The Protecting Americans from Tax Hikes Act of 2015 made several tax incentives permanent. Among the most beneficial for businesses is the Section 179 expensing limitations and phase-outs. The new thresholds allow $500,000 of immediate expensing of qualified business equipment, with a phase out of $2,000,000. If you are planning on making some big equipment purchases by year end, you will be able to write-off the entire purchase (or any portion) on your 2016 income tax return.
A separate provision allows 50% of the cost of improvements to be written off under “bonus depreciation”. This provision was extended for five years.
And, another permanent change allows retailers and restaurants to depreciate remodeling and other improvements to their stores over 15 years, rather than the previous standard of 39 years.
With the passage of Initiative 1433 in Washington State, minimum wage rates will take a big jump over the next few years. Beginning January 1, 2017, the minimum wage rate required to be paid to workers 18 years old and older will increase to $11.00 per hour from the current rate of $9.47 per hour.
The rate will increase to $11.50 per hour in 2018, $12.00 per hour in 2019, and $13.50 per hour in 2020. Subsequent increases will be inflation adjustments.
Starting in 2018, employers will be required to pay sick leave; earned at the rate of one hour per every 40 hours worked.
Beginning with 2016 returns, due dates for Forms W-2 and certain Forms 1099 have been moved up, and the penalties for late or inaccurate forms have substantially increased.
* Form W-2 is due to the Social Security Administration on January 31, 2017, instead of February 28, whether you file electronically or by paper. (If you file 250 or more forms, you must file electronically.)
* Form 1099 must be submitted by January 31, 2017 if you're reporting non-employee compensation in Box 7. Otherwise, the forms are due to the IRS on February 28, the same as in prior years, or March 31 if you file electronically.
In addition to filing on time, you need to make sure the information on the forms is accurate.
Penalties for Failure to File Correct Information Returns may apply if you:
- don’t file a correct information return by the due date and a reasonable cause is not shown,
- file on paper when you were required to file electronically,
- fail to report a Taxpayer Identification Number (TIN),
- report an incorrect TIN, or
- fail to file paper forms that are machine readable.
Penalties for Failure to Furnish Correct Payee Statements may apply if:
- you don’t provide a correct payee statement by the applicable date and a reasonable cause isn’t shown,
- all required information isn’t shown on the statement, or
- incorrect information is included on the statement.
How much are the penalties? If you fail to file on time and your business gross receipts are less than $5 million, penalties can range from $50 per return for up to 30 days late, to $260 per return for filing after August 1. The maximum dollar penalty can range from $186,000 to $1,064,000. If the IRS says you intentionally disregarded the rules, you can be fined $530 per return, with no maximum.