Author Archives: Phil Selvey

Deadline for Filing Wage Statements and Independent Contractor Forms

January 30, 2019

The Internal Revenue Service reminded employers and other businesses of the January 31, 2019, filing deadline that applies to filing wage statements and independent contractor forms with the government.

The Protecting Americans from Tax Hikes (PATH) Act requires employers to file their copies of Form W-2, Wage and Tax Statement, and Form W-3, Transmittal of Wage and Tax Statements, with the Social Security Administration by January 31, 2019. The January 31, 2019, deadline also applies to certain Forms 1099-MISC, Miscellaneous Income, filed with the IRS to report non-employee compensation to independent contractors. Such payments are reported in box 7 of this form.

This deadline makes it easier for the IRS to verify income that individuals report on their tax returns and helps prevent fraud. Failure to file these forms correctly and timely may result in penalties. As always, the IRS urges employers and other businesses to take advantage of the accuracy, speed and convenience of filing these forms electronically.

An extension of time to file Forms W-2 is no longer automatic. The IRS will only grant extensions for specific reasons. Details can be found on the instructions for Form 8809, Application for Extension of Time to File Information Returns.

The IRS noted that some employers who ordered paper information and employer returns may not receive them in time to meet the January 31, 2019, deadline and should consider an alternate source for these forms. The IRS is filling these orders as quickly as possible. Click here for more information.

For more information, read the instructions for Forms W-2 & W-3 and the Information Return Penalties page at IRS.gov.

New Tax Law Allows Small Businesses to Expense More, Expands Bonus Depreciation

November 26, 2018

In a November 15 news release, the IRS reminded small business taxpayers that changes to the tax law per the Tax Cuts and Jobs Act (TCJA) mean they can immediately expense more of the cost of certain business property. Many are now able to write off most depreciable assets in the year they are placed into service.

Section 179 expensing changes

A taxpayer may elect to expense all or part of the cost of any Section 179 property and deduct it in the year the property is placed in service. The new law increased the maximum deduction from $500,000 to $1 million. It also increased the phase-out threshold from $2 million to $2.5 million. These changes apply to property placed in service in taxable years beginning after December 31, 2017, and will most likely affect 2018 business tax returns filed next year.

See New rules and limitations for depreciation and expensing under the Tax Cuts and Jobs Act for more information.

New 100 percent, first-year ‘bonus’ depreciation

The 100 percent depreciation deduction generally applies to depreciable business assets with a recovery period of 20 years or less and certain other property. Machinery, equipment, computers, appliances and furniture generally qualify. The law also allows expensing for certain film, television, and live theatrical productions, and used qualified property with certain restrictions.

See the proposed regulations for more details.

Taxpayers may elect out of the additional first-year depreciation for the taxable year the property is placed in service. If the election is made, it applies to all qualified property that is in the same class of property and placed in service by the taxpayer in the same taxable year. The instructions for Form 4562, Depreciation and Amortization, provide details.

Business owners can refer to the Tax Reform Provisions that Affect Businesses page for updates.

More resources:

Publication 535, Business Expenses
Publication 946, How to Depreciate Property
Additional First Year Depreciation Deduction (Bonus) FAQs
Tax Cuts and Jobs Act: A Comparison for Businesses

Tax Reform Changes Depreciation Limits on Luxury Automobiles

November 25,2018

The Tax Cuts and Jobs Act changed depreciation limits for passenger vehicles placed in service after Dec. 31, 2017. If the taxpayer doesn’t claim bonus depreciation, the greatest allowable depreciation deduction is:

  • $10,000 for the first year
  • $16,000 for the second year
  • $9,600 for the third year
  • $5,760 for each later taxable year in the recovery period

If a taxpayer claims 100 percent bonus depreciation, the greatest allowable depreciation deduction is:

  • $18,000 for the first year
  • $16,000 for the second year
  • $9,600 for the third year
  • $5,760 for each later taxable year in the recovery period

This change applies to property placed in service after Dec. 31, 2017.