When Filing, Mind New Law
By ALEC BERRY
WHEELING — While 2016 did not usher through any new, major tax legislation, Jeff Yourkovich of Yourkovich and Associates in Wheeling, said filers should pay attention to at least one significant change.
He said there is now a federal law which accelerates the W-2 and Form 1099 filing deadline for employers and businesses by a few months — to Jan. 31, 2017.
“This replaces the old law that allowed these returns to be filed electronically by April 1,” Yourkovich said. “This new law also prevents taxpayers that are eligible for the Earned Income Credit (EIC) and the Additional Child Tax Credit (ACTC) on their personal federal return to not be able to file these returns until after Feb. 15, 2017.”
He said the change is an attempt by government to detect and prevent fraud. Yourkovich believes the 1099 rule is often overlooked by many businesses, farmers and rental property owners though penalties are severe. He said fines can be over $1,000 per return not filed.
“Taxpayers should receive a completed Form W-9 from each person they pay at least $600 in rents, services, prizes and awards, other income payments, medical and health care payments, or gross proceeds paid to an attorney during the tax year,” Yourkovich said. “The Form W-9 provides you the information necessary to file a correct 1099 if required. Service providers may include lawn care, repairs, contracting work, CPA, professional services and other services. I like to tell clients to get this form completed before you release your payment.”
He said taxation for payments from the gas and oil industry for leases, royalties, easements and right of ways for pipelines, and property damage are relatively new to the Ohio Valley, and he said there is still much misunderstanding as to how report this income.
Yourkovich recommended hiring a CPA knowledgeable in this area.
Also, he said individual taxpayers filing Ohio Form IT-1040 are allowed a deduction amounting to 100 percent of the taxpayer’s Ohio small business investor income, up to $250,000. The deduction cannot exceed $250,000; income over $250,000 is taxed at a flat rate of three percent.
“This is a tremendous tax break for small businesses in Ohio,” Yourkovich said.