New Tax Due Dates & Extension Periods

New Tax Due Dates & Extension Periods for Most Entities for Tax Year 2016

Many bills that Congress passes contain provisions that affect items that aren’t related to the main bill. The “Surface Transportation and Veteran’s Health Care Choice Improvement Act of 2015” is one such bill. Primarily a stopgap extension of the Highway Trust Fund, this bill also includes tax provisions that impact the due dates of a number of returns and other required filings.

The due date changes with the most impact will likely be those changes for partnership tax returns (Form 1065) and C Corporation tax returns. Essentially the due dates have swapped. The significant reorganization of due dates is intended to assist individuals involved in pass-through entities in receiving information required to prepare their individual returns in a more timely fashion.

For tax returns reporting 2016 information that are due in 2017, the following due date changes will apply.  These changes are effective for tax years beginning after December 31, 2015 for calendar year filers (tax year 2016 and beyond):

Form 2016 Filing Due Date(Tax   Year 2015) 2017 Filing Due Date(Tax Year 2016)
Form 1065 – Partnerships April 15th March 15th
Form 1065 Extension September 15th September 15th
C Corporations March 15th April 15th
S Corporations March 15th March 15th
C Corporations & S Corporation Extensions September 15th September 15th
Form 1040 Individual April 15th April 15th
Form 1120 C Corporation w/June 30 Fiscal Year September 15th September 15th
C Corporation Extension w/June 30 Fiscal Year March 15th April 15th
C CorporationFiscal   Year End (other than Dec. 31 or June 30) 15th day of 3rd month after year-end 15th day of 4th month after year-end
C Corporation Extension Fiscal Year End (other than Dec. 31 or June 30) 15th day of 9th monthafter year-end 15th day of 10th month after year-end
Form 1040 Extension October 15th October 15th
Form 1041 Trust & Estate April 15th April 15th
Form 1041 Extension September 15th September 30th
Form 5500 series –   Employee Benefit Plan July15th July 15th
Form 5500 series – Employee Benefit Plan Extension October 15th October 15th
Information Returns (i.e., W-2 and 1099s) To   IRS/SSA — Feb. 28 andMarch 31 if filed electronically Forms   W-2 and certain 1099-MISC due to IRS/SSA Jan. 31. All other Forms 1099 due   Feb. 28; March 31 if filed electronically

For fiscal year filers:

  • Partnership and S Corporation tax returns will be due the 15th day of the third month after the end of their tax year. The filing date for S Corporations is unchanged.
  • C Corporation tax returns will be due the 15th day of the fourth month after the end of the tax year.  A special rule to defer the due date change for C Corporations with fiscal years that end on June 30 defers the change until December 31, 2025 – a full ten years.

Other changes include:

  • Filers of U.S. Return of Partnership Income (Form 1065) will have a longer extension period, a maximum of six months, rather than the current five month extension, leaving the current (2015 and prior years) extended due date in place (September 15th for calendar year taxpayers.)
  • U.S. Income Tax Return for Estates and Trusts (Form 1041) will have a maximum extension of five and a half months, two weeks longer than the current (2015 and prior years) five month extension.
  • Annual Return/Report of Employee Benefit Plans will have a maximum automatic extension of three and a half months.
  • The Foreign Bank and Financial Accounts Report (FinCEN Report 114, FBAR) will be due on April 15th and permitted to extend for six months, thus aligning the FBAR reporting with the individual tax return reporting. Additionally, the IRS may waive the penalty for failure to file a timely extension request for any taxpayer required to file for the first time.

If you have any questions about these new due dates and/or the impact on your tax filings, please contact Alice, our qualified tax professional at (928)680-1300

 

Don’t Fall for New Tax Scam Tricks by IRS Posers

copied and posted directly from the IRS Summertime Tax Tip 2015


Don’t Fall for New Tax Scam Tricks by IRS Posers

Though the tax season is over, tax scammers work year-round. The IRS advises you to stay alert to protect yourself against new ways criminals pose as the IRS to trick you out of your money or personal information. These scams first tried to sting older Americans, newly arrived immigrants and those who speak English as a second language. The crooks have expanded their net, and now try to swindle virtually anyone. Here are several tips from the IRS to help you avoid being a victim of these scams:

  • Scams use scare tactics.  These aggressive and sophisticated scams try to scare people into making a false tax payment that ends up with the criminal. Many phone scams use threats to try to intimidate you so you will pay them your money. They often threaten arrest or deportation, or that they will revoke your license if you don’t pay. They may also leave “urgent” callback requests, sometimes through “robo-calls,” via phone or email. The emails will often contain a fake IRS document with a phone number or an email address for you to reply.
  • Scams use caller ID spoofing.  Scammers often alter caller ID to make it look like the IRS or another agency is calling. The callers use IRS titles and fake badge numbers to appear legit. They may use online resources to get your name, address and other details about your life to make the call sound official.
  • Scams use phishing email and regular mail.  Scammers copy official IRS letterhead to use in email or regular mail they send to victims. In another new variation, schemers provide an actual IRS address where they tell the victim to mail a receipt for the payment they make. All in an attempt to make the scheme look official.
  • Scams cost victims over $20 million.  The Treasury Inspector General for Tax Administration, or TIGTA, has received reports of about 600,000 contacts since October 2013. TIGTA is also aware of nearly 4,000 victims who have collectively reported over $20 million in financial losses as a result of tax scams.

The real IRS will not:

  • Call you to demand immediate payment. The IRS will not call you if you owe taxes without first sending you a bill in the mail.
  • Demand that you pay taxes and not allow you to question or appeal the amount that you owe.
  • Require that you pay your taxes a certain way. For instance, require that you pay with a prepaid debit card.
  • Ask for credit or debit card numbers over the phone.
  • Threaten to bring in police or other agencies to arrest you for not paying.

If you don’t owe taxes or have no reason to think that you do:

  • Do not provide any information to the caller. Hang up immediately.
  • Contact the Treasury Inspector General for Tax Administration. Use TIGTA’s “IRS Impersonation Scam Reporting” web page to report the incident.
  • You should also report it to the Federal Trade Commission. Use the “FTC      Complaint Assistant” on FTC.gov. Please add “IRS Telephone Scam” in the notes.

If you know you owe, or think you may owe taxes:

  • Call the IRS at 800-829-1040. IRS workers can help you if you do owe taxes.

Stay alert to scams that use the IRS as a lure. For more, visit “Tax Scams and Consumer Alerts” on IRS.gov.

IRS YouTube Videos:

IRS Podcasts:

FUTA Credit Reduction State

Retroactive to January 1, 2012, Arizona is now one of the 19 “FUTA Credit Reduction States”,

Under the provisions of the American Federal Unemployment Tax Act (FUTA), a Federal tax is levied on employers covered by the Unemployment Insurance program program at a current rate of 6.0% on wages up to $7,000 a year paid to a worker. The law, however, provides a credit against federal tax liability of up to 5.4% to employers who pay state taxes timely under an approved state UI program. Generally, employers may receive this credit of 5.4% when they file their Form 940 (PDF), Employer’s Annual Federal Unemployment (FUTA) Tax Return, to result in a net FUTA tax rate of 0.6% (6.0% – 5.4% = 0.6%).

The credit against the Federal tax may be reduced if the state has an outstanding advance (commonly called a “loan”). When states lack the funds to pay UI benefits, they may obtain loans from the federal government. To assure that these loans are repaid, and in accordance with Title XII of the Social Security Act, the federal government is entitled to recover those monies by reducing the FUTA credit it gives to employers, which is the equivalent of an overall increase in the FUTA tax. When a state has an outstanding loan balance on January 1 for two consecutive years, and the full amount of the loan is not repaid by November 10 of the second year, the FUTA credit will be reduced until the loan is repaid. This process is commonly called FUTA Credit Reduction and was designed as an involuntary repayment mechanism. The reduction schedule is 0.3% for the first year and an additional 0.3% for each succeeding year until the loan is repaid. From the third year onward, there may be additional reduction(s) in the FUTA tax credit (commonly dubbed “add-ons”).

As of November 11, 2012, there were 19 states that had outstanding UI federal loans and as a result, employers in these states will pay extra FUTA taxes that are effective retroactively to January 1, 2012.

Below is a list of FUTA Credit Reduction states. The rates listed in the “Potential” column for 2013 and 2014 are projected under the assumption that the Title XII loans on those states will not be repaid by November 10th of the column year.

State Effective FUTA   Tax Rate
Actual Potential
2012 2013 2014
Arizona 0.90% 1.20% 1.50%
Arkansas 1.20% 1.50% 1.80%
California 1.20% 1.50% 1.80%
Connecticut 1.20% 1.50% 1.80%
Delaware 0.90% 1.20% 1.50%
Florida 1.20% 1.50% 1.80%
Georgia 1.20% 1.50% 1.80%
Indiana 1.50% 1.80% 2.10%
Kentucky 1.20% 1.50% 1.80%
Missouri 1.20% 1.50% 1.80%
Nevada 1.20% 1.50% 1.80%
New Jersey 1.20% 1.50% 1.80%
New York 1.20% 1.50% 1.80%
North Carolina 1.20% 1.50% 1.80%
Ohio 1.20% 1.50% 1.80%
Rhode Island 1.20% 1.50% 1.80%
South Carolina* 1.80% 2.10%
Vermont 0.90% 1.20% 1.50%
Virgin   Islands** 2.10% 1.50% 1.80%
Wisconsin 1.20% 1.50% 1.80%

Tax Due Dates for January 2013

 

January 10 Employees – who work for tips. If you received $20 or more in tips during December, report them to your employer. You can use Form 4070, Employee’s Report of Tips to Employer.
January 15 Employers – Social Security, Medicare, and withheld income tax. If the monthly deposit rule applies, deposit the tax for payments in December 2012.

Individuals – Make a payment of your estimated tax for 2012 if you did not pay your income tax for the year through withholding (or did not pay in enough tax that way). Use Form 1040-ES. This is the final installment date for 2012 estimated tax. However, you do not have to make this payment if you file your 2012 return (Form 1040) and pay any tax due by January 31, 2013.

Employers – Nonpayroll Withholding. If the monthly deposit rule applies, deposit the tax for payments in December 2012.

Farmers and Fishermen – Pay your estimated tax for 2012 using Form 1040-ES. You have until April 15 to file your 2012 income tax return (Form 1040). If you do not pay your estimated tax by January 15, you must file your 2012 return and pay any tax due by March 1, 2013, to avoid an estimated tax penalty.

January 31 Employers – Give your employees their copies of Form W-2 for 2012 by January 31, 2013. If an employee agreed to receive Form W-2 electronically, post it on a website accessible to the employee and notify the employee of the posting by January 31.

Businesses – Give annual information statements to recipients of 1099 payments made during 2012.

Employers – Federal unemployment tax. File Form 940 for 2012. If your undeposited tax is $500 or less, you can either pay it with your return or deposit it. If it is more than $500, you must deposit it. However, if you already deposited the tax for the year in full and on time, you have until February 11 to file the return.

Employers – Social Security, Medicare, and withheld income tax. File Form 941 for the fourth quarter of 2012. Deposit any undeposited tax. (If your tax liability is less than $2,500, you can pay it in full with a timely filed return.) If you deposited the tax for the quarter in full and on time, you have until February 11 to file the return.

Employers – Nonpayroll taxes. File Form 945 to report income tax withheld for 2012 on all nonpayroll items, including backup withholding and withholding on pensions, annuities, IRAs, gambling winnings, and payments of Indian gaming profits to tribal members. Deposit any undeposited tax. (If your tax liability is less than $2,500, you can pay it in full with a timely filed return.) If you deposited the tax for the year in full and on time, you have until February 11 to file the return.

Individuals – who must make estimated tax payments. If you did not pay your last installment of estimated tax by January 15, you may choose (but are not required) to file your income tax return (Form 1040) for 2012. Filing your return and paying any tax due by January 31 prevents any penalty for late payment of last installment.

Payers of Gambling Winnings – If you either paid reportable gambling winnings or withheld income tax from gambling winnings, give the winners their copies of Form W-2G.

Certain Small Employers – File Form 944 to report Social Security and Medicare taxes and withheld income tax for 2012. Deposit or pay any undeposited tax under the accuracy of deposit rules. If your tax liability is $2,500 or more from 2012 but less than $2,500 for the fourth quarter, deposit any undeposited tax or pay it in full with a timely filed return.

2013 SOCIAL SECURITY CHANGES

Cost-of-Living Adjustment (COLA):

Based on the increase in the Consumer Price Index (CPI-W) from the third quarter of 2011 through the third quarter of 2012, Social Security and Supplemental Security Income (SSI) beneficiaries will receive a 1.7 percent COLA for 2013. Other important 2013 Social Security information is as follows:

Tax Rate:
2012 2013
Employee 7.65%* 7.65%
Self-Employed 15.30%* 15.30%
NOTE:  The 7.65% tax  rate is the combined rate for Social Security and Medicare.  The Social Security portion (OASDI) is 6.20%  on earnings up to the applicable taxable maximum amount (see below).  The Medicare portion (HI) is 1.45% on all earnings.
* The Temporary Payroll Tax Cut Continuation Act of 2011 reduced the Social Security payroll tax rate by 2% on the portion of the tax paid by the worker through the end of February 2012. The Middle Class Tax Relief and Job Creation Act of 2012 extended the reduction through the end of 2012. Under current law, this temporary reduction expired at the end of December 2012. For 2013, the rate is back to 6.2%. Please keep in mind that this might again change during 2013.
Maximum Taxable Earnings:
2012 2013
Social Security (OASDI only) $110,100 $113,700
Medicare (HI only) N o   L i m i t
Quarter of Coverage:
2012 2013
Earnings needed to earn one Social Security Credit $1,130 $1,160
Retirement Earnings Test Exempt Amounts:
2012 2013
Under full retirement ageNOTE: One dollar in benefits will be withheld for every $2  in earnings above the limit. $14,640/yr.        ($1,220/mo.) $15,120/yr.        ($1,260/mo.)
The year an individual reaches full retirement ageNOTE: Applies only to earnings for months prior to attaining full retirement age. One dollar in benefits will be withheld for every $3 in earnings above the limit.There is no limit on earnings beginning the month an individual attains full retirement age. $38,880/yr.        ($3,240/mo.) $40,080/yr.        ($3,340/mo.)
Social Security Disability Thresholds:
2012 2013
Substantial Gainful Activity (SGA)            Non-Blind            Blind       $1,010/mo.       $1,690/mo.       $1,040/mo.       $1,740/mo.
Trial Work Period (TWP) $720/mo. $750/mo.
Maximum Social Security Benefit: Worker Retiring at Full Retirement Age:
2012 2013
$2,513/mo. $2,533/mo.
SSI Federal Payment Standard:
2012 2013
Individual $698/mo. $710/mo.
Couple $1,048/mo. $1,066/mo.
SSI Resources Limits:
2012 2013
Individual $2,000 $2,000
Couple $3,000 $3,000
SSI Student Exclusion:
2012 2013
Monthly limit $1,700 $1,730
Annual limit $6,840 $6,960
Estimated Average Monthly Social Security Benefits Payable in January 2013:
Before       1.7% COLA After       1.7% COLA
All Retired Workers $1,240 $1,261
Aged Couple, Both Receiving Benefits $2,014 $2,048
Widowed Mother and Two Children $2,549 $2,592
Aged Widow(er) Alone $1,194 $1,214
Disabled Worker, Spouse and One or More Children $1,887 $1,919
All Disabled Workers $1,113 $1,132

4 Important 2013 Payroll Updates & Tax Changes For Small Business

The House voted 257-167 to approve a bill to prevent the fiscal cliff. The plan maintains tax cuts for those earning less than $400,000/year and couples earning less than $450,000/year. Those individuals earning more will see increased tax rates.

As we begin 2013 and deal with the aftermath of the Fiscal Cliff, there are many very important payroll tax updates that need to be explained:

  • Federal Income Withholding Tax: As of December 31, 2012 there has not been a final decision made on the 2013 federal withholding tax tables.  While income tax rate increases technically take effect immediately on Jan. 1, the IRS has instructed Employers to not change anything with regard to withholding; to use the same withholding tables that have been used for 2012. As a result, most American workers are not expected to immediately suffer an increase in income taxes, even if political leaders have failed to reach a deal.
  • Social Security: 2013 Social Security Wage Base has increased to $113,700, an increase of $3,600 from the 2012 wage base of $110,100.  As in prior years, there is no limit to the wages subject to the Medicare tax; therefore all covered wages are still subject to the 1.45% tax.
  • Medicare: In 2013 taxable Medicare wages paid in excess of $200,000 are subject to an extra 0.9% Medicare tax that will only be withheld from employees’ wages. Employers will not pay the extra tax.
  • Expired Payroll Tax Cut resulting in 2% more in employee social security tax withholding – As of December 31, 2012, the Payroll Tax Cut expired.  This cut reduced payroll taxes by 2%.  The 2012 FICA tax rate was 4.2% for employees and 6.2% for employers under the Middle Class Tax Relief and Job Creation Act of 2012.  However, bills currently being considered in Congress may change this but until Congress acts to further extend the 4.2 percent rate, the employee rate will withhold based on 6.2% with paychecks beginning in January 2013. The 2013 FICA tax rate, which is the combined Social Security tax rate of 6.2% and the Medicare tax rate of 1.45%, will be 7.65% for 2013 up to the social security wage base. The maximum social security tax employees and employers will each pay in 2013 is $7,049.40. This will be an increase of $2,425.20 for employees and $223.20 for employers.  The employer rate remains 6.2 percent.  The Medicare rate, also matched by the employer, is unchanged at 1.45 percent and applies to all wages.

ABS, Automated Business Service, Inc. are experts in payroll processing. We standby to monitor any payroll-tax related legislation changes made by congress and will send out additional updates of the changes and implementation of the change.  In the meantime, if you have any questions, please feel free to comment on this log or email alice@automatedbusinessservice.net

Questions and Answers for the Additional Medicare Tax

The following questions and answers provide employers and payroll service providers information that will help them as they prepare to implement the Additional Medicare Tax which goes into effect in 2013. The Additional Medicare Tax applies to individuals’ wages, other compensation, and self-employment income over certain thresholds; employers are responsible for withholding the tax on wages and other compensation in certain circumstances. The IRS has prepared these questions and answers to assist employers and payroll service providers in adapting systems and processes that may be impacted.

BASIC FAQs

  1. When does Additional Medicare Tax start? Additional Medicare Tax applies to wages and compensation above a threshold amount received after December 31, 2012 and to self-employment income above a threshold amount received in taxable years beginning after December 31, 2012.
  2. What is the rate of Additional Medicare Tax? The rate is 0.9 percent.
  3. When are individuals liable for Additional Medicare Tax? An individual is liable for Additional Medicare Tax if the individual’s wages, compensation, or self-employment income (together with that of his or her spouse if filing a joint return) exceed the threshold amount for the individual’s filing status:
    Filing Status Threshold Amount
    Married filing jointly $250,000
    Married filing separately $125,000
    Single $200,000
    Head of household (with qualifying person) $200,000
    Qualifying widow(er) with dependent child $200,000
  4. What wages are subject to Additional Medicare Tax? All wages that are currently subject to Medicare Tax are subject to Additional Medicare Tax if they are paid in excess of the applicable threshold for an individual’s filing status. For more information on what wages are subject to Medicare Tax, see the chart, Special Rules for Various Types of Services and Payments, in section 15 of Publication 15, (Circular E), Employer’s Tax Guide.
  5. What Railroad Retirement Tax Act (RRTA) compensation is subject to Additional Medicare Tax? All RRTA compensation that is currently subject to Medicare Tax is subject to additional Medicare Tax if it is paid in excess of the applicable threshold for an individual’s filing status. All FAQs that discuss the application of the Additional Medicare Tax to wages also apply to RRTA compensation, unless otherwise indicated.
  6. Are nonresident aliens and U.S. citizens living abroad subject to Additional Medicare Tax? There are no special rules for nonresident aliens and U.S. citizens living abroad for purposes of this provision. Wages, other compensation, and self-employment income that are subject to Medicare tax will also be subject to Additional Medicare Tax if in excess of the applicable threshold.
  7. Additional Medicare Tax goes into effect for taxable years beginning after December 31, 2012; however, the proposed regulations (REG-130074-11) are not effective until after the notice and comment period has ended and final regulations have been published in the Federal Register. How will this affect Additional Medicare Tax requirements for employers, employees, or self-employed? Additional Medicare Tax applies to wages, compensation, and self-employment income received in tax years beginning after December 31, 2012. Taxpayers must comply with the law as of that date. With regard to specific matters discussed in the proposed regulations, taxpayers may rely on the proposed regulations for tax periods beginning before the date that the final regulations are published in the Federal Register. If any requirements change in the final regulations, taxpayers will only be responsible for complying with the new requirements from the date of their publication.