Electronic Submission of W 2s & 1099s Nicole W Nicole Watson - - PDF document

1/11/2018 1

Electronic Submission of W‐2s & 1099s

Nicole W Nicole Watson tson What’s New?

O Businesses < 50 W-2s & 1099s

O Delayed implementation for tax year 2017 O Give small businesses more time to comply.

O 2017 filing requirements the same as 2016.

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Requirements for Tax Year 2017

What’s New?

Can IDR make filing easier?

O Working with software vendors

O register and test software prior to the 1/31/2018 filing deadline.

O Guiding businesses required to file

O Provide list of vendors who have completed testing O They offer software services for Iowa file formats. O 17 vendors so far

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Vendor List

O 1099 Pro, Inc. O Aatrix Software, Inc. O American HealthTech, Inc. O CFS Tax Software, Inc. O Drake Software O Financial MicroSystems, Inc. O Greatland Corporation O Heartland Inc. O IDMS Account Ability O Infor Global Solutions O Intuit O Kronos Inc. O MasterTax LLC/ADP O Real Business

Solutions, Inc.

O Sage O Solutions, Inc. O Thomson Reuters

Tax and Accounting

https://tax.iowa.gov/tax-year-2017-w-2-filing-vendor-list

Tax Year 2017 Filing Requirements

Who What hat Is it R it Required? ed? Filin iling Due g Due Dat ate

Business with a withholding permit Must file Verified Summary of Payments (VSP) Yes 1/31/2018 Business with 50 or more W-2s with Iowa withholding Must file W-2s Yes 1/31/2018 Business with fewer than 50 W-2s with Iowa withholding May file W-2s No 1/31/2018 Business with a withholding permit or filing though a bulk filer May file 1099s or W-2Gs No 1/31/2018

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How should I prepare my file?

O Do it yourself

O Do you have an ASCII programmer on staff? O If not, use a service provider.

O Service Providers

O 17 vendors are currently registered O Vendors listed on the IDR website.

O Filing extensions: https://tax.iowa.gov/webform/application-extension-time-file- iowa-w-2-wage-statements

Iowa Does Not Accept

O Other types of files (for example, PDFs scanned or

created with any other software product).

O Paper W-2 wage statements and 1099 information

returns.

O CD-ROMs; Cartridges; Flash drives; Floppy disks;

Magnetic media; PDF files created at SSA website.

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Does Iowa Participate in Combined Reporting?

O The SSA offers no Combined Reporting program for

reporting W-2 wage statements to both the SSA and state revenue agencies.

O The IRS offers Combined Federal/State Filing program

(CF/SF) for reporting certain information returns to both the IRS and state revenue agencies. IDR does not participate in IRS program.

What is the plan for 1099s?

O 1099 filing is currently optional and available to O Any business registered with an Iowa withholding

permit

O Any business using a bulk filer to submit a 1099 file

• n their behalf

O The Department will not issue permits and Business

eFile Numbers (BENs) for purposes of electronically filing 1099s or W-2s with no withholding.

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1099s forms accepted

O Form 1099-B, Proceeds From Broker and Barter Exchange

Transactions

O Form 1099-C, Cancellation of Debt O Form 1099-DIV, Dividends and Distributions O Form 1099-G, Certain Government Payments O Form 1099-INT, Interest Income O Form 1099-K, Payment Card and Third Party Network Transactions O Form 1099-MISC, Miscellaneous Income O Form 1099-OID, Original Issue Discount O Form 1099-R, Distributions from Pensions, Annuities, Retirement or

Profit-Sharing Plans, IRAs, Insurance Contracts, etc.

Submitting Wage Statements and Information Returns

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Upload a File

O Visit the Department’s eFile & Pay web application at

https://efilepay.idr.iowa.gov/iao_aaa/welcome.asp

O You need your business’ Business E File Number

(BEN) to login.

Upload a File

O If you are a Service Provider enter your BEN, not the

BEN of your client.

O Verify that the BEN and Employer Legal Name match

the information for the W-2 Wage Statement file you are about to upload.

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Upload a File

O Enter the User ID and password.

Upload a File

O Select file type. Service providers select File for

Client if uploading on behalf of a client.

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Upload a File

O Click Upload New File to upload a W-2 file.

Upload a File

O Click the Choose File button to select the file to

upload.

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Upload a File

O Select the appropriate W-2 file for Iowa. In this

example we are using IAW2-88771054-2016003.txt

Upload a File

O After you have selected your file, click the Upload

button.

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Upload a File

O After uploading the file click the Refresh button to

update the information on the page. Page contents will not update automatically.

How Will I Know the Department Received my File?

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Do I need authorization to upload my file to Iowa?

O Transmitters registered as Bulk Filers with the IDR must use

their own eFile & Pay credentials to upload withholding returns, wage and tax statements, and information returns on behalf of their software subscribers.

O Payroll Service Providers registered as Bulk Filers with the

Iowa Department of Revenue must use their own eFile & Pay credentials to upload withholding returns, wage and tax statements, and information returns on behalf of their clients.

Do I need authorization to upload my file to Iowa?

Companies registered to file Iowa withholding returns

O Use your existing eFile & Pay credentials O Upload wage and tax statements and information returns O Or use your software company to provide transmitter service.

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Is a test file required?

O Software vendors: Testing is required. O Software vendors (and commercial payroll service providers

who develop their own software) are issued login credentials for use on an eFile & Pay test site hosted in a User Acceptance Test (UAT) environment after they register their product(s) with the Iowa Department of Revenue.

O Software customers: Testing is discretionary. Sample files may

be uploaded through Iowa’s production eFile & Pay set to DEMO mode https://tax.iowa.gov/efile-pay.

How Will I Know the Department Received my File?

W-2 or 1099 Results File

O For each W-2 or 1099 file Iowa receives, Iowa posts a corresponding results

file, distinguished by the same filename as original W-2 file, but appended with “results”. e.g. IAW2-12345678-2017001results.txt

O Warning: If the results file doesn’t appear, remember to click the “REFRESH”

button.

O Large files take longer to process, delaying the results file. O Extremely large files including errors may cause the system to time out.

O Try uploading a smaller file in an effort to identify a common error. O Fix that error everywhere it occurs O Upload again.

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How Will I Know the Department Received my File?

Compressing files is optional

O IDR recommends compressing files

O Reduces transmission time O Only compress one data file into a single zip archive file.

O Before zipping your file, name the original (unzipped file)

according to the filename pattern described in 44-082.

O Archive filenames should match the original.

O For example: IAW2-12345678-2018001.txt.zip; IAIR-12345678-

2018001.txt.zip

Resources

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Resources

Visit the IDR website at https://tax.iowa.gov/

Resources

Visit the IDR website at https://tax.iowa.gov/

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Resources

Visit the IDR website at https://tax.iowa.gov/ A business can:

O Apply for Extension of Time to File Iowa W-2 Wage Statements O Sign up for email updates on Electronic Filing of W-2 and 1099s O View step by step instructions regarding W-2 Wage Statement

File Upload Instructions

Resources

Visit the IDR website at https://tax.iowa.gov/

A software vendor can:

O Access technical file specifications in the Electronic Reporting of Wage

Statements and Information Returns 44-082

O Register with the Department with the 2017 IA W-2 1099 e-File Vendor

Registration Form

O Apply to become a Bulk Filer of withholding returns or uploading of W-2/1099

files

O View W-2 Reporting Errors

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Information Online Information Online

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THANK YOU!!

Center for Agricultural Law and Taxation 2017 Legislative Update

1/11/2018 19

2017 Legislative Update Income Taxes

Non‐Conformity with Internal Revenue Code

What is “conformity?”

• The calculation for Iowa net income relies on federal AGI
• To do this, the Iowa Code “conforms” with the IRC as it existed
• n a certain date
• In past years, the Iowa Code was updated annually to conform

with the most recent IRC

• During the 2017 Iowa legislative session, lawmakers did not

update the Iowa Code to conform with the most recent IRC

• The Iowa Code now conforms with the IRC as it existed on

January 1, 2015

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Non‐Conformity with Internal Revenue Code

Impact of Non‐Conformity for TY2017 and Beyond

• The federal Tax Cuts and Jobs Act was signed into law

December 22, 2017; most provisions affect TY2018 and later

• Currently, Iowa does not conform with the Act
• During the 2018 legislative session, Iowa lawmakers will decide

whether and how Iowa law will conform with the IRC, including the PATH Act and the Tax Cuts and Jobs Act

• The Department will provide updated information on

conformity for TY2017 as soon as possible

Non‐Conformity with Internal Revenue Code

Impact of Non‐Conformity for TY2016

• For MOST taxpayers, non‐conformity will not affect Iowa net

income

• Taxpayers who claimed certain items for federal purposes must

make adjustments when calculating Iowa net income

• For Iowa purposes, taxpayers must calculate federal AGI as if

the PATH Act had never passed

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Non‐Conformity with Internal Revenue Code

Individual Income Tax

• Above‐the‐line deduction for qualified tuition and related

expenses (sunset 12/31/16)

• Above‐the‐line deduction for teacher classroom expenses

permanent and indexed

• Basis adjustment to stock of S corporations making charitable

contributions permanent

• Bonus depreciation (sunset 12/31/19)

Non‐Conformity with Internal Revenue Code

Individual Income Tax ‐ continued

• Deduction for State and local general sales taxes made

permanent

• Discharge of indebtedness on principal residence excluded

from gross income (sunset 12/31/16)

• Earned Income Tax Credit permanent benefit for 3+ children

and married households

• Energy efficient commercial building deduction (sunset

12/31/16)

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Non‐Conformity with Internal Revenue Code

Individual Income Tax – continued

• Exclusion of 100% gain on small business stock permanent
• Expensing limitations for section 179 property made

permanent and indexed

• Extend and expand charitable deduction for contributions of

food inventory permanently

• Extend special rules for qualified conservation contributions

permanently

• Parity for employer‐provided parking and mass transit benefits

permanent

Non‐Conformity with Internal Revenue Code

Individual Income Tax – continued

• Premiums for mortgage insurance deductible as qualified

residence interest (sunset 12/31/16)

• Special allowance for second generation biofuel plant property

(sunset 12/31/16)

• Tax‐free IRA distributions to certain public charities for

individuals 70‐1/2 or older permanent

• Work opportunity tax credit (sunset 12/31/19)

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Non‐Conformity with Internal Revenue Code

Corporate Income Tax

• 15‐year depreciation for restaurant and retail improvements

permanent

• Bonus depreciation (sunset 12/31/19)
• Energy efficient commercial building deduction (sunset 12/31/16)
• Exception under subpart F for active financing income permanent
• Expansion of reduction in S corporation recognition period for

built‐in gains tax permanent

• Expensing limitations for section 179 property made permanent

and indexed

Non‐Conformity with Internal Revenue Code

Corporate Income Tax ‐ continued

• Extend and expand charitable deduction for contributions of food

inventory permanently

• Extend special rules for qualified conservation contributions

permanently

• Look‐through treatment of payments between CFCs (sunset

12/31/19)

• Restriction on tax‐free spinoffs involving REITS
• Special allowance for second generation biofuel plant property

(sunset 12/31/16)

• Work opportunity tax credit (sunset 12/31/19)

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SF 505 – First‐time Homebuyer’s Savings Account

• Anyone can establish account
• Beneficiary must be Iowa resident
• No deposit limit
• Deduction limited to $2,000 or $4,000/year
• No financial institution requirements
• Effective for Tax Year 2018

HF 242 – Political Checkoff Elimination

• Effective for Tax Year 2017
• Fund is dissolved

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HF 625 – Dependent Heath Care Coverage Indicator

• Effective for Tax Year 2017
• Removes reporting requirements, as well

Geothermal Heat Pump Credit

• Federal credit was not renewed
• Iowa Geothermal Tax Credit (10% of

expenses) comes into play for tax year 2017

• Use IA 140 to file for Iowa credit.

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Iowa Capital Gain Deduction

Iowa Capital Gain Deduction

• Iowa individual income tax deduction for the

entire net long‐term capital gain from sales

• f certain property
• Certain requirements must be met
• Complete form IA 100

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Iowa Capital Gain Deduction

• IA 100A – Cattle, Horses, or Breeding Livestock
• IA 100B – Real Property Used in a Farm Business
• IA 100C – Real Property Used in a Non‐Farm Business
• IA 100D – Timber
• IA 100E – Business
• IA 100F – Employer Securities to a Qualified Iowa

Employee Stock Ownership Plan

IA 100A – Cattle, Horses, or Breeding Livestock

• Eligible livestock sales:
• Horses and cattle held for at least 24 months and used for

breeding, dairy, draft, or sporting purposes; and

• Other livestock (hogs, sheep, goats, etc.) held for at least 12

months and used for breeding purposes

• Qualifying taxpayer:
• More than 50% of the taxpayer’s gross income came from

farming or ranching operations; or

• Livestock were sold to a lineal descendant
• Report qualifying sales on IA 100A and affirm the holding

period was met

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IA 100B – Real Property Used in a Farm Business

• Farmland held for at least 10 years
• Taxpayer materially participated in the farm business

for at least the 10 years prior to the sale

• Cash rent landlord usually does not qualify
• Crop share landlord may qualify
• Direct participation or management in CRP may qualify
• Special rules for retired farmers and surviving spouses
• Report qualifying sales and participation on IA 100B

Other Information

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Standard Deduction Amounts

2016:

• Filing status 1 ‐ $1,970
• Filing status 3 or 4 ‐ $1,970 for each spouse
• Filing status 2, 5, or 6 ‐ $4,860

2017:

• Filing status 1 ‐ $2,000
• Filing status 3 or 4 ‐ $2,000 for each spouse
• Filing status 2, 5, or 6 ‐ $4,920

College Savings Iowa 529 Plan

• $3,188 per beneficiary for 2016
• $3,239 per beneficiary for 2017

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Individual Income Tax Checkoffs

Same four checkoffs for 2017 & 2018:

• Fish & Wildlife Fund (Chickadee Checkoff)
• Iowa State Fair Foundation (Corn Dog Checkoff)
• Joint Fire Fighter Preparedness Fund / Veterans

Trust Fund

• Child Abuse Prevention

Interest Rate

• 0.4% per month during 2017
• 0.5% per month during 2018

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eFiling Statistics for Current Processing Year

• 90% of individual income tax returns
• 70% of corporation income tax returns
• 22% of fiduciary tax returns

Resources

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https://tax.iowa.gov

64

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• Newsroom
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• Sign‐up for Due Date Reminders
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Purpose of this Presentation

This presentation is intended for general educational purposes only. Anyone involved in an audit or protest must contact the Department representative they are working with on that issue.

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What Questions Do You Have?

THANK YOU!!