It might seem like 2015’s tax season just ended, but that doesn’t mean you don’t have to start thinking about 2016’s yet.
IRS is constantly drafting new rules and announcements that impact year-end – and we have the inside scoop for your Payroll people.
At the recent American Payroll Association’s conference in Nashville, A/P reporting updates was a hot topic in APA Education Advisor Jim Medlock’s 1099 session.
He reviewed a number of changes that A/P will need to be aware of when 2016’s year-end quickly rears its head.
While that tax season is still months away, it’s never too soon to start preparing.
Suiting up for a smooth year-end
Here’s what you should know:
1. The changes to the 1099 deadlines. Sure, by now you’ve heard it all over the place: The 1099 deadlines have been bumped up to Jan. 31.
But here’s the thing: That’s for amounts in box 7 of the 1099-MISC.
If you have amounts in more than just box 7, that leaves you with two options, Medlock said. You can either:
- report the entire 1099 at the earlier date, or
- report the amounts in box 7 by Jan. 31, and then report the other amounts at the dates you’re used to.
2. Handling LLCs. Should you send them 1099s? In the 1099 instructions, IRS says an LLC shouldn’t get one if it’s a corporation.
But as Medlock pointed out, IRS sometimes contradicts itself. And in a recent notice, the Service said LLCs should be treated as non-corporations because they’re typically pass-through entities.
The safe bet: Send the 1099 unless the LLC can show proof from IRS that it’s a legitimate corporation.
3. Preparing to e-file. Earlier this year, IRS upgraded its security standards so that anyone filing electronically will have to use updated browsers.
To ensure you’re ready, Medlock recommends sending a test file to the Service each year to make sure everything is in working order.
The tests are typically available on the IRS website by November, and IRS will usually respond within 2-3 days.