Information Returns (W-2s, 1098s, 1099s, 5498s, etc.)
Penalties increased—Higher penalties apply for:
• Failure to file correct information returns by the due date, and
• Failure to furnish information returns. The higher penalty amounts apply to returns required to be filed
after December 31, 2017 and are indexed for inflation. The new penalty amounts are listed below:
per information return if filed correctly within 30 days of the due
date; the maximum penalty is $536,000 per year ($187,500 for small
per information return if filed correctly more than 30 days after the
due date but by August 1; the maximum penalty is $1,609,000 per year
($536,000 for small businesses)
per information return if filed after August 1, did not file
corrections, or did not file required information returns; the maximum
penalty is $3,218,500 per year ($1,072,500 for small businesses)
W-2 - Reprogramming required
Box 9 Verification code—Box 9 is no longer shaded and is now used for the optional W-2 verification code.
New box 12 Code FF—A
new box 12 Code FF has been added to report the total amount of
permitted benefits under a qualified small employer health reimbursement
arrangement (QSEHRA). These new QSEHRAs allow eligible employers to
pay or reimburse medical care expenses of eligible employees after the
employees provide proof of coverage. The maximum reimbursement for an
eligible employee under a QSEHRA is $4,950 ($10,000 if it also provides
reimbursements for family members), before indexing for inflation.
Leave-based donation programs to aid victims of a) the severe storms and flooding in Louisiana, and b) Hurricane Matthew—Under
these programs, employees may donate their vacation, sick, or personal
leave in exchange for employer cash payments made before January 1,
2018, to qualified tax-exempt organizations providing relief for the
victims of a) the severe storms and flooding in Louisiana that began on
August 11, 2016, or b) Hurricane Matthew. The donated leave will not be
included in the income or wages of the employee. The employer may
deduct the cash payments as business expenses or charitable
Box 1 text—The
text in box 1 has been changed from “Gross winnings” to “Reportable
winnings”. This change clarifies that for certain types of gambling
activity, the amount shown in box 1 is gross winnings less the amounts
of the wager or buy-in.
1042-S - Reprogramming required
Unique form identifier—Beginning
in 2017, withholding agents will be required to assign a unique
identifying number to each Form 1042-S they file. This identifying
number is used, for example, to identify which information return is
being corrected or amended when multiple information returns are filed
by a withholding agent with respect to the same recipient. The unique
identifying number cannot be the recipient’s U.S. or foreign TIN; must
be exactly 10 numeric digits; and must be unique to each original Form
1042-S filed for the current year. The identifying number can be used on
a new original form in a subsequent year.
in 2017, withholding agents filing an amended form must indicate the
amendment number. Any amended form must have the same unique form
identifier as the original form that is being amended. Each time that
the same form is amended (as determined by the unique form identifier),
provide the amendment number in the box provided on the form (using “1”
for the first amendment and increasing sequentially for each
Pro-rata reporting—The “Pro-Rata Reporting” box was moved from the top of the form (below the title) down to new box 15.
Qualified derivatives dealers—To
facilitate implementation of the withholding requirements associated
with QDDs, a new chapter 3 exemption code that applies for payments to a
QDD and a new chapter 3 status code for a QDD have been added.
Pooled reporting codes—The
2017 Form 1042-S includes new pooled reporting codes 36, 37, and 38
(related to dividend equivalent offsetting payments) as well as existing
code 33 (for joint account withholding rate pools). However, based on
the final QI agreement applicable for 2017, these codes are no longer
valid and withholding agents should not use these codes for Form 1042-S
reporting purposes. These four codes will be removed from the 2018
Other changes to codes—Income
code 54 has been changed from “Other income” to “Substitute payments –
interest from certain actively traded or publicly offered securities.”
Withholding agents should use income code 23 (Gross income – Other) to
report payments of income for which no other income code applies. A
chapter 4 exemption code has been added for payments that are not
subject to chapter 4 withholding and for which no other chapter 4
exemption code applies. The chapter 4 exemption codes for excluded
payments on offshore obligations and collateral have been removed as
these exemptions do not apply after the 2016 calendar year. The chapter 4
status codes for limited FFIs and branches that are treated as
nonparticipating FFIs have also been removed as these are not valid
statuses for purposes of chapter 4 after the 2016 calendar year.
List of foreign country codes—Beginning
in 2017, Form 1042-S filers will use the same list of country codes
used on other IRS forms such as Forms 926, 1118, 3520 and 8805.
Foreign taxpayer identifying number and date of birth—Beginning
in 2017, a financial institution that files a Form 1042-S with respect
to a payment on an obligation that it maintains at its U.S. office or
branch must report the recipient’s foreign taxpayer identifying number
and date of birth (if the recipient is an individual).
Amount repaid to recipient—A
withholding agent that repays overwithheld tax to a recipient under
the set-off procedure should report the repayment in box 11 if the
repayment is made in the year following the calendar year of
1098 - Reprogramming required
New box 10, number of mortgaged properties—Filers must report the number of properties in excess of one that secure a single mortgage.
Limited penalty relief—For
the 2017 calendar year, no penalties will be imposed under sections
6721 or 6722 for reporting the aggregate amount billed instead of the
aggregate amount of payments received for qualified tuition and related
expenses on Form 1098-T. Beginning in 2018, only the qualified tuition
and related expenses actually paid can be reported on Form 1098-T.
Removal of the expiration of non-payment testing period as an identifiable event—The
rule has been removed that a deemed discharge of indebtedness for
which a Form 1099-C must be filed occurs at the expiration of a
36-month nonpayment testing period.
1099-OID - Reprogramming required
Reporting tax-exempt OID—Box 11 was added to report tax-exempt OID.
1099-S - Reprogramming required
new checkbox has been added as box 5 to report the transfer of real
estate by a foreign person. Previous box 5, Buyer’s Part of Real Estate
Tax, is now box 6.
Reporting late rollover contributions to an IRA—Report
late rollover contributions certified by the participant in boxes 13a
and 13b on Form 5498. Report the self-certification code in box 13c.