2016 Business Tax Updatesadmin
Happy New Year! I hope 2016 was a great year for you, your family and your business. We are looking forward to a healthy, happy and prosperous 2017!
Several significant tax law changes took effect in 2016 that may affect your business’s federal tax filings in 2017. Please take a moment to read through this as it contains important tax updates.
We are grateful for your patience with us but due to the busy nature of tax season, we ask you to allow a reasonable amount of time for us to prepare your return. Also, to make your appointments move more efficiently, please have all documents ready and all calculations totaled before coming in for your appointment. Please keep in mind, if you’re Quickbooks file or bookkeeping is incomplete or in total disarray, expect to file an extension.
If SCL Tax Services is completing your bookkeeping, please be sure that we have the necessary documents to complete your annual bookkeeping. Business Tax Check List
There are new tax deadlines for some businesses beginning in 2016 (6 month extensions are available if requested)
Partnership Returns (Form 1065) due March 15th
S-Corp. Returns (Form 1120S) due March 15th
Corp. Returns (Form 1120) due April 18th
Individual Returns (Form 1040) due April 18th
FBAR Filing due April 18th
Accelerated Filing Deadlines for Forms W-2, W-3, and Form 1099-MISC
New for 2016, the deadline for filing both electronic and paper Forms W-2 to employees and to the Social Security Administration (SSA) is January 31, 2017. Previously, the deadline was the end of February to file paper Forms W-2 with the SSA and until the end of March to make electronic filings. The January 31 deadline also applies to Forms W-2AS, W-2GU, W-2VI, W-3 and W-3SS.
If you are filing any Forms 1099-MISC and reporting an amount in Box 7, Nonemployee Compensation, the deadline for filing these forms has also been moved up to January 31, 2017. If you are not reporting an amount in Box 7, the deadline remains February 28 for paper filings and March 31 for electronic filings.
Extensions of time to file Forms W-2 with the SSA are no longer automatic. For filings due on or after January 1, 2017, you may request one 30-day extension and the IRS will only grant the extension in extraordinary circumstances or catastrophe. An extension of time to furnish Forms W-2 to employees may be requested by sending a letter to the IRS, but if an extension is for more than 10 employees, the request must be filed electronically. Requests for an extension of time to furnish Forms W-2 to employees are not automatically granted. If approved, an extension will generally be for no more than 15 days from the due date, unless the need for up to a total of 30 days is clearly shown.
SECURE CLIENT PORTAL
Security and Identity Theft
We have implemented a “no-click” e-mail policy. This means we will not open any documents that you have sent us via email, which when combined with our latest security software and other steps makes it extremely difficult for electronic intruders to get through our defenses. This brings the question about how you will transfer data to us, and vice versa. We now will accept data from you in 4 ways: regular mail; drop-off; fax; or mandatory upload to our web portal. We know these changes will cause some hassle on your (and our part) but it is the best way to protect your and our confidentiality. More details to follow.
Increased Penalties for Failure to Timely File Certain Information Returns
In addition to the accelerated filing deadlines for 2016 Forms W-2, Forms W-3, and Forms 1099-MISC, higher penalties apply for (1) the failure to file correct Forms W-2 by the due date; (2) the intentional disregard of filing requirements; (3) the failure to furnish Forms W-2; and (4) the intentional disregard of payee statement requirements. In addition to applying to Forms W-2, W-3, and 1099-MISC, other common forms subject to these increased penalties include: Schedules K-1 for Forms 1041, 1065, and 1120S.
Penalties for the late filing of these information returns have also increased. For each information return or payee statement with respect to which a failure occurs, the penalty has been increased from $100 to $250, and the maximum penalty that may be imposed has been increased from $1,500,000 to $3,000,000. The per-failure penalty for intentionally disregard the filing requirements also has been increased, from $250 to $500.
Vehicle Deductions and Substantiation
Deductions for vehicle-related expenses are an important part of most business tax returns. Whether such deductions pass scrutiny with the IRS depends on whether the business complies with the strict substantiation requirements necessary for such deductions. With respect to deductions relating to vehicles, we need to ensure that your business records include the following information with respect to each vehicle used in the business: (1) the amount of each separate expense with respect to the vehicle (e.g., the cost of purchase or lease, the cost of repairs and maintenance); (2) the amount of mileage for each business or investment use and the total miles for the tax period; (3) the date of the expenditure; and (4) the business purpose for the expenditure. The following are considered adequate for substantiating such expenses: (1) records such as an account book, diary, log, statement of expense, or trip sheets; and (2) documentary evidence such as receipts, canceled checks, bills, or similar evidence.
Records are considered adequate to substantiate the element of an expense only if the records are prepared or maintained in such a manner that each recording of an element of the expense is made at or near the time the expense is incurred.
Work Opportunity Tax Credit (WOTC)
This is a Federal tax credit incentive to employers for hiring individuals from certain target groups who have consistently faced significant barriers to employment. Employers can hire eligible employees from the following target groups for WOTC: [Unemployed Veterans (including disabled veterans), Temporary Assistance for Needy Families (TANF) Recipients, Food Stamp (SNAP) Recipients, Designated Community Residents (living in Empowerment Zones or Rural Renewal Counties), Vocational Rehabilitation Referred Individuals, Ex-Felons, Supplemental Security Income Recipients, Summer Youth Employees (living in Empowerment Zones)]. The credit varies according to each group. I can provide you with more information if you are an eligible employer.
Foreign Accounts (FBAR)
If you have read any news in the last year you know that the IRS is looking closely for offshore accounts. If you have an account, retirement account, or business interest with a value over $10,000 in a foreign country, or a foreign business ownership (not through a mutual fund) please let us know as some special rules will apply to you. There are substantial penalties for failure to disclose these items.
We now offer Life Insurance and Retirement planning through Prudential Insurance. Please ask us if you are interested.
Please find the “Business Tax Check List” website link here for your convenience.
Officially, the tax season begins January 23rd when the IRS will open the gateway to begin accepting electronically filed returns.
Our office is ready to start preparing your taxes before the 23rd once you have all your documents.
Our TAX SEASON OFFICE HOURS will be:
Monday – Friday 10:00am – 8:00pm
Saturday 10:00am – 6:00pm
Sunday 12:00pm – 3:00pm
Of course, we will also be available outside of these hours by appointment only.
If you need a special appointment, please call our office for scheduling.
Thank you and we look forward to working with you again this year.