Tax Filing Updates for January 2019

The 2019 tax season is now upon us. At the time this post was written, there were but two weeks remaining for businesses to meet their responsibilities in relation to W-2 forms, 1099 forms, etc. This is the time of year when even small mistakes with tax forms can create big issues down the road.

There is not much to report by way of legislation right now except to say that a number of states are looking at the 2019 legislative session with an eye toward addressing minimum wage and tax withholding questions. If you operate in a state where such issues are being looked at, keep a close eye on what is decided in the coming months.

From the federal perspective, there are couple of things to pay attention to right now. First are the deadlines for filing annual forms.


January 31 is the 'Big One'

The big deadline every tax season is January 31. This is the date by which employers are expected to have filed certain forms with the government and distributed W-2 forms to employees. Significant penalties are in place should employers fail to meet their responsibilities.


By January 31, your company should have already filed:

  • W-3 Forms – These are summation forms sent to the Social Security Administration (SSA) in concert with the W-2 forms given to employees. The W-3 essentially informs the SSA that you have transmitted W-2 data and have already, or are preparing to, distribute W-2 forms to employees.
  • 1099-MISC – These forms are completed and distributed to contractors that have been paid $600 or more during the previous tax year.
  • Form 1096 – This form is a summation form for reporting any and all 1099s issued for the previous tax year.

Paper tax forms can still be filed, but the IRS and SSA both encourage electronic filing whenever possible. Penalties for failure to file or filing late start at $50 per return and go as high as $530 per return. If your company cannot make the January 31 deadline for filing with the IRS and the SSA, an extension can be requested by filing Form 8809.


New Scam for 2019

The second issue employers need to be concerned about is a new scam the IRS began warning of late last year. This scam involves a phishing effort to steal either employee direct deposit or W-2 information.

In the direct deposit scam, scammers send an e-mail to employees asking them to provide new direct deposit information for security purposes. The scammers often pose as high-level company executives trying to protect employees against fraud. Once they get the new direct deposit information, the scammers help themselves to victim bank accounts.

In the case of the W-2 scam, it works in a similar manner. Scammers send e-mails that appear to be coming from company executives. The e-mails request detailed W-2 information including employee names, Social Security numbers, and earnings. The scammers then use that information to file fraudulent tax returns.


Changes for 2019

The biggest payroll change coming in 2019 has to do with the elimination of the individual mandate for health insurance. Withholding will have to be adjusted for those employees who choose not to take advantage of company health insurance plans.

Hopefully, all your employees who needed to file new W-4 forms in 2018 have already done so. If not, filing their tax returns in the coming months might make it apparent to some that a new W-4 is in order. Be prepared to furnish new forms and offer assistance during the first quarter of 2019.