The Internal Revenue Service rang in the new year with eight updates that farm business “bean counters” need to track or comply with — effective Jan. 1. Here’s the quick list:
1. Standard mileage rates. Deductible costs for autos, vans, pickups and panel trucks used for business, medical or moving purposes decreased:
• 53.5 cents per mile for business miles driven, down from 54 cents for 2016
• 17 cents per mile driven for medical or moving purposes, down from 19 cents
• 14 cents per charitable mile, unchanged
2. Form 1099s and W-2s. Big change! Now your W-2 (Wage and Tax Statement) and Form 1099 for 2016 must be filed with IRS and Social Security Administration by Jan. 31 — not the last day of February. Under the old law, businesses were required to send 1099 and W-2 forms only to employees and payees by Jan. 31.
3. Need new W-9s? Vendors should complete a Form W-9 to verify name, address and taxpayer identification number to help ensure 1099 accuracy.
4. Filling out 1065s? Form 1065 for partnership and most limited liability corporation returns is now due March 15. Partnership tax returns previously were due April 15 for calendar year filers.
5. Do 1120 forms? Form 1120-S for subchapter corporation returns keeps the March 15 due date. Form 1120 for corporation returns is due April 15.
6. Got a mortgage? Form 1098 (mortgage interest statement) now must report the beginning principal balance, mortgage origination date and address of the mortgaged property. IRS wants those numbers to verify proper mortgage interest deductions.
7. Claim educational credits? The Form 1098-T tuition statement must be obtained to claim an education credit. In the past, you could claim the credit without the form.
8. Section 179 change coming. This deduction is limited to $500,000 on new, used or leased equipment until further notice. For the 2016 and 2017 tax years, the special 50% bonus depreciation can be taken once Section 179’s $2 million spending cap is reached — on new equipment only. But the bonus depreciation phases down to 40% in 2018 and 30% in 2019.
Now’s the time to update employee payroll information. Each employee should complete an updated Form W-4 and Local Residency Certification Form so payroll providers can account for any change in tax withholdings and/or address.
If your business hires workers, be sure you have employment eligibility verification form (I-9) for each one in your files.