Business taxes: Due date changes and fringe-benefits reminder
As the calendar year changes, there are a few important tax return due-date changes that should be on your radar, and we want to remind you of a few fringe-benefit reporting requirements.
After many years of certain business tax returns having the same due dates, this year the IRS has decided to mix it up — just to keep things interesting! Forms 1099 and W-2 are due this year to recipients and to the IRS by Jan. 31 2017. The Jan. 31 due date for recipient copies remains the same as before, but the IRS has moved up the deadline for when you are required to file the tax forms with the government.
There are a few other major tax deadline changes:
- Partnership and LLC tax returns are now due on March 15, or two-and-a-half months after year-end and an automatic six-month extension is allowed
- FinCen 114 — Report of Foreign Bank Accounts — is now due on April 15 and an automatic six-month extension is allowed
- C-Corporations are now due on April 15, or three-and-a-half months after year-end and an automatic five-month extension is allowed
As you get ready to process your fourth quarter payroll tax returns and prepare your 2016 Form W-2s, you may need to calculate taxable fringe benefits. These benefits should be added to wages for the year. Examples of a few of the more common benefits are personal tax preparation fees paid by the corporation or LLC, personal use of company car and group term life insurance coverage over $50,000.
S-Corporations have special rules for health insurance premiums paid on behalf of shareholders owning 2 percent or more of the stock. The premiums are required to be included in taxable wages but they are not subject to Social Security or Medicare. The shareholders may be able to deduct 100 percent of the health insurance premiums on their personal income tax return for 2016.
Similarly for LLCs, health insurance premiums paid on behalf of members are subject to income tax, but not self-employment tax. The members may be able to deduct 100 percent of the health insurance premiums on their personal income tax return for 2016.
Remember that LLC members generally do not receive a W-2 reporting wages. Instead, most members are required to receive guaranteed payments. These are subject to self-employment tax on each member’s annual income tax return. Guaranteed payments are reported on each member’s Schedule K-1.