Changes to W2 &1099 Forms for 2018

Minor changes for W2 & 1099 forms are occurring in 2018. 

Remember: W2 Copy A forms and 1099-MISC Copy A for contractors, must be filed by January 31 for paper and e-file. 

W-2 Changes for 2018

Official W-2 Instructions for 2018

Due Date for W2 Copy A

The due date to the SSA is January 31, 2019 for W-2 Forms for tax year 2018.

This includes: W-2, W-2AS, W-2CM, W-2GU, W-2VI, W-3 and W-3SS with the SSA. The due date is now January 31 whether you file using paper forms or electronically.

You no longer get more time to e-file or print and mail copies to the SSA.

Discount Efile can help you get it all done on time, with no extra work!


Leave-Based Donation Programs

To aid victims of Hurricanes and Tropical Storms Harvey, Irma, and Maria, and the 2017 California Wildfires, a leave-based donation program is in effect for 2018.

Under these programs, employees may donate their vacation, sick, or personal leave in exchange for employer cash payments made before January 1, 2019, to qualified tax-exempt organizations providing relief for the victims of these disasters.

The donated leave need not be included in the income or wages of the employee. The employer may deduct the cash payments as business expenses or charitable contributions. For more information, see the Official W2 Instructions for 2018.

Suspension of exclusion for qualified moving expense reimbursements

The Tax Cuts and Jobs Act (Public Law 115-97) temporarily suspends the exclusion for qualified moving expense reimbursements under section 132(a)(6) and (g). However, the exclusion still applies for a member of the Armed Forces of the United States on active duty who moves under a military order to a permanent change of station.

This change is effective for taxable years beginning after December 31, 2017, and before January 1, 2026. For more information, see the Official W2 Instructions for 2018.

Combat pay of members of the Armed Forces

For members of the Armed Forces performing services in the Sinai Peninsula of Egypt, the Tax Cuts and Jobs Act also temporarily makes the Sinai Peninsula of Egypt a qualified hazardous duty area. Treat this hazardous duty area as a combat zone for the exclusion from income of certain combat pay under section 112 and exclusion from wages under section 3401(a)(1). For purposes of withholding, this change generally applies to remuneration paid during the period December 22, 2017 through December 31, 2017, and taxable years 2018 through 2025. For more information, see the Official W2 Instructions for 2018.

New qualified equity grants

The Tax Cuts and Jobs Act added section 83(i) for “qualified equity grants.” The law also added new Form W-2 reporting requirements for these grants. Employers with employees who have qualified equity grants must report the amount includible in gross income under section 83(i) for an event which occurs in the calendar year in box 12 using code GG.

Also, employers must report the aggregate amount of income which employees elect to defer under section 83(i) as of the close of the calendar year in box 12, using code HH. For more information, see the Official W2 Instructions for 2018.

Penalties increased

Failure to file and failure to furnish penalties, and penalties for intentional disregard of filing and payee statement requirements have increased due to adjustments for inflation. The higher penalty amounts apply to returns required to be filed after December 31, 2018. For more information, see the Official W2 Instructions for 2018.

1099 Changes for 2018

Official 1099MISC Instructions 2018

Due date for 1099-MISC Copy A with Non-Employee Compensation (contractors)

Public Law 114-113, Division Q, section 201, requires Form 1099-MISC to be filed on or before January 31, 2019, when you are reporting nonemployee compensation payments in box 7.

Otherwise, file by February 28, 2019, if you file on paper, or by March 31, 2019, if you file electronically.

The due dates for furnishing payee statements remain the same.


1099 Rules that can make or break you

Here is a great article from Entrepreneur Magazine about who is required to file 1099 forms and why, the exceptions and how you can be proactive about 1099s to protect your business from large penalties. 

Read the Article

1098 Form Changes

Due to the passage of the Tax Cuts and Jobs Act, P.L. 115-97, the last bullet point in “Exceptions” under “Points” has been changed to the following: “Generally, to acquire a principal residence to the extent the points are allocable to an amount of principal in excess of $750,000.” For more information, see the Official 1098 Instructions for 2018.

1042-S Form Changes (Foreign Income Subject to Withholding)

Boxes 9 and 11 of Form 1042-S have been switched and clarifying language has been added to those boxes on the form. Clarifying language has also been added to boxes 7b and 10 of the form. These instructions have been revised to modify and add certain definitions.

New sections Requirement To Withhold and Before Completing Form 1042-S have been added to clarify a withholding agent’s obligations under chapters 3 and 4 and provide general steps that should be considered when completing Form 1042-S. The income codes, exemption codes, recipient status codes, and LOB codes have been moved to the end of the instructions.

Appendix C has been added. It provides an expanded Example 1, which explains how to complete Form 1042-S for a payment of U.S. source;FDAP income made directly to a beneficial owner.

Appendix D has been added. It provides a comprehensive example of how to complete Form 1042-S for gambling winnings made directly to an individual.

Changes to withholding rates. For tax years beginning after December 31, 2017, the rate of withholding under section 1446 by a publicly traded partnership on a distribution of income effectively connected to a U.S. trade or business has changed to 21% for corporate partners and 37% for all other partners.

For tax years beginning after December 31, 2017, the rate of withholding by a Qualified Investment Entity on a distribution to a nonresident alien or foreign corporation that is treated as gain from the sale or exchange of a U.S. real property interest by the shareholder has changed to 21%.

Changes to codes. To reflect changes made to the chapter 4 regulations regarding U.S. branches of foreign entities that act as intermediaries, chapter 4 status codes have been added for U.S. branches treated as U.S. persons and U.S. branches not treated as U.S. persons that are reporting under Regulations section 1.1471-4. Finally, the LOB Treaty Category code for individuals (code 01) has been removed.

For details, see the Official 1042-S Instructions for 2018.