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Remember those postcard-sized tax returns? They’re here. Sort of. They’re not exactly postcard-sized, but the new form 1040 is smaller than before. The Internal Revenue Service (IRS) has made the new form 1040 and the accompanying six new schedules for the 2018 tax year available on the IRS website.

Here’s a peek at page one of the form 1040:

1040 draft

And page two:

draft 1040 p2

The form may look easier, but the instructions didn’t get any shorter. The instructions for the form 1040 for 2018 weigh in at 117 pages.

One change worth noting (and previously called out in the drafts): The new form 1040 is intended to replace not only the current form 1040 but also forms 1040A and 1040EZ. 

The instructions state:

For 2018, you will no longer use Form 1040A or Form 1040EZ as you may have in the past. Instead, you will use the redesigned Form 1040, which now has six new numbered schedules in addition to the existing lettered schedules like Schedules A, B, C, D, E and F. 

The plan is for taxpayers to only file the base form 1040 plus any new schedules that apply to their own facts and circumstances.

Confused yet? Don’t be. According to IRS Commissioner Charles Rettig, if you e-file your return, you likely won’t notice much of a change at tax time. Speaking to reporters yesterday, Rettig confirmed taxpayers using tax software should expect to see roughly the “same interview format” as before tax reform.

Whether filing on paper or e-filing, taxpayers will recognize a familiar checkbox: There remains a spot to indicate whether you had full-year health coverage or whether you are exempt. It’s front and center on page one of the form 1040 for 2018 (it was on the second page of the form 1040 at line 61 for 2017).

While some lawmakers have touted the disappearance of the shared responsibility payment, the IRS reminds taxpayers that the law was still in effect for 2018. You must make a shared responsibility payment if, for any month in 2018, you, your spouse (if filing jointly), or anyone you can or do claim as a dependent didn’t have coverage and doesn’t qualify for a coverage exemption.

Here’s some more about how the new forms are alike and how they differ:

  • Names and Social Security Numbers. The spaces for names and Social Security numbers remain largely the same.
  • Signatures. The spaces for signatures remain on page one and are largely the same, but there is no longer a separate signature box on page two.
  • Filing Status. Despite differences on the draft version, the final form 1040 retains the choices for the five filing statuses: Single, Married filing jointly, Married filing separately, Head of household or Qualifying widow(er).
  • Presidential election campaign. The option to contribute to the Presidential election campaign is the same.
  • Personal exemptions. There are no personal exemptions available for the tax years 2018 through 2025, so those line items have been removed on the first and second pages of the form 1040.
  • Dependents. On the 2017 form 1040, there was space on the front page to list four dependents, but the draft form eliminated two lines, meaning families like mine (I have three kids) would need to add another page. That’s been changed in the final version to again include space for four dependents (thanks, IRS).
  • Income reporting. The income reconciliation (that block on the front page where you used to transfer your items of income from separate schedules) has been moved from the first page of the return to the second. Income from each of Schedules C, D, E, and F are now reported on a new Schedule 1. You can see it here (downloads as a PDF).
  • Adjusted income reporting. Most of this entire block found on page one of the 2017 1040 has been eliminated or consolidated on other spots in the return. Good ol’ line 37 (adjusted gross income, or AGI) is now line 7; pay attention to this moving ahead since many other federal (and financial) forms ask for AGI by line number.
  • Standard deduction. Your standard deduction amounts still appear on page two, but the amounts are different (you can find the 2018 amounts here).
  • Qualified business deduction. Remember the new qualified business deduction? The potentially confusing one that requires a flowchart to understand? It gets just one line on the new 1040 (line 9) with a note to “see instructions.” The instructions are a few pages long and include an additional worksheet.
  • Payments. The ten separate lines for tax payments, including certain tax credits, have been consolidated into a line for withholding, another line for refundable tax credits and instructions to complete a separate Schedule 5 if needed.
  • Third Party Designee. The space that previously allowed you to designate another person to discuss this return with the IRS has been moved to a new Schedule 6, though there is a tick box if you wish for your preparer to be a Third Party Designee.

The Tax Cuts and Jobs Act of 2017 (TCJA) is nearly a year old, and the Internal Revenue Service (IRS) is still struggling to figure out how to assist taxpayers with their withholding under the new law. The push from Congress to make things “simple” means that many taxpayers might not be withholding enough – and that may not change any time soon.

In February, the IRS released an updated form W-4Employee’s Withholding Allowance Certificate (downloads as a PDF) to reflect changes in the new tax law. But the form didn’t cover situations for all taxpayers. So, in June, the IRS released a draft version of an updated form W-4—this one for 2019—on its website (downloads as a PDF). That draft was immediately met with criticism from tax professionals who feared that it might not protect taxpayers from claiming the wrong withholding.

The IRS clearly expected criticism, cautioning on the draft W-4 that “we anticipate it is likely that this form will change before being released as final.” The agency promised to revisit the form, and this week, issued a statement confirming that it will not release a 2019 form W-4 which is significantly different from the current form. A new draft of that form for 2019 will be available in the coming weeks, but it will look like the 2018 version.

As to the pushback? It was not insignificant. Tax professionals wrote letters expressing their concerns included Jean C. Nelsen, president of the National Association of Enrolled Agents (NAEA) and Annette Nellen, chair of the AICPA Tax Executive Committee. Nelsen called the draft form and instructions “too long and too complicated,” pointing out “the taxpayer is directed to reference up to 12 other publications and forms” (You can read the NAEA letter in full here). Nellen also called the form “unduly complicated,” noting that it “essentially requires taxpayers to calculate their tax liability.” (You can read the AICPA letter, which downloads as a PDF) in full here.)

In response, the IRS has indicated that “Following feedback from the payroll and tax communities, the Treasury Department and the IRS will incorporate important changes into a new version of the Form W-4, Employee’s Withholding Allowance Certificate, for 2020.” The new version will help employees improve withholding accuracy, and fully reflect changes included in the Tax Cuts and Jobs Act.

That’s right. To be clear, a law that Congress pushed through at the end of 2017, which was effective beginning in 2018, won’t have clear guidance for taxpayers on withholding until 2020.

It would be easy to blame IRS for not responding more quickly. But a great deal of blame lay at the feet of Congress who pushed through a temporary tax cut which they promised would result in a tax return that could fit on a postcard. The problem, of course, is that we don’t have one-sized fits all taxpayers and the Tax Code still remains quite complicated. Pushing through changes that only apply for a few years doesn’t help. And many of those tax changes – like the loss of the personal exemption amount and the doubling of the standard deduction – are so sweeping that many taxpayers really don’t know what their real tax liability should look like in 2018. Or 2019.

In the meantime, the IRS advises taxpayers to take advantage of the new Withholding Calculator which reflects changes under the new tax law. (You can find the new withholding calculator on the IRS website here.) But as for a new form W-4? As with tax reform, we’ll only have a temporary version for next year.

The hallmark of the Tax Cuts and Jobs Act of 2017 (TCJA) was supposed to be its simplicity. By eliminating the personal exemption amounts and doubling the standard deduction, the theory was that taxpayers would have a tax return that was so simple that it could fit onto a postcard. In the weeks and months following the TCJA, that postcard got a little bit bigger (you can see more on the postcard here). At the same time, the form W-4 got a little bit smaller. But, tax practitioners warn, smaller doesn’t mean easier. Simple, it turns out, is still hard.

Here’s what you need to know. In February, the Internal Revenue Service released an updated form W-4Employee’s Withholding Allowance Certificate (downloads as a PDF). At the time, the IRS cautioned that if you need to make changes to your withholding for 2018, you complete the form W-4 and submit to your employer as soon as possible: You do not send the form W-4 to the IRS.

At the same time, the IRS advised taxpayers to take advantage of the new Withholding Calculator which reflects changes under the new tax law. (You can find the new withholding calculator on the IRS website here.)

“Withholding issues can be complicated, and the calculator is designed to help employees make changes based on their personal financial situation,” Acting IRS Commissioner David Kautter said. “Taking a few minutes can help taxpayers ensure they don’t have too little—or too much—withheld from their paycheck.”

In June, the IRS released a draft version of an updated form W-4—this one for 2019—on its website (downloads as a pdf). The draft has been met with criticism from tax professionals who suggest that the new “simple” form may not protect taxpayers from claiming the wrong withholding.
How simple is it? The form is, in fact, shorter than the existing form.

But like that postcard-size 1040, many of the changes are attributable to deleted lines that merely shift calculations to new schedules or that require the use of multiple versions of the form. For example, the “Two-Earners/Multiple Jobs Worksheet” has been eliminated and instead, the IRS advises that you complete a form W-4 for every job in the household. There are, however, no separate instructions advising about the potential impact on your withholding of holding more than one job or a double-income family where both spouses work.

Additionally, unlike the current form W-4 where you simply calculate the number of allowances to claim, the new form basically requires you to estimate gross income, deductions, and credits for the year. In other words, it’s almost a mini-version of your tax return—done in advance.

This is concerning for tax professionals. This summer, Jean C. Nelsen, president of the National Association of Enrolled Agents (NAEA), issued a letter to the IRS raising a number of issues. Nelsen warns that the current draft form “both increases complexity (by an order of magnitude) and, in many cases, decreases accuracy” for taxpayers.

The draft form W-4 instructions and accompanying worksheets—the easier, more straightforward version—actually clocks in at 11 pages. That is, writes Nelsen, “too long and too complicated.” To complete the form could take significantly more time as well since, as Nelsen points out “the taxpayer is directed to reference up to 12 other publications and forms.”

Nelsen also cites concern over privacy, since employees may not want to disclose certain information—like a side job—to their employer. Remember that forms W-4 are not submitted to the IRS: They are submitted to your employer for purposes of withholding.

(You can find out more about form W-4 here.)

So what’s the solution? According to Nelsen, the IRS should consider a return to the traditional method of claiming a simple number of exemptions based on the answers to plain-language questions. The NAEA also recommends that there be a single worksheet for all outside income and that the failure to provide enough information should be a default to “Single with 1 exemption” to prevent under-withholding.

Remember: The more allowances you claim, the less federal income tax your employer will withhold from your paycheck (the bigger your take-home pay), while the fewer allowances you claim, the more federal income tax your employer will withhold from your paycheck (the smaller your take-home pay).

You can read the NAEA letter in full here.

The American Institute of CPAs (AICPA) joined their tax pro colleagues in issuing a similar letter of concern. In her July 12 letter, Annette Nellen, chair of the AICPA Tax Executive Committee, called the form “unduly complicated,” noting that it “essentially requires taxpayers to calculate their tax liability.” Citing many of the same issues raised by the NAEA, Nellen suggests that the form should allow taxpayers a simplified method based on the standard deduction to estimate total gross income and that it include an alternative for taxpayers who do not want to provide total gross income on the form.

In addition to the potential privacy issues created by the form between employers and employees, the AICPA expressed concern that the detailed information “poses an increased identity theft security risk as information on this draft form is highly coveted by criminals filing fraudulent tax returns and loan applications.” Now, employers are tasked with keeping that information, including other personal information like taxpayer’s spouse’s wages, “safe and private for an indefinite period of time.”

You can read the AICPA letter in full here (downloads a PDF).

The Internal Revenue Service (IRS) is warning about a new identity-theft scam targeting international taxpayers and non-resident aliens. In the scam, criminals use a fake form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (form downloads as a PDF) to gain personal and bank identification from taxpayers.

It’s a variation on an old scheme. In fact, some version of this scam been happening for more than ten years (downloads as a PDF). The IRS issued similar warnings in 2014, in 2016 and again in 2017. Apparently, old habits die hard.

Here’s how it works. The scammers send a letter to a taxpayer stating that they may be exempt from withholding and reporting income tax. However, the letter advises that the taxpayer needs to authenticate their information by filling out and returning a form W-8BEN – only the attached form W-8BEN a fake.

The form W-8BEN is actually a legitimate tax form. The top looks like this:

w-8 form

The fake form W-8BEN, however, asks for personal details such as your mother’s maiden name, your passport number and PIN codes. The letter (or, in some cases, email or fax) that accompanies the fake form W-8BEN also refers to form W9095. The catch? The form W9095 does not exist. And, the IRS doesn’t require recertification of foreign status.

Don’t be a victim. Remember that the IRS will never:

  • Request personal information, PIN codes or passwords.
  • Call to demand immediate payment over the phone, nor will the agency call about taxes owed without first having mailed you a bill.
  • Threaten to immediately bring in local police or other law-enforcement groups to have you arrested for not paying.
  • Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.
  • Require you to use a specific payment method for your taxes, such as a prepaid debit card, gift card or wire transfer.
  • Ask for credit or debit card numbers over the phone.

If you are a victim of an IRS impersonation scam, you should report it to the Treasury Inspector General for Tax Administration at its IRS Impersonation Scam Reporting site and to the IRS by emailing phishing@irs.gov with the subject line “IRS Impersonation Scam.”

Remember that versions of the scam may continue to evolve – they’ve done so for years. When in doubt, assume it’s a scam.

It’s my annual “Taxes from A to Z” series! If you’re wondering whether you can claim home office expenses or whether to deduct a capital loss, you won’t want to miss a single letter.

W is for W-9.

A form W-9, Request for Taxpayer Identification Number and Certification, is used to provide your taxpayer identification number, such as your Social Security Number (SSN), your Individual Taxpayer Number (ITIN), or your Employer Identification Number (EIN), to certain payers. The form is typically completed by a U.S. person. For this purpose, a U.S. person includes an individual (citizen or resident alien), domestic trust or estate, and a partnership, corporation, company, or association created or organized in or under the laws of the United States.

The information on a form W-9 is used to satisfy certain Internal Revenue Service (IRS) reporting requirements and/or to issue a federal form 1099. Forms 1099 may be issued to report payments for income not included on a form W-2 (for wages) or another tax form. That might include earnings from stocks and dividends, distributions from a pension, annuity, profit-sharing or stock bonus plan, canceled debts and certain real estate transactions.

Taxpayers often don’t blink when asked to complete a form W-9 by a bank or a financial institution but may question why other companies might ask. The short answer is that it’s part of doing business under our current tax laws. Companies that may ask you to complete a form W-9 include resale platforms, sites where you sell goods or services (like Etsy), and companies that offer affiliate or ad revenue (like Google or Amazon). You may also be asked to complete a form W-9 if you provide services as an independent contractor or a freelancer, since the person or company who pays you for those services may be required to report the payments to the IRS on a form 1099-MISC (for more on form 1099-MISC, click here).

Filling out the form is fairly simple.

W-9

(To view a full-sized version, click here. Note that the numbers in the blue circles referenced below may only be viewed in the full-sized version, depending on your browser.)

  • First, you’ll enter your name at the top along with any D/B/A or trade name.
  • Next, check the box that mirrors your federal tax classification. For most individual taxpayers, that will be simply an individual, sole proprietor or a single-member limited liability company (SMLLC) disregarded for federal income tax purposes – that’s the first box.
  • Third, you’ll enter your address.
  • Fourth, enter your tax identification number, or TIN. If you are an individual taxpayer, your TIN is your Social Security Number (SSN) or if you don’t have an SSN, it’s your individual taxpayer identification number (ITIN). If you are a sole proprietor and you have an employer identification number (EIN), you can enter either your SSN or EIN. If you’re organized as an SMLLC that is disregarded for federal income tax purposes, enter your SSN (do not enter the disregarded entity’s EIN).
  • Read over the certification and make sure that you understand and agree.
  • Finally, sign and date and return the form to the requestor – you don’t have to do anything else.

While a copy of various forms 1099 may be submitted to the IRS (as with a form W-2), the form W-9 is not typically transmitted to the IRS. The party that requested the form W-9 is required to keep the form on file, in case of a discrepancy or reporting issue, and to confirm or substantiate backup withholding.

You may be subject to a penalty if you refuse to complete a form W-9. It can also complicate business, banking, and other relationships. If you have a question about whether it’s appropriate to fill out a form W-9 or what to include on the form, check with your tax professional.

For your taxes from A to Z, here’s the rest of the series:

Taxpayer asks:

Dear Taxgirl,

Hi! My son has received a corrected w2 from his employee. On box 12 it has 2 12a dd and 2 different amounts. He doesn’t have an option for 2 12a dds. Is this normal?

Taxgirl says:

If an employer makes a mistake on a form W-2, the employer will issue a corrected form W-2, called a form W-2c, Corrected Wage and Tax Statement.

The form W-2c can be confusing because it includes the original (incorrect) amounts, as well as the corrected amounts. Even more confusing, there are no real distinguishing features between the two on the form other than the headers on the top of the columns. I’m guessing that is what’s throwing you in this case.

Take a look at the form. The first amount listed at box 12a (located at the spot where I’ve placed a blue circle on the blank form above) should match the incorrect amount originally reported to your son on his first form W-2. The second amount listed at box 12 (located at the spot where I’ve place a green circle on the blank form above) should be the correct amount.

w-2c

So what do you do with the form W-2c?

  • If you have already filed your tax return, you may need to file an amended return (but see below).
  • If you have not yet filed your tax return, just use the corrected amounts as reported on the W-2c on your tax return.

In this case, if the “DD” amount at box 12 is the only correction, the good news is that it won’t change your tax picture. The numbers labeled “DD” simply indicate the amount of employer-provided healthcare. Your employer is required to report this amount but it is not taxable. If that’s the only change for your son, you will not need to amend any previously filed return.

For more on understanding your form W-2 – including a list of box 12 codes – check out this article.

Before you go: be sure to read my disclaimer. Remember, I’m a lawyer and we love disclaimers.
If you have a question, here’s how to Ask The Taxgirl.

With tax season in full swing, you probably have a number of tax forms either in hand on on the way. If you’re an employee, one of those forms is the form W-2, Wage and Tax Statement. No matter whether you’re self-preparing your tax return or having your return prepared professionally, you should have a basic understanding of what the form says and how it affects your bottom line. Here’s what you need to know:

A form W-2 (downloads as a PDF) is issued by an employer to an employee. An employer has certain reporting, withholding and insurance requirements for employees that are a bit different from those owed to an independent contractor.

The threshold for issuing a form W-2 is based on dollars. Not time worked. Not position held. Just dollars earned. The magic number is $600. Every employer who pays at least $600 in cash or cash equivalent, including taxable benefits to an employee must issue a form W-2. If any taxes are withheld, including those for Social Security or Medicare, a form W-2 must be issued regardless of how much was paid out to an employee.

If you were paid less than $600 and still received a form W-2, don’t panic: Sometimes, an employer will issue a form W-2 to all employees because it’s easier for them.

An employer prepares six copies of each form W-2 per employee. Yes, that’s a lot of paperwork. If, as the employee, you don’t want to receive paper copies and your employer has an appropriate system in place, you can opt to receive your forms electronically. To do this, you must specifically consent; your employer may not send a form W-2 electronically to any employee who doesn’t consent or who has revoked consent.

  • Copy A looks different from the others forms W-2 because it’s printed in red: the rest are printed in black. Copy A is transmitted to the Social Security Administration (SSA) along with a form W-3 (the form W-3 reports the total of all forms W-2 for the employer). For 2018, the due date for employers to get that information to SSA is January 31 and is the result of the Protecting Americans from Tax Hikes (PATH) Act.
  • Copy 1 is issued to any applicable state, city or local tax department.
  • Copy D is retained by the employer.

As an employee, you get three copies:

  • Copy B is used to report your federal income taxes and is generally filed with your federal income tax return (unless you are e-filing in which case you have to provide it to the preparer but it is not usually forwarded to IRS).
  • Copy 2 is used to report your state, city or local income tax and is filed with the relevant taxing authorities.
  • Copy C is for your records (keep this copy for at least three years after you file or the due date of your return, whichever is later).

The left side of the form is for reporting taxpayer information:

left

Box a. Your Social Security Number (SSN) is reported in box (a). You should always double-check this to make sure it’s correct. If it’s not correct, you need to request a new form W-2 from your employer (that corrected form is called a W-2c). An error could slow the processing of your return. Keep in mind that your entire Social Security Number should appear in this box: while the Regs allow for truncation of numbers on certain forms, it’s not allowable on your form W-2.

Box b. Your employer’s EIN is reported in box (b). An EIN is the employer’s equivalent of your SSN.

Box c. Your employer’s address is reported in box (c). This is the legal address of your employer which may or may not be where you actually work. Don’t let that throw you.

Box d. A control number is an internal number used by your employer or your employer’s payroll department. If your employer doesn’t use control numbers, it’s not a big deal: Box (d) will simply be blank.

Boxes e and f. These appear as one big block on your form W-2. Your full name is reported in box (e). It’s supposed to reflect the name that’s actually on your Social Security card (the SSA isn’t crazy about suffixes, even if you use them, so you shouldn’t see one on your form W-2 unless it’s on your Social Security card). If your name isn’t exactly as it appears on your Social Security card, you may need a new form W-2; ask your employer if you’re not sure (if you need to make a change with SSA, find out how here). Your address is reported at box (f) and should reflect your mailing address, which could be a post office box, and is likely without punctuation (a USPS preference). If your address on the form W-2 isn’t correct, notify your employer: You won’t need a new form W-2, but your employer needs to update his or her records.

The right side of the form is used to report dollars and codes:
right

Box 1 shows your total taxable wages, tips, prizes and other compensation, as well as any taxable fringe benefits. It does not include elective deferrals to retirement plans, pretax benefits or payroll deductions. Since the figure doesn’t include those amounts, it’s not unusual for this amount – like the one in my example – to be less than the amounts included in boxes 2 and 3. This tends to be the number most taxpayers care about the most.

Box 2 reports the total amount of federal income taxes withheld from your pay during the year. This amount is determined by the elections on your form W-4 based on exemptions and any additional withholding. If you find that this number is too low or too high, you’ll want to make an adjustment to your withholding.

Box 3 shows your total wages subject to the Social Security tax. This figure is calculated before any payroll deductions which means that the amount in box 3 could be higher than the number reported in box 1, as in my example. It could also be less than the amount in box 1, if you’re a high-wage earner, since the total of boxes 3 and 7 (see below) cannot exceed the maximum Social Security wage base. If you have more than one job, for Social Security tax purposes, the cap still applies.

Box 4 shows the total of Social Security taxes withheld for the year. Unlike federal income taxes, Social Security taxes are calculated based on a flat rate. The rate is 6.2%. The amount in Box 4 should, then, be equal to the amount in box 3 times 6.2%. Since you should not have more Social Security withholding than the maximum wage base times 6.2%, the amount in box 4 should not exceed $7,347.00. In my example, the figure is $50,000 x .062, or $3,100.00.

Box 5 indicates wages subject to Medicare taxes. Medicare taxes generally do not include any pretax deductions and will include most taxable benefits. That, combined with the fact that unlike Social Security wages, there is no cap for Medicare taxes, means that the figure in box 5 may be larger than the amounts shown in box 1 or box 3. In fact, it’s likely the largest number on your form W-2.

Box 6 shows the amount of Medicare taxes withheld for the year. Like Social Security taxes, Medicare taxes are figured based on a flat rate. The rate is 1.45%. For most taxpayers, this means that the figure in box 6 is equal to the figure in box 5 times 1.45% (as in my example since $50,000 x 1.45% = $725). Your employer must also withhold additional Medicare tax of .9% from wages paid to an individual earning more than $200,000, regardless of filing status or wages paid by another employer. Since your employer doesn’t know your entire financial picture, it’s possible that you may have to pay more additional Medicare taxes than your withholding depending on filing status, compensation and self-employment income.

Tips which were reported to your employer will be found in box 7. If this box is blank, it means that you did not report tips to your employer (unreported tips are still taxable).

Allocated tips reported in box 8 are those that your employer has attributed to you. Those tips are considered income to you.

Box 9 is relatively new. You may see a 16-digit verification code here. It’s part of a growing security initiative to assist the IRS with verifying that the form is authentic. If your form W-2 contains this code, you or your tax professional should enter it when prompted using software (electronically filed returns only). If the code is not on your form, don’t worry: your tax return will still be accepted.

At box 10, your employer will report the total benefits paid on your behalf under a dependent care assistance program, including those greater than the $5,000 exclusion (if the value exceeds $5,000, that excess will be reported in boxes 1, 3 and 5). Amounts which are less than $5,000 and are paid under a qualified plan are considered non-taxable benefits.

Box 11 is used to report amounts distributed to you from your employer’s non-qualified deferred compensation plan (this amount is taxable). Don’t confuse this with amounts contributed by you. That shows up in box 12.

Box 12 is the kitchen sink of form W-2 reporting. Here, you’ll see all kinds of codes. Not all of the income coded at box 12 is taxable. Here’s a quick rundown of the codes (if you have trouble reading them, click here):

code

In my example form W-2, I’ve included three of the most popular codes.

If you participate in an elective deferral program like a 401k plan, you’ll see it reported using Code D. As explained earlier, these amounts will generally be included in box 3 and box 5, too, even if they are excluded from wages at box 1.

The cost of employer-sponsored health coverage (or health insurance paid for by your employer) is reported using Code DD. This amount is reportable under the Affordable Care Act, sometimes referred to as Obamacare, but it is not taxable to you. In most cases, this is only your major medical benefit: separate dental or vision plan reporting is optional. Also optional? Health Reimbursement Arrangement (HRA) contributions. You will not see amounts paid into a Health Flexible Spending Arrangement (FSA) funded with pre-tax dollars; Health Savings Arrangement (HSA) contributions from you or your employer; or Archer Medical Savings Account (Archer MSA) contributions from you or your employer since those are not reportable.

Excludable moving expenses are reported using Code P. This is an example of benefits which are reported by your employer but are not taxable to you. If reimbursements are non-qualified, they will be reported as income to you in boxes 1, 3, and 5.

Box 13 really isn’t one box: it’s a series of three boxes. Your employer will check the applicable box if you are a statutory employee (employees whose earnings are subject to Social Security and Medicare taxes but not federal income tax withholding); if you participated in your employer’s retirement plan during the year; or if you received sick pay under your employer’s third-party insurance policy.

Box 14 is a “catch all” box. Your employer reports anything here that doesn’t fit anywhere else. Examples include state disability insurance taxes withheld, union dues, health insurance premiums deducted and nontaxable income. If you can’t figure out the amounts in this box, check with your payroll or human resources (HR) department: in most cases, the IRS will not be able to interpret these for you.

Finally, your state and local tax reporting can be found at the very bottom of the form W-2:
bottom

Box 15 is straightforward and includes your employer’s state and state tax identification number. If you work in a state without a reporting requirement, this box (along with boxes 16 and 17) will be blank. If you had multiple withholdings in a number of states, more than one box will be filled.

If you are subject to state taxes, box 16 will indicate the total amount of taxable wages for state tax purposes.

If you have wages reported in box 16, box 17 will show the total amount of state income taxes withheld during the year. If you live in a state that has a flat state tax (like PA), you can double check to make sure that your withholding is correct by multiplying the amount in box 16 by the flat tax rate.

If you are subject to local, city, or other state income taxes, those will be reported in box 18. If you have wages subject to withholding in more than two states or localities, your employer will furnish an additional form W-2.

If you have wages in box 18 subject to local, city, or other state income taxes, any amount of withholding will be reported at box 19.

Box 20 is exactly what you’d expect: the name of the local, city, or other state tax being reported at box 19.

You should have received your form W-2 – with all of this information properly reported – by January 31.

Now that Christmas card season is behind us, mail carriers are doing the real heavy lifting: delivering tax forms. Tax season is scheduled to open on January 29, 2018. That means that many tax forms are already either in the hands of taxpayers or in the mail. Here’s what you need to know about tax form due dates and what to do if yours is late.

The form that most folks care about is the form W-2, which has an annual due date of January 31. Your tax form is considered on time if the form is properly addressed and mailed on or before that date. If the regular due date falls on a Saturday, Sunday, or legal holiday – which is not the case in 2018 – issuers have until the next business day.

Here’s a look at the general due dates for some other popular tax forms:

due dates for tax forms

Keep in mind that these are the due dates for furnishing tax forms to taxpayers. For updated information about due dates for furnishing tax forms to Internal Revenue Service (IRS), check out this post.
It’s worth noting that there are some exceptions to the general reporting requirements and due dates (this is, after all, tax law). Here are a couple of important ones:

  • Some forms might be issued earlier – so dig back through your records if you’re missing a 1099 or a 1098-C. If you redeemed savings bonds, for example, the form 1099-INT might have been issued at the time of redemption. Similarly, if you donated a car to charity, the form 1098-C would have been acknowledged within 30 days of the sale or within 30 days of the contribution.
  • You should also put the brakes on filing if you’re a beneficiary of a trust or estate, or a shareholder, partner or member of an LLC, LLP or S corporation. Those entities rarely – if ever – report early. Since those are pass-through entities, they must prepare their actual tax returns first before they can furnish any Schedules K-1. Those Schedules K-1 might take until March or April to show up on your doorstep. In some cases, it could take longer. If you’re not sure what the time frame is, and you haven’t heard otherwise, drop a note to the powers that be to find out when you can expect your forms.

If you haven’t received a tax form by the due date, here’s what to do:

  • Look around. Your form could be stuck in a catalog or lost in that pile of mail on the counter that you’ve been swearing to sort through for weeks. It could be at work. Before you assume that it wasn’t delivered, double check.
  • Check your email. Tax forms cannot be generated electronically without your consent unless a paper copy is also issued. However, in these days of e-statements and online transfers, it’s not out of the question that you might have checked a box to receive your information electronically. Check your inbox and your spam filter.
  • If you’re sure that you didn’t receive your forms, try contacting the issuer. It might be easy to fix. You might not have received the form because of an incomplete or bad address – maybe you moved this year. Or maybe the address is correct but your form got lost in the mail. If that’s the case, the issuer can simply furnish another form. Problem solved.
  • If your employer is no longer in business or has moved, try to make contact. It’s the fastest, easiest solution. If you don’t receive your forms and you don’t know where your employer has moved, send a note to the last known address: there may be a forwarding order at the post office. Or try Google. I know that it’s not your job to find your employer but if you have time to watch that Mariota-to-Mariota catch in the playoffs or check out that dog sledding video (granted, both are worth the click), you can search online for a change of address.
  • If you still don’t have your forms, or if your forms aren’t correct, contact IRS. You’ll have to wait a bit: the IRS does not want to hear from you about missing forms until the end of February. If you still haven’t received your forms by then, you can call Internal Revenue Service (IRS) at 1.800.829.1040. You’ll need to have your address, phone number, Social Security Number, and dates of employment available. It’s also helpful to have an estimate of your earnings, and your federal withholding amounts (you can find most of this information on your last pay stub). You’ll also need the name, address and phone number of your employer. Make your life easier by having everything together before you pick up the phone.
  • Be patient. After your call, the IRS will contact your employer on your behalf. The IRS will also send you a form 4852, Substitute for Form W-2, Wage and Tax Statement, or Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., along with instructions. If you do not receive your missing forms from your employer by Tax Day, April 17, you can file the form 4852. But be smart: don’t file a form 4852 just to get your tax return in early or to teach an employer a lesson. If you file a bogus or improper form, you could be hit with substantial penalties.
  • You may need to amend. If you receive your tax form after your return is filed using a form 4852, and the information is different from what you reported, you will have to amend your return by filing form 1040X, Amended U.S. Individual Income Tax Return (downloads as a pdf).
  • If you need to replace a form SSA-1099 or SSA-1042, you can request a new one on or after February 1, 2018. It’s important to note that since those forms are issued by the Social Security Administration, you’ll need to contact SSA directly, not IRS. To contact SSA, call 1.800.772.1213 (TTY 1.800.325.0778), Monday through Friday from 7 a.m. to 7 p.m.; visit your local Social Security Office (find yours here); or log into the SSA website and click the “Replacement Documents” tab (if you don’t already have an account, you can create one online).

One final piece of advice: do not file your tax returns until you’ve received your tax forms. I know it’s tempting. I know you think you know what’s on those forms but what if you’re wrong? Not only are you making it hard on your preparer to figure it out, but you’re also asking them to break the rules: the IRS specifically bars tax preparers from e-filing your tax returns without receipt of forms W-2, W-2G and 1099-R.

Filing before you have your forms in hand also sets you up for a potential audit. At the most basic, the IRS matches forms W-2 and forms 1099 to the information on your tax return. If the information doesn’t match, the IRS will flag your return for additional examination. My mom – who is right almost all of the time about everything – used to tell me that it was okay to be different. That might be true in junior high, but it’s not true at the IRS. Trust me. You want your tax return to look like everybody else’s tax return. Don’t give the IRS a reason to give yours a second look.

Taxpayer asks:

I’m a contractor who signed a w-9 form but am no longer gonna do the work, am I okay or how do I cancel the w-9 form????

Taxgirl says:

You should be fine. Here’s why.

A form W-9 is used to provide your taxpayer identification number (such as your Social Security Number (SSN) or your Employer Identification Number (EIN)) to certain payers. The form is typically completed by U.S. persons (citizens or resident aliens), domestics trusts and estates, and a partnership, corporation, company, or association created or organized in or under the laws of the United States.

There are a few reasons why a company might ask you to complete a form W-9. In your case, you were asked to complete a form W-9 because you were planning on providing services as an independent contractor or a freelancer. The person who was paying you for those services might have been required to report the payments to the Internal Revenue Service (IRS), typically using a form 1099, if those payments met certain criteria. One of the most common reasons for issuing a form 1099 is when total payments exceed $600 in one tax year.

But if you didn’t perform the services and didn’t get paid, there’s no need for the payer to issue the form 1099. And while a copy of the form 1099 reporting those payments would have been submitted to the IRS (just like a form W-2), the form W-9 is not typically transmitted to the IRS. The only party that should have that form W-9 would be the company (or the company’s tax professional). So if you’re worried that the IRS might have a record that you were intending to do some work for this company which might trigger a tax consequence, that’s not the case. You can sleep at night.

So why does the company have the form in the first place if you never did the work? In many cases, companies ask for a form W-9 to be completed at the beginning of a business or employment relationship even if it’s not clear that you’ll meet the 1099 filing threshold. They ask early in the game to avoid the hassle of asking at the end: It’s nearly impossible to get taxpayers to fill out the forms after the fact – trust me.

Before you go: be sure to read my disclaimer. Remember, I’m a lawyer and we love disclaimers.
If you have a question, here’s how to Ask The Taxgirl.

Taxpayer asks:

If I’m paid in cash can they make me fill out a w-9?

Taxgirl says:

Yes. How you’re paid – in cash, by check, in Bitcoin or barter – doesn’t matter when it comes to filling out a form W-9.

A form W-9 is used to provide your taxpayer identification number (such as your Social Security Number (SSN) or your Employer Identification Number (EIN)) to certain payers. The form is typically completed by U.S. persons (citizens or resident aliens), domestics trusts and estates, and a partnership, corporation, company, or association created or organized in or under the laws of the United States.

You might be asked to complete a form W-9 when you have provided services as an independent contractor or a freelancer. The person who is paying you for those services – no matter how you’re paid – may be required to report the payments to IRS (Internal Revenue Service), typically using a form 1099.

There are also circumstances when the IRS requires the person who is paying you to withhold a portion of your payment and remit that amount to the IRS. That withholding, which is a flat 28% of the amount to be paid, is called “backup withholding.” Backup withholding is required when:

  • You don’t provide your Taxpayer Identification Number (or “TIN,” generally, your EIN, SSN or ITIN) when required;
  • You provided the wrong TIN (or the IRS says that you did); or
  • You are required, but fail, to certify that you are not subject to backup withholding.

If you’re not subject to backup withholding, no other taxes will be withheld from your check (or cash, Bitcoin, etc.). Filling out a form W-9 does not trigger withholding for other taxes, such as income taxes or Social Security payments.

Before you go: be sure to read my disclaimer. Remember, I’m a lawyer and we love disclaimers.
If you have a question, here’s how to Ask The Taxgirl.