The Internal Revenue Service is reminding employers and other businesses that wage statements and independent contractor forms still have a Jan. 31 filing deadline.
Before the Protecting Americans from Tax Hikes (PATH) Act, employers, for the most part, had a longer period of time to file these forms. However, the 2015 law made a permanent requirement for 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 Jan. 31, according to an IRS news release.
Certain Forms 1099-MISC, Miscellaneous Income, filed with the IRS to report non-employee compensation to independent contractors are also due at this time. Such payments are reported in box 7 of this form.
The early filing date means the IRS can more easily detect refund fraud by verifying income that individuals report on their tax returns. Employers can avoid penalties by filing the forms on time and without errors. The IRS recommends e-file as the quickest, most accurate and convenient way to file these forms, the news release added.
Get a Jump on the Due Date
To get started employers should verify employees’ information. This includes names, addresses, and Social Security or individual taxpayer identification numbers. They should also ensure their company’s account information is current and active with the Social Security Administration before January. If paper Forms W-2 are needed, they should be ordered early.
Automatic extensions of time to file Forms W-2 are not available. The IRS will only grant extensions for very specific reasons. Details can be found on the instructions for Form 8809, Application for Time to File Information Returns.
Interest Rates Remain the Same for First Quarter 2020
Also, the Internal Revenue Service recently announced interest rates will remain the same for the calendar quarter beginning Jan. 1, 2020. The rates will be:
- 5% for overpayments (4% in the case of a corporation);
- 2.5% for the portion of a corporate overpayment exceeding $10,000;
- 5% for underpayments; and
- 7% for large corporate underpayments.
Under the Internal Revenue Code, the rate of interest is determined quarterly. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points, a news release stated.
Typically, in the case of a corporation, the underpayment rate is the federal short-term rate plus 3 percentage points and the overpayment rate is the federal short-term rate plus 2 percentage points. The rate for large corporate underpayments is the federal short-term rate plus 5 percentage points. The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point, according to the IRS news release.
The interest rates announced are computed from the federal short-term rate determined during October 2019 and became effective Nov. 1, 2019, based on daily compounding.
Source: Internal Revenue Service