The Internal Revenue Service is making changes in W-2 and 1099 forms and reporting requirements, starting next year.

Greatland, a provider of W-2 and 1099 business software, offered a description of the changes below.

W-2 Form Changes

Returned Wage Reports from the Social Security Administration
Effective January 2015, the Social Security Administration will return Form W-2 electronic and paper wage reports under the following conditions:

• Medicare wages and tips are less than the sum of social security wages and social security tips,

• Social Security tax is greater than zero; Social Security wages and social security tips are equal to zero, and

• Medicare tax is greater than zero; Medicare wages and tips are equal to zero.

In addition, Forms W-2 and W-2c electronic and paper wage reports for household employers will be returned under the following conditions:

• The sum of Social Security wages and Social Security tips is less than the minimum yearly earnings subject to Social Security and Medicare tax withholding for a household employee, and

• The Medicare wages and tips are less than the minimum yearly earnings subject to Social Security and Medicare tax withholding for a household employee.

If the above conditions occur in an electronic wage report, the SSA will notify the submitter by email or postal mail to correct the report and resubmit it to the SSA. If the above conditions occur in a paper wage report, the SSA will notify the employer by email or postal mail to correct the report and resubmit it to the SSA.

Third-Party Sick Pay Recap Reporting
The IRS expects to change the third-party sick pay recap reporting and filing requirements for wages paid in 2014.  Information about this change will be included in the 2014 Publication 15-A.

1099 and Related Form Changes

1098: Mortgage Insurance Premiums
Mortgage insurance premiums paid or accrued after Dec. 31, 2013, are no longer eligible to be treated as interest paid by the payer/borrower. Box 4 on Form 1098, formerly used for reporting these premiums paid or accrued, has been reconfigured for providing other information. 

1098-C: Motor Vehicle Odometer Mileage Entry
Donators of motor vehicles must enter the odometer reading of the motor vehicle in the new box 2a.

1099-B: New Reporting Requirements
Brokers are required to report the adjusted basis of certain debt instruments upon a sale of the debt instrument. In addition, brokers are required to report the adjusted basis of certain securities futures contracts and options upon a sale or closing transaction as well as the gross proceeds from the sale or closing transaction. Brokers also must report whether any gain or loss from these transactions is short-term, long-term or ordinary. Furthermore, there are reporting requirements for a transfer of a debt instrument, an option or a securities futures contract to another broker and for an organizational action that affects the basis of a debt instrument, an option, or a securities futures contract.

Additional changes to this form include:

• The form has been redesigned to conform to the box numbers on Form 8949. A new box has been added at the top center of the form to enter a code that will assist the recipient in reporting the transaction on Form 8949 and/or Schedule D.

• Additional State Copies: Copy 1 (For Payer State) and Copy 2 (For Recipient State) were added for 2014.

• Boxes 14 through 16 (state boxes) allow for a second data entry.

1099-INT 
Boxes 10 and 11 were added to accommodate the new reporting requirements for a debt instrument that is a covered security and that is acquired by a taxpayer with market discount, bond premium or acquisition premium. 

1099-K
• Box 1b, Card Not Present transactions: Box 1b was added to the form to be used to enter the gross amount of total reportable payment card/third party network transactions for the calendar year where the card was not present at the time of the transaction or the card number was keyed into the terminal, such as in the case of online, phone, or catalogue sales. Reporting in box 1b is optional for 2014.

• Second TIN notification box: The 2nd TIN notification box was added to Copies A and C.

1099-MISC 
Box 11, Foreign tax paid, and Box 12, Foreign country or U.S. possession, were deleted.  This information is now reported on Form 8966, Foreign Asset Tax Compliance Act Report. 

1099-OID
Boxes 5 and 6 headings changed from Foreign tax paid and Foreign country or U.S. possession to Market discount and Acquisition premium respectively. Boxes 5 and 6 are now used for the new reporting requirements for a debt instrument that is a covered security and that is acquired by a taxpayer with market discount, bond premium, or acquisition premium. 

1099-R: New Distribution Code
Use Distribution Code K to report distributions of IRA assets not having a readily available fair market value (FMV).

Important Dates – 2014 W-2 and 1099
Feb. 2, 2015 – due date to mail employee copies for W-2 & 1099
March 2, 2015 – due date to send paper format of 1099 Federal (IRS) filing
March 2, 2015 – due date to send paper format of W-2 Federal (SSA) filing    
  or                          
March 31, 2015 – due date to send e-file format of W-2 and 1099 Federal (SSA/IRS) filing

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