Tax

Tax Due Dates for February 2020

February 10

Employees – who work for tips. If you received $20 or more in tips during January, report them to your employer. You can use Form 4070.

Employers – Social Security, Medicare, and withheld income tax. File Form 941 for the fourth quarter of 2019. This due date applies only if you deposited the tax for the quarter in full and on time.

Farm Employers – File Form 943 to report Social Security and Medicare taxes and withheld income tax for 2019. This due date applies only if you deposited the tax for the year in full and on time.

Certain Small Employers – File Form 944 to report Social Security and Medicare taxes and withheld income tax for 2019. This tax due date applies only if you deposited the tax for the year in full and on time.

Employers – Nonpayroll taxes. File Form 945 to report income tax withheld for 2019 on all nonpayroll items. This due date applies only if you deposited the tax for the year in full and on time.

Employers – Federal unemployment tax. File Form 940 for 2019. This due date applies only if you deposited the tax for the year in full and on time.

February 18

Employers – Social Security, Medicare, and withheld income tax. If the monthly deposit rule applies, deposit the tax for payments in January.

Employers – Nonpayroll withholding. If the monthly deposit rule applies, deposit the tax for payments in January.

All businesses. Give annual information statements to recipients of certain payments made during 2019. You can use the appropriate version of Form 1099 or other information return. This due date applies only to payments reported on Form 1099-B, Form 1099-S, and substitute payments reported in Box 8 or gross proceeds paid to an attorney reported in Box 14, respectively.

Individuals – If you claimed exemption from income tax witholding last year on the Form W-4 you gave your employer, you must file a new Form W-4 by this date to continue your exemption for another year.

February 19

Employers – Begin withholding income tax from the pay of any employee who claimed exemption from withholding in 2019, but did not give you a new Form W-4 to continue the exemption this year.

February 28

Businesses – File information returns (for example, certain Forms 1099) for certain payments you made during 2019. However, Form 1099-MISC reporting nonemployee compensation must be filed by January 31. There are different forms for different types of payments. Use a separate Form 1096 to summarize and transmit the forms for each type of payment. See the General Instructions for Certain Information Returns for information on what payments are covered, how much the payment must be before a return is required, what form to use, and extensions of time to file.

If you file Forms 1097, 1098, 1099 (except a Form 1099-MISC reporting nonemployee compensation), 3921, 3922 or W-2G electronically, your due date for filing them with the IRS will be extended to March 31. The due date for giving the recipient these forms generally remains January 31.

Payers of Gambling Winnings – File Form 1096, Annual Summary and Transmittal of U.S. Information Returns, along with Copy A of all the Forms W-2G you issued for 2019. If you file Forms W-2G electronically, your due date for filing them with the IRS will be extended to March 31. The due date for giving the recipient these forms remains January 31.

Health Coverage Reporting – If you are an Applicable Large Employer, file paper Forms 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns, and 1095-C with the IRS. For all other providers of minimum essential coverage, file paper Forms 1094-B, Transmittal of Health Coverage Information Returns, and 1095-B with the IRS. If you are filing any of these forms with the IRS electronically, your due date for filing them will be extended to March 31.

March 2

Large Food and Beverage Establishment Employers – with employees who work for tips. File Form 8027, Employer’s Annual Information Return of Tip Income and Allocated Tips. Use Form 8027-T, Transmittal of Employer’s Annual Information Return of Tip Income and Allocated Tips, to summarize and transmit Forms 8027 if you have more than one establishment. If you file Forms 8027 electronically, your due date for filing them with the IRS will be extended to April 2.

Health Coverage Reporting – If you are an Applicable Large Employer, provide Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, to full-time employees. For all other providers of minimum essential coverage, provide Form 1095-B, Health Coverage, to responsible individuals.

Farmers and Fishermen – File your 2019 income tax return (Form 1040) and pay any tax due. However, you have until April 15 to file if you paid your 2019 estimated tax by January 15, 2020.

• By Leon Clinton
• February 2, 2020

Tax Planning Includes Keeping Good Records

It’s January and tax season is right around the corner. For many people that means scrambling to collect receipts, mileage logs, and other tax-related documents needed to prepare their tax returns. If this describes you, chances are, you’re wishing you’d kept on top of it during the year so you could avoid this scenario yet again. With this in mind, here are seven suggestions to help taxpayers like you keep good records throughout the year:

1. Taxpayers should develop a system that keeps all their important info together. They can use a software program for electronic recordkeeping. They could also store paper documents in labeled folders.

2. Throughout the year, they should add tax records to their files as they receive them. Having records readily at hand makes preparing a tax return easier.

3. It may also help them discover potentially overlooked deductions or credits. Taxpayers should notify the IRS if their address changes. They should also notify the Social Security Administration of a legal name change to avoid a delay in processing their tax return.

4. Records that taxpayers should keep include receipts, canceled checks, and other documents that support income, a deduction, or a credit on a tax return.

5. Taxpayers should also keep records relating to property they dispose of or sell. They must keep these records to figure their basis for computing gain or loss.

6. In general, the IRS suggests that taxpayers keep records for three years from the date they filed the return.

7. For business taxpayers, there’s no particular method of bookkeeping they must use. However, taxpayers should find a method that clearly and accurately reflects their gross income and expenses. The records should confirm income and expenses. Taxpayers who have employees must keep all employment tax records for at least four years after the tax is due or paid, whichever is later.

Well-organized records make it easier for taxpayers to prepare their tax returns. Good recordkeeping also helps provides answers in the event that a taxpayer’s return is selected for examination or if the taxpayer receives an IRS notice. If you need help setting up a recordkeeping system that works for you, don’t hesitate to call.

• By Leon Clinton
• January 24, 2020

Opportunity Zone Guidance Finalized

Final regulations were recently issued regarding details about investment in qualified opportunity zones (QOZ) that modified and finalized proposed regulations for QOFs and QOZ businesses that were previously issued on October 28, 2018, and May 1, 2019.

The final regulations provide additional guidance for taxpayers who are eligible to make an election to temporarily defer the inclusion in gross income of certain eligible gain. The final regulations also address the ability of such taxpayers’ eligibility to increase the basis in their qualifying investment equal to the fair market value of the investment on the date that it is sold, after holding the equity interest for at least 10 years.

Here’s what it means for taxpayers investing in qualified opportunity zones:

The statute permits the deferral of all or part of a gain that would otherwise be included in income if corresponding amounts are invested into a QOF. The gain is deferred until an inclusion event or Dec. 31, 2026, whichever is earlier.

Furthermore, the final regulations provide a list of inclusion events and provide guidance that allows taxpayers to determine the amount of income that must be included at the time of the inclusion event or December 31, 2026.

Also addressed are the various requirements that must be met to qualify as a QOF, as well as the requirements that an entity must meet to qualify as a QOZ business. Specifically, how an entity becomes a QOF or QOZ business and the rules regarding the requirement that a QOF or QOZ business engage in a trade or business.

The final regulations also retain the general approach of the proposed regulations while providing additional guidance and clarification regarding the rules regarding QOZ business property.

Related forms, instructions, and other information taxpayers need to take advantage of this update are available in January 2020. For more information about this and other TCJA provisions, please contact the office for assistance.

• By Leon Clinton
• January 22, 2020