Grippin Donlan Pinkham

– 2023 YEAR-END INFORMATION REPORTING MEMO –

DEADLINE REMINDERS

Filing Deadline*		Form		Provide info to GDP by **
January 1, 2025***		FinCen Beneficial Owner Information		December 13, 2024
January 31, 2025		1099s		January 10, 2025
January 31, 2025		W-2		January 10, 2025
March 17, 2025		S Corp, Partnership & LLC tax returns		February 10, 2025
April 15, 2025		C Corp, Trust & Individual tax returns		March 5, 2025

*Deadline postponements due to natural disasters are not considered in the due dates above but could affect your due dates based on your specific situation and location.

**If you provide us your tax information after these dates your tax return will be extended. We will adhere to this policy to ensure the well-being of our staff and the quality of our services. Tax return engagement letters and document requests will be provided to you in January 2025.

NEW FINCEN REPORTING FOR SMALL BUSINESSES STARTS in 2024

*** UPDATE: Companies are not currently required to comply with FinCEN’s Beneficial Ownership Information (BOI) filings.

The enforcement of the BOI filing has been blocked by a preliminary injunction issued by a Texas court on 12/3/24. This is not a final ruling, and it has already been appealed. There is much uncertainly around when or if the BOI filings will need to resume. Please monitor the FinCEN website for updates.

Please see the end of this memo for the BOI details and filing requirements. These requirements are technically still in place, but enforcement has been temporarily suspended.

NEW VERMONT SAVES RETIREMENT MANDATE STARTS IN 2025

Employers that do not offer a retirement plan and have 5 or more employees will be required to participate in this new program. Employers will be sent registration information including an access code. The registration deadline is March 1, 2025. Employers will be required to withhold retirement amounts from wages and remit to the state unless the employee opts out. Please discuss with your payroll processor and find more information here.

NEW VERMONT CHILD CARE CONTRIBUTIONS PAYROLL TAX

Employers will be required to pay this new .44% payroll tax on all employee wages earned in Vermont starting July 1, 2024. Employers may choose to withhold a portion of this tax from employee’s wages. Self-employment income will also be subject to this tax at a rate of .11%. Please discuss with your payroll processor and find more information here.

NEW VERMONT 3% SURCHARGE ON SHORT TERM RENTALS

Effective August 1, 2024, operators of short-term rentals in Vermont must collect a new 3% surcharge and remit on Form MRT-441. If you use an Internet rental platforms such as Airbnb, they may be handling this on your behalf. Please discuss with your rental platform or leasing agent and find more information here.

THRESHOLDS FOR ELECTRONIC FILING OF FORMS W-2 AND 1099

The IRS requires electronic filing if you file 10 or more information returns. This is no longer determined on a form by form basis, instead you must look at the combined number of forms filed to determine if you must file electronically. The IRS has a new free filing system called IRIS, but the FIRE system is also still available. Learn more about the new filing threshold and the IRIS system here. Vermont requires electronic filing if total combined W-2s and 1099s being submitted exceed 25. The online filing system can be accessed at The Vermont Department of Taxes.

FORM 1099 GENERAL REPORTING INFORMATION

Forms 1099 are used to report certain amounts paid by a trade or business and rentals, including payments for rents and payments for services to independent contractors & consultants.

Payments over $600 for services paid to a non-corporate entity are reported on Form 1099-NEC.

Payments over $600 for rent paid to a non-corporate entity are reported on Form 1099-MISC.

Payments to vendors paid by credit card or through third-party processors (such as PayPal and Venmo) are not required to be reported on 1099s.

Rental real estate activities need to file 1099s if the rental is considered a trade or business.

Also send a copy of the 1099 to the state if either 1) the payment was subject to state withholding or 2) the payment was made to a non-resident for services performed in the state.

NORTH CAROLINA PERSONAL PROPERTY TAX RETURNS

Personal Property Tax Returns are due January 31, 2025. A return is required when a NC business owns or possesses personal property including machinery and equipment, office furniture, computers, supplies and leasehold improvements. If you would like us to prepare the return, please provide us with information by January 10, 2025. If you have questions, please contact our NC office at 704-558-6010.

EMPLOYEE RETENTION CREDIT UPDATE

The IRS is continuing to process ERC claims, but they are behind due to the large number of invalid claims being received as a result of aggressive and false marketing by some ERC promotors. Keep in mind that income tax returns will need to be amended if you receive an ERC refund. Please call us to discuss your claim or assistance with filing the amended tax returns.

PERSONAL USE OF COMPANY VEHICLES

The personal use of a company owned vehicle is a taxable fringe benefit and must be reported on the employee’s Form W-2. For assistance in calculating these amounts, please contact us.

HEALTH INSURANCE FOR S-CORPORATION SHAREHOLDERS

Health insurance premiums and contributions to health savings accounts paid by an S Corporation for more than 2% shareholders must be included as wages on Form W-2 in boxes 1 and 16. These amounts are not subject to federal or state tax withholdings and Medicare and Social Security tax should not be withheld on these amounts. When appropriately reported on the W-2, the shareholder may be able to deduct these costs on their individual tax return.

VT W-2 REPORTING OF EMPLOYER-SPONSORED HEALTH COVERAGE

The VT Dept. of Taxes has mandated that all employers must include the cost of employer-sponsored healthcare on the employee Form W-2. Employers must report both the portion paid by the employer and the portion paid by the employee as a single line item in Box 12 on Form W-2 with code “DD”. This reporting is informational only with no tax implications.

WITHHOLDING REQUIREMENTS ON BONUSES

Bonuses and other supplemental payments to employees are wages and taxes must be withheld by the employer. Income tax may be withheld at a flat rate or at the employee’s normal rate if paid concurrently with regular wages. The flat rates are 22% federal, 6.6% Vermont and 4.85% for North Carolina. These payments are also subject to Social Security and Medicare withholdings. See section 7 of Publication 15 for more details.

GROUP TERM LIFE INSURANCE

Employer-provided group term life insurance coverage over $50,000 must be treated as taxable income and reported on the employee’s Form W-2. The taxable value is determined by using a table provided by the IRS. For assistance in calculating the value, please contact us.

AFFORDABLE CARE ACT REPORTING & PENALTIES

Employers with over 50 full time employee equivalents may have additional reporting requirements and could be subject to penalties if health insurance requirements are not met. If you might have this level of employees, please contact us to discuss.

OTHER REMINDERS

• Have employees review their pay stubs to confirm that their name, address, social security number and related information is accurate.
• Review your state payroll filing requirements. Generally, states require that taxes be withheld based on where the employee is performing services. If you have employees who have shifted to remote working from home and they live in a different state, a change may be needed to their state withholdings.
• The current version of Form W-4 can be found at the IRS website. New employees and all change requests must be made on the current Form W-4. IRS withholdings tables can be found in IRS Pub 15-T. State withholding information can be found on the websites for the Vermont Department of Taxes and North Carolina Department of Revenue.
• All participants in cafeteria plans must be employees. An “employee” for purposes of the cafeteria plan rules does not include a partner in a partnership, a member in an LLC, or a 2% or greater shareholder of an S-corporation (or their family members).
• Vermont landlords who rent one or more residential units must submit a Form LRC-140 to Vermont for each property by January 31, 2024. Copies of the Landlord Certificates are no longer provided to the tenants. Find more information and file online at the Vermont Department of Taxes.
• All VT employees must complete a Form HC-2, Declaration of Health Care Coverage every year. This form is not submitted to the VT Dept. of Taxes but must be retained in your business records for three years.
• If your business has inventory, we will need the cost of inventory on hand at 12/31/23.
• In order to claim any vehicle business deductions, a written mileage log must be maintained. Please document the odometer readings at 12/31/23 for all company vehicles and personal vehicles with business use. For each vehicle, we will need the total miles driven during the year and the total business miles driven during the year.

NEW FINCEN BOI REPORTING FOR SMALL BUSINESSES IN 2024

*** Please see important BOI update on the first page before reading further.

Most small businesses will have a new Beneficial Ownership Information filing requirement with FinCen starting in 2024. The Corporate Transparency Act established these reportings to prevent money laundering. This reporting is not part of your income tax return. Please review your responsibilities and learn more at FinCen's website. If you would like GDP to assist you with these filings, please contact Brianna at bwillett@gdp-cpa.com or call our office.

• Most small entities registered with a secretary of state will be required to file and report information about beneficial owners.
• This includes single member LLCs that operate a business or own rentals.
• Exceptions apply to public companies, non-profits & large operating companies.
• Entities created before 2024 must file by January 1, 2025.
• New entities created during 2024 must file within 90 days of creation.
• Any updates or corrections to reported information must be filed within 30 days.
• Beneficial owners include individuals with 25% ownership and non-owners who have substantial control such as senior officers and major decision makers.
• Failure to file could lead to civil or criminal penalties.
• Reports must be filed electronically at FinCen’s website.