Tax Changes

Tax Changes

Tax Changes

We will be updating the 2020 Tax Changes. Here the latest information as of Aug 2020

 
 
W-2
Trunication of social security number (SSN) on employee copies of From W-2--Employers may not truncate the employee's SSN on Employee Copies of W-2. Do not truncate the employee's NNS on Copy A
 
Military Spouses Residency Relief Act (MSRRA) change- Civilian spouses of service members can elect to use the same residence for purposes of taxation as the service member
 
Clarification on code Preporting in Box 12-The only amounts to be reported in Box 12 under code P are moving expense reimbursements paid directly to a member of the U.S. Armed Forces who moves per a military order and incident to a permanent change of station. Employers should not report excludable allowances or any other amounts under code P.
 
Awards compensating employees for lost wages are subject to Railroad Retirement Tax-The U. S. Supreme Court ruled that award payments to employees to compensate for working time lost due to an on-the-job injury is taxable "compensation" under the Railroad Retirement Act (RRTA), and more generally, that "compensation" under the RRTA encompasses any money remuneration that stems from the "employer-employee relationship." Railroad employers must withhold Tier 1 and Tier 2 taxes when paying such awards to employees covered by the RRTA.
 
1096 -Reprogramming required.
Form 1099-NEC-A check box was added to line 6 for Form 1099-NEC, and Line 7 is no longer applicable and has been shaded on the form.
 
CONTINUOUS-USE FORMS AND INSTRUCTIONS
The following forms and the corresponding instructions have been converted from an annual revision to continuous use. Both the form
and instructions will be updated as needed.
 
Form Latest Revision Date Reprogramming Required
1098-C Rev. November 2019 Yes
1099-CAP Rev. September 2019 Yes
1099-LTC Rev. October 2019 Yes
1099-LS Rev. December 2019 Yes
1099-Q Rev. November 2019 Yes
 
 
The following forms have been converted from an annual revision to continuous use. The instructions for these forms are combined with another form that is an annually revised form. Both the form and instructions will be updated as needed.
 
Form Latest Revision Date Reprogramming Required Combined Forms
1099-0ID October 2019 Yes 1099-INT & 1099-0ID
1099-SA November 2019 Yes 1099-SA & 5498-SA

1098
The Further Consolidated Appropriations Act retroactively extends the deductibility of mortgage insurance premiums (MIP) for tax years 2018 and 2019, and through tax year 2020. Report MIP aggregating $600 or more that was received during the calendar year in the course of a trade or business from an individual, including a sole proprietor.

 
1099-MISC - Reprogramming required.( ***ABOUT 1099 NEC UPDATE**)
Due to the creation of Form 1099-NEC, Form 1099-MISC has been revised and box numbers for reporting certain income have been
rearranged. Changes in the reporting of income and the form's box numbers are as follows:
  • Payer made direct sales of$5,000 or more (checkbox) in box 7
  • Crop insurance proceeds are reported in box 9
  • Gross proceeds to an attorney are reported in box 10
  • Section 409A deferrals are reported in box 12
  • Non qualified deferred compensation income is reported in box 14
  • Boxes 15, 16, and 17 report state t axes withheld, state identification number,
  • and amount of income earned in the stat e, respectively
 
1099-NEC -Programming required.
The Protecting Americans from Tax Hikes (PATH) Act accelerated the due date for filing Form 1099 that includes non employee compensation (NEC) from February 28 to January 31 and eliminated the automatic 30-day extension for forms that include NEC. Beginning with tax year 2020, use Form 1099-NEC to report non employee compensation. Here is a PDF about the 1099 NEC
 
1099-PATR - Reprogramming required
Numbered reporting box changes-New boxes were added and existing boxes were renumbered, retitled, and/or repurposed to allow for reporting information to patrons needed for section 199A (Qualified Business Income Deduction).
 
1099-R
Distributions for qualified birth and adoption-The Further Consolidated Appropriations Act provides for a distribution of up to $5,000 for a qualified birth or adoption that is exempt from the 10% early distribution tax and that can be repaid.
 
5498
New repayment code-Code "BA:' has been added for reporting a repayment of a qualified birth or adoption distribution. Required minimum distributions (RMDs)-The RMD age has increased from 70 '12 to 72 for taxpayers turning 70'12 after December 31, 2019.
 
5498-QA
Contributions-Contributions (including any contributions from a section 529 program, but not including contributions of the designated beneficiary's compensation income) made to the ABLE account in 2020 cannot exceed $15,000.
 


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