Changes in Tax and Reporting Rules
By: Charles L. Telk Jr., CPA, Senior Tax Advisor | email
Business Mileage Rate
The IRS has lowered the business mileage reimbursement rate to $.55 effective January 1, 2009 – down from the prior amount of $.585.
W-2/W-3 & 1099/1096
W-2 and 1099 forms must be sent to the recipient by January 31, 2009. However, the related form W-3 and 1096 are not due until March 2, 2009. While you may think it a good idea to mail these w-3 and 1096 transmittal forms early – it can create big problems if you do.
The extra month is provided to allow recipients to review their w-2’s and 1099’s and alert the issuer to any mistakes. It is far easier to correct a potential problem prior to filing the forms W-3 and 1096 than filing amended reports. So, get forms w-3 and 1096 ready to file, but actually file them closer to their due date of March 2, 2009.
It is important for each business that issues checks to non-employees to have a form W-9 on file. Form W-9 is the non-employee equivalent of form W-4. Now is a good time to review your files to make certain that these forms are on hand and current. The information contained on form W-9 is used to determine if a form 1099 must be filed.
Even you don’t need to issue a 1099, you are still required to have a W-9 on file. If a proper W-9 is not on file, backup withholding should be withheld from each check issued to the non-employee. Otherwise, the IRS can disallow related tax deductions and assess taxes equal to the backup withholding which you did not withhold, plus penalty and interest.
Work Opportunity Tax Credit
Any new employees aged 18 to 39, depending on the county that they reside in, may qualify you, as an employer, for a tax credit of up to $2,400 per qualifying employee. Due to specific timing and certification requirements associated with this credit, please contact us if you have hired or will hire any new employees aged 18-39.