As the year winds down and business owners focus on year-end tax planning, it’s time to mark the new deadlines on your 2017 calendars.
“With some deadlines moving up, it will catch people off guard,” says Michelle Mahle, office managing partner of tax services at BDO USA, LLP.
In fact, Mahle herself recently realized the full implementations of these accelerated filing deadlines, and she’s concerned that employers will be scrambling.
“A best practice for saving on your taxes is knowing, by year end, what to expect so you can plan for it, she says. “However, business owners are certainly going to have less time to react to things, with some of these deadlines.”
Smart Business spoke with Mahle about tax due date changes and year-end tax planning practices.
What key due dates have been moved up?
There is a new filing deadline for both Form W-2 and Form 1099-MISC with amounts reported in Box 7. Previously, these forms were due to recipients by Jan. 31, but weren’t due to the Social Security Administration (SSA) until Feb. 28. If you e-filed with the IRS, you had until March 31.
For the 2016 tax year, both the recipient copies and submission to the SSA/IRS of these forms are due by Jan. 31 — for paper and e-file. The IRS has also eliminated all automatic 30-day extensions of time to file Form W-2 for the tax year 2016. This change consolidates what typically was prepared and submitted over a three-month period of time into 30 days.
With W-2s and 1099s, businesses should already have the information upfront. In reality, many employers are still collecting employer identification numbers or current addresses at the 11th hour. If employers expect to get these filed on time, they need to gather the necessary information much sooner, by year-end.
The focus on getting everything in and filed by Jan. 31 is probably because there’s such rampant tax identity fraud. The government is trying to pin down the information reporting to make sure it has everything in its system correctly, so that the IRS is in a better position to deal with that.
In addition, businesses that file partnership tax returns (Form 1065) will have less time in 2017. Businesses filing Form 1065 for the tax year ending Dec. 31, 2016 now have a due date of March 15, 2017, as opposed to April 15. However, they can still file for an extension, which remains Sept. 15, 2017.
Essentially the due dates for partnership tax returns (Form 1065) and C Corporation tax returns have swapped. It is intended to help individuals involved in pass-through entities receive the information they need to prepare their individual returns in a more timely fashion.
The due date for foreign bank reporting has moved up two months. Taxpayers required to file a FinCEN 114, Report of Foreign Bank and Financial Account (aka FBAR) for 2016 will have a due date of April 15, 2017, as opposed to June 30. Filers may still obtain an automatic six-month extension to file until Oct. 15.
Finally, with health insurance, the Form 1095 (proof of insurance coverage) filing deadline has moved up to Jan. 31, so employees will get this at the same time they get their W-2. Other health care forms, including Forms 1094B and 1095A-B-C will be due Feb. 28, or March 31 if filed electronically.
What actions should employers be taking in the final quarter to make their upcoming filing smoother?
Based on the accelerated filing deadlines, business owners need to be informed and prepared. They must start gathering information now for vendors and verifying employee addresses and Social Security numbers. This will ensure they have what is needed to file their information reporting timely. Penalties for late and/or incomplete filings can add up quickly.
Knowing that the 2016 partnership tax return is due 30 days earlier will require business owners to send information to their tax preparers much sooner than they are accustomed to doing. Reviewing fixed asset additions and disposals in the last quarter could accelerate the year-end closing.
Additionally, if an audited or reviewed statement is required for the business, having the assurance team come in and do testing that is permitted before year end can be beneficial all around.
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