A new federal law, aimed at making it easier for the IRS to detect and prevent refund fraud, will accelerate W-2 and certain 1099-Misc filing deadlines for employers to Jan. 31, 2017. For similar reasons, the new law also requires the IRS to hold refunds involving two key tax credits until at least Feb. 15. Here are details on each of these key dates.
New Jan. 31 Deadline for Employers
The Protecting Americans from Tax Hikes (PATH) Act, enacted last December, includes a new requirement for employers. They are now required to file their copies of Form W-2, submitted to the Social Security Administration, by Jan. 31.
The new Jan. 31 filing deadline also applies to certain Forms 1099-Misc reporting non-employee compensation such as payments to independent contractors. If you're filing Form 1099-Misc and reporting amounts in Box 7: Non-employee Compensation, then you will need to meet the new filing deadline of Jan. 31. If you don't have amounts in Box 7, then the deadline remains Feb. 28 for paper filings or Mar. 31 for electronic filings.
In the past, employers typically had until the end of February, if filing on paper, or the end of March, if filing electronically, to submit copies of these forms. In addition, there are changes in requesting an extension to file Form W-2. Only one 30-day extension to file Form W-2 is available and this extension is not automatic. If an extension is necessary, a Form 8809 Application for Extension of Time to File Informational Returns must be completed as soon as you know an extension is necessary, but by January 31. Please carefully review the instructions for Form 8809, for more information.
The new accelerated deadline will help the IRS improve its efforts to spot errors on returns filed by taxpayers. Having these W-2s and 1099s earlier will make it easier for the IRS to verify the legitimacy of tax returns and properly issue refunds to taxpayers eligible to receive them. In many instances, this will enable the IRS to release tax refunds more quickly than in the past. The Jan. 31 deadline has long applied to employers furnishing copies of these forms to their employees and that date remains unchanged.
Some Refunds Delayed Until at Least Feb. 15
Due to the PATH Act change, some people will get their refunds a little later. The new law requires the IRS to hold the refund for any tax return claiming either the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) until Feb. 15. By law, the IRS must hold the entire refund, not just the portion related to the EITC or ACTC.
Even with this change, taxpayers should file their returns as they normally do. Whether you’re claiming the EITC or ACTC, the IRS cautions taxpayers not to count on getting a refund by a certain date, especially when making major purchases or paying other financial obligations. Though the IRS issues 90 percent of refunds in less than 21 days, some returns are held for further review.
If you have questions about any of these changes or would like help determining when you need to file, please CONTACT US right away. We’re here to help!