal years ending on June 30. New date rules for C Corporations will go into effect for returns with taxable years beginning after December 31, 2025.

We have highlighted below some of the major changes. For a complete list of new due dates, please refer to our giveaway this month, a copy of the AICPA’s resource which includes a list of all original and extended tax return due dates.

Return Type	Prior Due Dates	New Due Dates
Partnership (calendar year)	April 15	March 15
S Corporation (calendar year)	March 15	No change
C Corporation (calendar year)	March 15	April 15
FinCEN Report 114 (Replaces FBAR return)	June 30	April 15
Individual Form 1040	April 15	No change
Extension Modifications for Calendar Year Filers
Form	Extension
1065	6 Months
1041	5 ½ months
5500	3 ½ months
990	6 months
3520-A and 3520	6 months
FinCEN report 114	6 months
Extension Modifications for C Corporations
June 30 FYE	7 months
December 31 FYE	5 months
All other FYE’s	6 months
After 12/31/25	All revert back to 6 months

Will individual tax filers be affected by the new due dates?

Yes, those who file foreign bank account reports will notice a change. The due date for FBARs will move from June 30 to April 15. FBAR filers are also applicable to receive a six-month extension, similar to tax returns.

 Trust Returns

The extension dates for trust returns are receiving an extension. Trust returns are still due in April, but the extension will change from September 15 to September 30.

You will want to review your return-filing procedures and determine what changes need to be made to comply with the new dates. The professionals in our office can help you understand how this will affect your business; call on us today.

The Internal Revenue Service recently revised the depreciation limits for business-use passenger automobiles, trucks and vans first placed in service during calendar year 2016. The updated amounts under Revenue Procedure 2016-23 are in table format below.

The maximum depreciation limits under Code Sec. 280F for passenger automobiles first placed in service during the 2016 calendar year:

Passenger Automobiles

1st tax year                                 $3,160

2nd tax year                               $5,100

3rd tax year                                $3,050

Each succeeding tax year        $1,875

The maximum depreciation limits under Code Sec. 280F for trucks and vans first placed in service during the 2016 calendar year:

Trucks and Vans

1st tax year                                 $3,560

2nd tax year                               $5,700

3rd tax year                                $3,350

Each succeeding tax year        $2,075

When bonus depreciation rules apply, the first year limitation is $11,160 for personal automobiles and $11,560 for trucks and vans. In both cases, limitations for subsequent years remain the same. The professionals in our office can answer the questions you may have on the updated auto depreciation limits, call on us today.

Effective Monday, July 11, 2016

Employees who perform at least two hours of work (within the geographic boundaries of the City of San Diego) in one or more calendar weeks of the year must be paid at least $10.50 per hour and must accrue one hour of paid sick time for every 30 hours worked within the City of San Diego.

As passed, the Ordinance provides that while employers can cap use of sick pay to 40 hours within a benefit year, sick pay must continue to accrue indefinitely. Additionally, the Ordinance currently does not allow for a front-loading or deposit method of providing sick pay. Both of these issues present challenges for employers as they attempt to align their current paid time off and sick pay policies with new San Diego requirements.

Fortunately, the San Diego City Council is attempting to address these challenges and, on July 11, 2016, approved an Implementing Ordinance at a first reading that will provide much needed clarification and flexibility for employers with San Diego employees. If the implementing Ordinance becomes effective, it provides the following key changes:

• It allows employers to comply with the sick pay law by depositing or “front-loading” San Diego employees with 40 hours of sick pay at the beginning of each benefit year. Employers who don’t wish to front load the time, especially for part-time employees, may choose to comply with the law through the accrual method.
• Employers who use the accrual method may cap accrual of sick pay at 80 hours. This means that employers would be able to continue to limit an employee’s use of sick pay to 40 hours each year and also cap accrual of paid sick time at 80 hours.
• Employers who provide an employee with an amount of paid leave, including paid time off, paid vacation or paid personal days, of at least 40 hours each year, and who allow such time to be used for the same purposes and under the same conditions as the Ordinance, do not need to provide additional sick pay to employees. Similarly, employers who provide greater paid time off through a contract, collective bargaining agreement, employee benefit plan, or other agreement will be deemed in compliance even if they use a different method of calculating, paying or using sick pay.
• Employers have additional time to meet the Ordinance’s notice and posting requirements. The Ordinance requires employers to post a notice in the workplace informing employees of, among other things, the minimum wage and their rights to sick pay accrual. Under the proposed Implementing Ordinance, the City’s Enforcement Office will have this notice poster available for employers by September 1, 2016. Additionally, under the proposed Implementing Ordinance, employers must issue a notice to each employee, by October 1, 2016 or the time of hire, whichever is later, that provides information on how the employer complies with the Ordinance. This notice must be provided to both exempt and non-exempt employees and may be provided through electronic communication. Under the proposed Implementing Ordinance, the City’s Enforcement Office will have a template notice available to employers by September 1, 2016

Finally, the proposed Implementing Ordinance establishes strong anti-retaliation provisions, provides increased damages and civil penalties and outlines enforcement procedures. The Ordinance is now effective, which means immediate compliance steps need to be taken, including ensuring all covered San Diego employees receive a minimum wage of $10.50 per hour as of July 11, 2016. However, since the law is in flux on key sick pay issues such as caps and accrual rates and favorable employer changes are anticipated, it would be smart for covered employers to consult with legal counsel to craft a customized compliance solution.

Miscellaneous deductions can cut taxes. These may include certain expenses you paid for in your work if you are an employee. You must itemize deductions when you file to claim these costs. So if you usually claim the standard deduction, think about itemizing instead. You might pay less tax if you itemize.  Here are some tax tips you should know that may help you reduce your taxes:

Deductions Subject to the Limit.  

You can deduct most miscellaneous costs only if their sum is more than two percent of your adjusted gross income. These include expenses such as:

• Unreimbursed employee expenses.
• Job search costs for a new job in the same line of work.
• Some work clothes and uniforms.
• Tools for your job.
• Union dues.
• Work-related travel and transportation.
• The cost you paid to prepare your tax return. These fees include the cost you paid for tax preparation software. They also include any fee you paid for e-filing of your return.

Deductions Not Subject to the Limit.  

Some deductions are not subject to the two percent limit. They include:

• Certain casualty and theft losses. In most cases, this rule applies to damaged or stolen property you held for investment.  This may include property such as stocks, bonds and works of art.
• Gambling losses up to the total of your gambling winnings.
• Losses from Ponzi-type investment schemes.

There are many expenses that you can’t deduct. For example, you can’t deduct personal living or family expenses. You claim allowable miscellaneous deductions on Schedule A, Itemized Deductions. For more about this topic call one of our professionals.

The Internal Revenue Service recently issued the 2016 optional standard mileage rates to be used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

As of January 1, 2016, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) are:

• 54 cents per mile for business miles driven
• 19 cents per mile driven for medical or moving purposes
• 14 cents per mile driven in service of charitable organizations

The mileage rate for service to a charitable organization is not alterable by the IRS. Instead, it must be changed by statute passed by Congress.

It is important to remember that a taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates. For more information, please contact one of our professionals today.