The IRS reminds employers and other businesses to file Form W-2 and other wage statements for Tax Year 2022 by January 31, 2023. The deadline also applies to Forms 1099-NEC, Nonemployee Compensation, and Form W-3, Transmittal of Wage and Tax Statements. Extensions are only granted for very specific reasons and penalties may apply if the deadline is missed. E-file is available for these forms.
Monday, January 23, 2023, will be the beginning of the 2023 tax season when the IRS will begin accepting and processing 2022 tax year returns. With the increase in staffing at the IRS, provided via the Inflation Reduction Act, the agency aims to ensure all systems run smoothly. Filing a complete and accurate return can avoid extensive processing delays, such as were seen during pandemic years. The IRS is still working on reviewing certain 2021 returns, though taxpayers in that situation can and should still file their 2022 return on time. The filing deadline is April 18, 2023.
Storm victims in California now have until May 15, 2023, to file various federal individual and business tax returns and make payments. This relief postpones certain deadlines that occurred starting January 8, 2023. IRA and health savings accounts contributions for 2022, farmers who normally file their returns by March 1, quarterly estimated tax payments normally due January 17 and April 18, payroll and excise tax returns normally due on January 31 and April 30, 2023, all are due May 15, 2023. The Tax Relief in Disaster Situations page has updated information for disaster victims, and a current list of affected counties.
The IRS recently completed corrections of tax year 2020 accounts for taxpayers who overpaid their taxes on unemployment compensation received in 2020. The American Rescue Plan Act of 2021 – passed in March 2021 – excluded up to $10,200 in 2020 unemployment compensation from taxable income calculations ($10,200 for each spouse if married filing jointly). Some taxpayers, however, had already filed their return before the Act passed. The IRS determined the correct taxable amount of unemployment compensation for these returns and has issued refunds or applied the overpayment to taxes due or other debts.
The IRS has released guidance addressing improper forgiveness of Paycheck Protection Program (PPP) loans. When a PPP loan is forgiven based upon misrepresentations or omissions, the taxpayer is not eligible to exclude the forgiven loan proceeds from taxable income. Taxpayers who inappropriately received PPP loan forgiveness are encouraged to file amended returns and come into compliance.
The IRS reminds struggling individuals and businesses affected by the pandemic that they may qualify for late-filing penalty relief if they file their 2019 and 2020 returns by September 30, 2022. This aims to help not only taxpayers but to allow the IRS to focus resources on processing backlogged tax returns in an effort to return to normal operations for the 2023 filing season. The relief applies to the failure-to-file penalty, usually assessed at a rate of 5% per month, up to 25% of the unpaid tax, when a return is filed late.
Reconstructing records after a disaster may be required for tax or insurance purposes or getting federal assistance. For more information, visit National Preparedness Month.
The IRS reminds taxpayers who pay estimated taxes that the deadline for payment of their third quarter estimated taxes is September 15, 2022. Those who typically make quarterly estimated tax payments are the self-employed, investors, retirees, or those receiving income from dividends, interest, rental income, alimony and other sources not subject to withholding. Those who expect to owe at least $1000 in taxes for 2022 (after withholding and tax credits) should make quarterly payments. Special rules apply to some taxpayers, such as those in a federally recognized disaster area, farmers, fishermen, and those who receive income unevenly during the year. Underpaying taxes may result in a penalty.
In recognition of September as National Preparedness Month, the IRS urges individuals, organizations, and businesses to update and secure their records. The ongoing threat of wildfires, as well as that of hurricanes, underscores the importance of having and keeping an updated emergency preparedness plan.
Reconstructing records after a disaster may be required for tax or insurance purposes or getting federal assistance. For more information, visit National Preparedness Month.
Due to concerns around transparency and impact on taxpayers, the IRS is updating its process for certain frequently asked questions (FAQs). The IRS is also addressing concerns regarding the application of penalties to taxpayers who rely on FAQs in making business and tax decisions. FAQs on newly enacted tax legislation will now be announced in a news release and posted in a Fact Sheet, which will confirm to taxpayers the date at which changes are enacted. Prior versions of Fact Sheet FAQs will be maintained on IRS.gov. A statement is also being released clarifying that if a taxpayer relies on any FAQ in good faith and that reliance is reasonable, the taxpayer will have a “reasonable cause” defense against any penalty if it turns out the FAQ was inaccurate.
The IRS aims to improve tax administration with clearer instructions for those seeking to claim a research and experimentation credit. Each year thousands of claims are submitted from corporations, businesses, and individuals. Currently those claims consume significant IRS resources. It is proposed that taxpayers provide information at the time the refund claim is filed, including all business components to which the claim relates that year; identifying all research activities and the names of the individuals doing the research; and the total qualified wage, supply, and contract expenses. By requiring this information, it is hoped the IRS will be able to determine immediately whether a credit refund should be paid, or if further review is needed. There is a grace period until January 10, 2022 before this information will be required and further comments are welcomed.
The IRS is reminding employers that they generally won’t put the tax status of their pension plans at risk if they rehire retirees or permit distributions of retirement benefits to current employees who have reached age 59 1/2 or the plan’s normal retirement age. Retaining experienced workers and encouraging retirees to return to the workforce may help address COVID-related labor shortages. There are two new FAQ pages designed to guide public and private employers who sponsor pension plans.
The IRS is reminding employers that the next quarterly payroll tax return is due November 1, 2021, and urges them to file electronically. E-filing is the most accurate and efficient method to file returns, and reduces processing time and errors. There are two options available for filing: Self-file (purchase IRS-approved software, pay a fee, apply for an online signature PIN or attach the required form), or hire a qualified tax professional who can file on behalf of the business.
Victims of recent disasters have had many deadlines extended to December 15, 2020. This includes many individual and business tax returns and tax payments normally due in September, October, and November. The extensions have been granted to those living in FEMA-designated disaster zones, including parts of Iowa affected by the August 10 derecho storm, and those affected by wildfires in California. Hurricane affected areas are being added; the IRS’ disaster relief page provides a current list of designated areas. No action is needed for qualified taxpayers to take advantage of this relief.
Some 50,000 spouses will receive their economic impact payment in the form of a check. In some cases, an individual’s payment was redirected to pay their husband’s or wife’s child support debt. Those who filed Form 8379, Injured Spouse Allocation with a recent tax return will receive their check in early- to mid-September. Those who have not filed Form 8379 will still receive their EIP check, but it is not yet known when to expect it. No action is required in either case.
Individual taxpayers who filed their return by July 15 and were due a refund will receive an interest payment along with it. This applies to those who have received refunds in the past three months, or who are still waiting on their refunds. The interest is calculated from the original filing due date of April 15, and will be direct-deposited with the refund for those who use direct-deposit. Paper checks will be issued to others. Additionally, the interest is considered taxable income and recipients will receive a Form 1099-INT early next year.
The IRS and Treasury Department have issued guidance implementing the August 8 Presidential Memorandum allowing employers to defer withholding and payment of an employee’s share of Social Security tax. The deferral generally applies to wages paid from September 1, 2020 through December 31, 2020, and only if the wages total less than $4,000 during a bi-weekly pay period.