Tax & Accounting Blog

IRS Private Rulings on Tax Reporting of Account-opening Bonus Payments for IRAs and 529 Plans

IRS Private Rulings on Tax Reporting of Account-opening Bonus Payments for IRAs and 529 Plans

The Internal Revenue Service has issued two private letter rulings concerning the reportability of a cash bonus credited to a customer’s IRA account – or to a section 529 higher education savings plan account – as an account-opening incentive. In both rulings, the IRS held that an IRA new-account incentive bonus required no 1099 reporting. … Read More

IRS Issues Draft of Form 1042 for 2014, to Report Withholding on U.S. Source Income of Foreign Persons

IRS Issues Draft of Form 1042 for 2014, to Report Withholding on U.S. Source Income of Foreign Persons

The IRS has issued a draft of Form 1042 for calendar year 2014 reporting. The first use of the new version of this information reporting form will be the reconciliation of 2014 withholding, due date Match 15, 2015. A draft of the form can viewed on the IRS website. The IRS has not yet … Read More

Ask the Expert: If a payee returns prior-year money to you, do you have to “correct” the 1099-MISC you issued for that prior year?

Ask the Expert: If a payee returns prior-year money to you, do you have to “correct” the 1099-MISC you issued for that prior year?

Question: If a payee returns prior-year money to you, do you have to “correct” the 1099-MISC you issued for that prior year? Answer from Marianne Couch of COKALA Tax Information Reporting Services: This question came up in several different contexts recently. An overpayment of royalties was returned to the payer by personal check; an overpayment … Read More

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IRS Releases Schema of the List of FATCA-compliant Foreign Financial Institutions

Under FATCA, payers (referred to in tax parlance as “withholding agents”) must withhold tax on certain payments to foreign financial institutions (FFIs) that do not agree to report certain information about their U.S. accounts or accounts of certain foreign entities with substantial U.S. owners. An FFI may agree to report certain information about its … Read More

Form 1042/1042-S-Related Penalties Part 1: Failure to Meet Withholding Obligations.

Form 1042/1042-S-Related Penalties Part 1: Failure to Meet Withholding Obligations.

The IRS enforces compliance with withholding obligations by collecting the underwithheld tax from payers who fail to meet their obligations to withhold and timely pay overwithheld taxes. Assessments are increased for penalties as provided by the Code (and explained in the instructions for the various forms) and for interest computed on the taxes and penalties. … Read More

Ask the Expert: Is it a problem that we have received a Form W-9 with a taxpayer ID number starting with a “9”?

Ask the Expert: Is it a problem that we have received a Form W-9 with a taxpayer ID number starting with a “9”?

Question: Is it a problem that we have received a Form W-9 with a taxpayer ID number starting with a “9”? Answer from Marianne Couch of COKALA Tax Information Reporting Services: Not all TINs beginning with a “9” are a problem. It is true that social security numbers (SSNs) never begin with a “9”. When … Read More