Information returns are due to the IRS at the beginning of each fiscal year. Whether you've made payments to
thirds parties or to employees, you might need to report these payments. Various forms exist (W-2, W-2G, 1042-S, 1094-C, 1095, 1097, 1098, 1099 1099-NEC, 3921, 3922, 5498, 8027) with various deadlines and rules. We focus this short article on information returns 1099.
As we approach January 31st, we are dealing with a new information return: Form 1099-NECAs we approach January 31st, we are dealing with a new information return: Form 1099-NEC. NEC stands for Non-Employee Compensation. Typically, contractors paid during the fiscal year 2020 will receive a 1099-NEC.
As a payor, your duty to the IRS is to send a report 1099 with information regarding payments above $600 in the aggregate made to third parties during the year. The deadline is January 31, 2021, and on form 1099-NEC the IRS did not allow an extension to file (exceptions apply).
It is highly recommended you keep a copy of W-9s requested to your business partners during the course of the year. W-9s should be updated each fiscal year, so you can report the information accurately to the IRS.
Regarding the redesigned form 1099-MISC, and following the IRS instructions, the recipients should receive notice by January 31, 2021 and you must file the form with the IRS no later than February 28, 2021 (or March 31, 2021 if filing electronically). You might as well request a 30-day extension to file.
Failure to comply with the information reporting may trigger penalties.
Contact your legal/tax advisor for additional questions and to help you comply with the information returns this year.
Following the recent decisions to push back Tax Day to July 15, 2020, most of the States also decided to delay the 2019 corporate tax filing and payment to July 15, 2020.
We worked on providing you the current (as of April 8, 2020) deadlines applicable to corporate income tax returns, payments and estimated tax Q1 & Q2-2020 for all States. If your tax year ends is different than December 31st or have any concern regarding the tax filings or payment, our office remains open to help you.
|CO||7/15/20||7/15/20||7/15/20||2019 TR automatic extension until 10/15/2020|
|MN||4/15/20||4/15/20||6/15/20||C corporations receive an automatic extension to file their Minnesota return to the later of 7 months after the due date or the date of any federal extension to file.|
|NC||7/15/20||4/15/20||6/15/20||No penalties for filing on 7/15/2020 but interest will be charged after 4/15/2020|
|NH||5/15/20||5/15/20||6/15/20||The state relief is provided only to Business Tax taxpayers whose tax year 2018 total tax liability was $50,000 or less. Otherwise, Business taxpayers must pay in full at least the tax liability determined in 2018 or 2019.|
|NM||7/15/20||7/15/20||7/15/20||Estimated tax penalty will be waived but interest will be charge from the original due date.|
|OH||5/10/20||5/10/20||8/10/20||No corporate income tax but Commercial Activity Tax due|
|VA||6/1/20||6/1/20||6/15/20||Extension due 5/1/2020|
|NYC||4/15/20||3/15/20||6/15/20||Can request waiver of penalty|
CARES Act H.R. 748
"Coronavirus Aid, Relief, and Economic Security Act"
The bill is on its way to be signed by the President.
State shall enter into and participate in an agreement with the Secretary of Labor.
Employees will get the amount determined under the state law PLUS an additional $600 "Federal Pandemic Unemployment Compensation" – Weekly compensation.
State will get reimbursed by the Federal Government.
- Recovery Rebates for individuals
Taxpayers will receive a tax credit within the next few weeks.
It is a credit against the tax for the taxable year 2020.
The amount of credit is: $1,200 for single or $2,400 married filing joint return + $500 per qualifying child
Phase out: starts $75k for single, $112,500 head of household, $150k joint return
Phase out 5% of the AGI above thresholds.
Example 1: Mr. A and Mrs. A file a joint return in 2018 and 2019. They receive W-2 income. In 2019, their adjusted gross income is $110,000. They will get immediately $2,400 as a tax credit. Later when they file their 2020 tax return (April 2021) they will pay their tax as computed for the fiscal year.
Example 2: Mr. Z is single and pay tax every year. In 2019 his adjusted gross income is $70,000. He will receive $1,200 as a credit against 2020 tax.
All individuals with SSN are concerned except non resident aliens, estate and trust
The credit is automatically sent on bank account on file after 1/1/2018.
Taxpayers will receive a notice from the Secretary within 15 days of the payment
The condition is to have filed a tax return in 2018. If not, you can file 2019 ASAP in order to receive the credit on your bank account.
- Individual Retirement Plan
IRC Section 401(a)(9): Annuity contracts subject to minimum distribution rules, the CARES Act changes the distribution rules for 2020
- Charitable contribution $300 allowed "above the line"
Also, corporations will be allowed to deduct 2020 charitable contribution 2020 deductible up to the maximum of 25% of taxable income over the amount of all other charitable contributions allowed
- Employee Retention Credit for Employers subject to Closure due to COVID-19
Credit employment tax 50% of qualified wages. Qualified wages for quarter for any employee not to exceed $10,000
The excess credit is refundable. The credit applies for the period beginning after 12/31/2019.
Eligible employers: engaged in trade or business in 2020 and is fully or partially suspended activity due to the virus + significant decline in gross receipt ie less than 50% for the same calendar quarter in the prior year.
Health expenses included in qualified wages.
- Limitation business interest Section 163(j) for 2019 and 2020 limit 50% of adjusted taxable income
- Credit Protection during the Pandemic
When the creditor makes am accusation with respect to 1 or more payments on a credit obligation or account of a consumer and the consul er respects the terms of the accommodation, the creditor report the credit obligation or account as current
- Mortgage loan
Borrower can request for forbearance of foreclosure up to 180 days no additional fees, no penalties, or interests. Borrower must show financial hardship. Ask your lender.
Foreclosure moratorium: related eviction delayed at least 60 days starting March 18, 2020
New qualified medical expenses
Long time overdue, the federal government allows taxpayer to deduct expenses related to Menstrual care products (naming tampon, pad, liner, cup, sponge, or similar product used by individuals with respect to menstruation or other genital-tract secretions)