Category Archives: Uncategorized

Businesses: Don’t forget the upcoming deadline for wage statements and independent contractor forms. Employers are required to file their copies of Form W-2 and Form W-3 with the Social Security Administration by Jan. 31. This deadline also applies to certain Forms 1099-MISC filed with the IRS to report nonemployee payments to independent contractors. An extension of time to file is no longer automatic, and the IRS will only grant extensions for very specific reasons. “Failure to file these forms correctly and timely may result in penalties,” the IRS stated.

If you have any questions on how to file these forms, contact Langdon & Company today!

Employers must exert a certain amount of time and resources to properly retaining their income tax records. But these aren’t the only documents you need to maintain. Retention of your organization’s payroll records is also important.

Rule of thumb

Most employers must withhold federal income, Social Security and Medicare taxes from their employees’ paychecks. As such, you must keep records relating to these taxes for at least four years after the due date of an employee’s personal income tax return (generally, April 15) for the year in which the payment was made. This is often referred to as the “records-in-general rule.”

These records include your Employer Identification Number, as well as your employees’ names, addresses, occupations and Social Security numbers. You should also keep for four years the total amounts and dates of payments of compensation and amounts withheld for taxes or otherwise ― including reported tips and the fair market value of noncash payments.

It’s also important to track and retain the compensation amounts subject to withholding for federal income, Social Security and Medicare taxes, and the corresponding amounts withheld for each tax (and the date withheld if withholding occurred on a day different from the payment date). Where applicable, note the reason(s) why total compensation and taxable amount for each tax rate are different.

Other data and documents

A variety of other data and documents fall under the records-in-general rule. Examples include:

• The pay period covered by each payment of compensation,
• The employee’s Form W-4, “Employee’s Withholding Allowance Certificate,”
• Each employee’s beginning and ending dates of employment,
• Statements provided by employees reporting tips received,
• Fringe benefits provided to employees and any required substantiation,
• Adjustments or settlements of taxes, and
• Amounts and dates of tax deposits.

Follow the rule, too, for records relating to wage continuation payments made to employees by the employer or third party under an accident or health plan. Such records should include the beginning and ending dates of the period of absence, and the amount and weekly rate of each payment (including payments made by third parties). Also keep copies of each employee’s Form W-4S, “Request for Federal Income Tax Withholding From Sick Pay,” and, where applicable, copies of Form 8922, “Third-Party Sick Pay Recap.”

Simple rule, complex info

As you can see, the records-in-general rule is fairly simple, but the various forms and types of information involved are complex. Please contact our firm for assistance in managing the financial aspects of your role as an employer.

An ex-wife gets no tax relief. In general, married taxpayers who file a joint tax return are “jointly and severally liable” for the tax due on the return. However, spouses may be eligible for “innocent spouse” relief if they can prove they didn’t know about an understatement of tax. In one case, a married couple filed a joint return and later divorced. The U.S. Tax Court ruled the ex-wife wasn’t entitled to innocent spouse relief with respect to two sources of income earned by the ex-husband because she was aware he had received 1099 forms. (TC Summ. Op. 2017-95)

Education expenses may be deductible, but not if the education is needed as a minimum requirement of the taxpayer’s current job, or if it qualifies him or her for a new profession. In one case, a taxpayer was hired as a speech pathologist, but she didn’t have the required master’s degree. After obtaining that degree, she deducted the costs on her tax return, but the IRS disallowed the deductions. The U.S. Tax Court agreed, because the degree was needed to meet the minimum requirements of her job and also qualified her for a new profession. (TC Summary Op 2017-93)

Employers: Withholding guidance coming soon. With the new tax law now in place, Form W-4 will need to be substantially revised. On Dec. 26, the IRS announced it is working on withholding guidance and anticipates issuing it this month. Employers and payroll companies will be encouraged to implement the changes in Feb. The IRS stated the information will be designed to work with W-4 forms already filed. Use of the new withholding tables will allow employees to see changes in their paychecks as early as Feb. Until then, employers should continue using 2017 tables.

by Tony Pandiscia

In guidance released in January, 2017, the Internal Revenue Service [“IRS”] announced a new extension procedure for organizations required to file Form 990, “Return of Organization Exempt from Income Tax”.  Tax Exempt Organizations seeking an extension will now file a “single” Form 8868 to request an automatic 6 month maximum extension of time to file the annual tax return.  Previously Tax Exempt Organizations intending to avail themselves of the full statutory extension period would be required to file 2 consecutive 3 month extensions, provide a valid reason for the extension request and sign the extension “under penalty of perjury”.  The new Form 8868 filing procedure will also apply to filers of other annual returns such as Form 990EZ [“Short Form Return of Organization Exempt from Income Tax”], Form 990PF [“Return of Private Foundation”], and Form 5227 [“Split Interest Trust Information Return” used by Charitable Trusts].  Note that Form 990-T [“Exempt Organization Business Income Tax Return”] that is required for Tax Exempt Organizations who generate Unrelated Business Income Tax [“UBIT”] has always been subject to a 6 month extension and will continue to do so under the new Form 8868 process.

The new extension form will apply commencing with the filing of “2016 tax returns” during calendar year 2017 [i.e. fiscal years with a “beginning date” in 2016] and must be filed prior to the due date for filing of the respective tax return.  As a reminder, a Form 990 is initially due 4 ½ months following the organization’s fiscal year end.  For “control or affiliate groups,” a separate extension form must be filed for each respective organization or affiliate that has an annual filing requirement.  Payments required (i.e. such as for “UBIT”) should accompany the extension form.  The Form 8868 may at the discretion of the filer be submitted via regular mail to the Ogden, UT IRS Service Center or electronically filed using any approved “EFILE” processing system.  Finally, note that this revised extension procedure applies to annual Federal Form 990 (and similar) filings for a Tax Exempt Organization and does not directly affect any State-mandated annual filing requirements.

We will be discussing with our respective clients the new extension procedures during the next few months, however anyone may contact Langdon & Company LLP should you have any questions.

Tony ([email protected]) is the Tax Partner with Langdon & Company LLP.  He is a CPA and also an attorney, advocating for clients on many levels-including with the State and the IRS.

by Rachel Owens

We have an official update from the NC Office of the Controller!

They have announced that NO Adult Care Cost Report will be due in 2016 after the General Assembly passed House Bill 1030, which changed the General Statute 131D-4.2 stating the ACH Cost Reporting requirements.  These reporting requirements changed to every OTHER year instead.

Therefore, the next cost report required will be for 2017.  The deadline has not been set, nor the year end for that cost report.  We will continue to be in communication with our contacts at the state to get information as it comes in, and pass it along to you.

Click here to see the official announcement.  If you have additional questions about cost reports or other ways Langdon & Company LLP can help your Organization, contact us!

Rachel ([email protected]) is an Senior Accountant who works primarily with healthcare clients, providing all their Medicare and Medicaid reimbursement reporting needs.