Tax & Accounting Blog

The 2016 Halfway Point: Reflections & What’s Ahead

Accounting Firms, CS Professional Suite Payroll Solutions, Payroll July 6, 2016

Summer is here, and it’s hard to believe we’re already halfway through 2016—and since it’s a presidential election year, law changes are usually minimal. Let’s take a moment to review what has transpired and been enacted earlier in 2016 and what’s on the horizon for the remainder of 2016.

The Affordable Care Act (ACA) became front row with year-end 2015, bringing the dawn of 1094s and 1095s with two deadline extensions—one for employee receipt and one for employer filing. Note that tax year 2016 is rapidly progressing and the deadlines for form disbursement in 2017 will be the normal dates:

  • 1095s to employees January 31, 2017
  • 1095s & 1094s filed to government by employers—paper February 28, 2017; electronic March 31, 2017
  • W-2 filings—Due date for employees to receive W-2s remains January 31, 2017. You should also note that electronic filing of Federal W-2s with SSA becomes January 31, 2017, as well. This will cause many companies and payroll service bureaus to close out their years for changes much earlier than in previous years.

Speaking of W-2s, the IRS wants to expand the very successful verification pilot by adding several more payroll service providers. The IRS plans to expand the W-2 Verification Code Pilot Program and would like to see 20% of all W-2s include the verification code. The IRS used a 16-character algorithm in sets of four numbers, and these numbers were put on two million random W-2s. These numbers were then to be inputted with individual 1040 tax returns. The numbers were reported to be validated 94% of the time, resulting in better matchup in helping to prevent fraud.

Moving on to 1099 filings, where there has been much confusion. First, know that1097, 1098, 1099, 3921 and 3822 are due to the IRS by February 28, 2017, and the electronic filing due date is March 31, 2017. Now here’s where the confusion comes in—if the 1099-MISC has Box 7 amounts (non employee compensation, which is very common, i.e. Independent Contractors), these 1099-MISCs are due to the IRS by January 31, 2017.

Next, let’s talk about State W-2s. In the past, most states mirrored the federal filing requirement dates. However, in 2015, many states started accelerating the deadlines for employer copies to be filed. Several more states have accelerated their filing dates for tax year 2016. Below is a chart of the current filing dates (as of June 9, 2016). Take note that several states are considering advancing their dates, so keep an eye out for more changes.

State W-2 Filing Dates State W-2 Filing Dates State W-2 Filing Dates State W-2 Filing Dates
AL Jan. 31 IL Feb. 15 MT Feb. 28 PR Jan. 31
AK None IN Jan. 31 NE Feb. 1 RI Last day of Feb.
AZ Feb. 28 IA n/a NV None SC Last day of Jan.
AR Feb. 28 KS Last day of Feb. NH None SD None
CA n/a KY Jan. 31 NJ Last day of Feb. TN None
CO Mar. 31 LA First bus. day after Feb. 27 NM Last day of Feb. TX None
CT Jan. 31 ME Mar. 31 NY n/a UT Jan. 31
DE Mar. 31 MD Jan. 31, 2017 NC Jan. 31 VT Jan. 31, 2017
DC Jan. 31 MA Mar. 31 ND Mar. 31 VA Jan. 31
FL None MI Feb. 28 OH Feb. 28 WA None
GA Jan. 31 MN Jan. 31, 2017 OK n/a WV Feb. 28
HI Last day of Feb. MS Jan. 31 OR Mar. 31 WI Jan. 31
ID Feb. 28 MO Last day of Feb. PA Jan. 31 WY None

 

In addition, the U.S. Department of Labor has put out new wage guidelines for Exempt employees. The new wage thresholds go into effect December 1, 2016. The new rates are $913 per week, or $47,476 annually. The high salary test becomes $134,004. Be mindful of the first pay period, since the effective date of the new rates will most likely be in the middle of the pay period.

Several changes will be announced in the coming months. Look for my blogs, webinars and industry presentations as the year progresses.