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Friday, August 30, 2024
QuickAlerts - Technical New Modernized e-File (MeF) Business Returns Schema and Business Rules are Available
QuickAlerts - Technical - Form 1040 Series Tax Year 2024, Business Rules and Schema are available
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Thursday, August 29, 2024
IR-2024-228: Treasury, IRS and DOE announce full applications are open for Qualifying Advanced Energy Project Tax Credit
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News EssentialsThe Newsroom TopicsIRS Resources | Issue Number: IR-2024-228Inside This IssueTreasury, IRS and DOE announce full applications are open for Qualifying Advanced Energy Project Tax Credit IR-2024-228, Aug. 29, 2024 WASHINGTON — The U.S. Department of Treasury, the Internal Revenue Service and the U.S. Department of Energy announced today that they received over 800 concept papers — project proposals — seeking a total of nearly $40 billion in tax credits, representing $200 billion in total project investments, for Round 2 of the Qualifying Advanced Energy Project Tax Credit (48C) Program. Of the nearly $40 billion, approximately $10.3 billion is from projects in designated energy communities census tracts. Today, the IRS and DOE notified applicants on the 48C Portal that applications are now open and after initial review were encouraged to apply for the next stage of evaluation to determine which projects will receive a tax credit. The IRS encouraged more than 450 projects across 46 states and the District of Columbia with over $22.5 billion in tax credits requested. Roughly $4.8 billion of the $22.5 billion in tax credits encouraged are in historic energy communities. The encouraged projects span large, medium and small businesses and non-profits, all of which must meet prevailing wage and apprenticeship requirements to receive a 30% investment tax credit. There is up to $6 billion in tax credit allocations for the second round for the 48C(e) program, including approximately $2.5 billion for projects located in 48C(e) designated energy communities. Applicants who submitted a concept paper, whether they received an encourage or discourage letter, may now submit a full application on the 48C Portal. Applications are due by Friday, October 18th 11:59 PM ET. Applicants are encouraged to use the application templates available on the 48C Portal. DOE, IRS and UST will host a webinar for applicants on Monday, September 16th. The webinar registration link will be made available on the 48C landing page. The 48C Program, funded by the Inflation Reduction Act, is designed to accelerate domestic clean energy manufacturing and reduce greenhouse gas emissions at industrial facilities. DOE is partnering with the Treasury Department and the IRS to implement the Qualifying Advanced Energy Project Tax Credit (48C). DOE's Office of Manufacturing & Energy Supply Chains (MESC) manages the 48C Program on behalf of the Treasury Department and the IRS. At least $4 billion of the total $10 billion will be allocated for projects in designated § 48C energy communities — communities with closed coal mines or coal plants as defined in Appendix C of IRS Notice 24-36. Learn more about the Qualifying Advanced Energy Project Credit (48C) and the Qualifying Advanced Energy Project Credit (48C) Program.
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IRS Fact Sheet 2024-29: SECURE 2.0 Act impacts how businesses complete Forms W-2
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News EssentialsThe Newsroom TopicsIRS Resources | Issue Number: FS-2024-29Inside This Issue
SECURE 2.0 Act impacts how businesses complete Forms W-2 The Internal Revenue Service reminds businesses that starting in tax year 2023 changes under the SECURE 2.0 Act may affect the amounts they need to report on their Forms W-2. The SECURE 2.0 Act allows for additional features in various employer retirement plans to encourage use of these plans. The provisions potentially affecting Forms W-2 (including Forms W-2AS, W-2GU and W-2VI) are:
De minimis financial incentives The SECURE 2.0 Act made changes designed to encourage employees to contribute to their employers' 401(k) or 403(b) plans. These changes allow employers to offer small financial incentives to employees who choose to participate in these retirement savings arrangements. If an employer offers such an incentive, it's considered part of the employee's income and is subject to regular tax withholding unless there's a specific exemption. For more information, refer to Questions and Answers D-1 through D-6 in Notice 2024-2, published in the Internal Revenue Bulletin. Roth SIMPLE and Roth SEP IRAs Under section 601 of the SECURE 2.0 Act, an employer that maintains a SEP or SIMPLE IRA plan can offer participating employees the option to designate a Roth IRA as the IRA to which contributions under the arrangement or plan are made. For more information, refer to Questions and Answers K-1 through K-8 in Notice 2024-2, published in the Internal Revenue Bulletin. Salary reduction contributions to a Roth SEP or Roth SIMPLE IRA are subject to federal income tax withholding, the Federal Insurance Contributions Act (FICA) taxes and the Federal Unemployment Tax Act (FUTA) taxes. These contributions should be included in boxes 1, 3 and 5 (or box 14 for railroad retirement taxes) of Form W-2. They'll also be reported in box 12 with code F (for a SEP) or code S (for a SIMPLE IRA). Employer matching and nonelective contributions to a Roth SEP or Roth SIMPLE IRA are not subject to withholding for federal income tax, FICA taxes or FUTA taxes. These contributions must be reported on Form 1099-R for the year in which the contributions are made to the employee's Roth IRA. The total amounts are listed in boxes 1 and 2a of Form 1099-R with code 2 or 7 in box 7, and the IRA/SEP/SIMPLE checkbox is checked. Designated Roth nonelective contributions and designated Roth matching contributions Under section 604 of the SECURE 2.0 Act, plans can allow employees to designate certain matching and nonelective contributions made after Dec. 29, 2022, as Roth contributions. These contributions are not subject to withholding for federal income tax. In addition, these contributions generally are not subject to withholding for Social Security or Medicare tax. However, for designated Roth nonelective contributions (including contributions that would be treated as matching contributions if the plan were a qualified plan) that are made to a governmental section 457(b) plan, refer to Question and Answer Q&A L‑7 in Notice 2024‑2, published in the Internal Revenue Bulletin. Unlike regular Roth contributions, designated Roth nonelective and matching contributions must be reported on Form 1099-R for the year in which they're allocated to an individual's account. They're reported in boxes 1 and 2a of Form 1099-R, and code "G" is used in box 7. For more information, refer to Questions and Answers L-1 through L-11 in Notice 2024-2. Form W-2 or Form 1099-R reporting As described above, the reporting requirements that apply to contributions made to a Roth IRA under a SEP arrangement or SIMPLE IRA plan, or to a designated Roth account under an applicable retirement plan, depend on the type of contribution made. The table below summarizes these reporting requirements. For more information, refer to the 2024 General Instructions for Forms W-2 and W-3 and the 2024 Instructions for Forms 1099-R and 5498.
Reminder Businesses can now complete and print various copies (excluding Copy A) of Forms W-2 (including Forms W-2AS, W-2GU and W-2VI) on IRS.gov for recipients. Any information entered on one copy (excluding Copy A) will automatically appear on the others. Copy A cannot be completed online to print and file with the Social Security Administration. If a business filed 2023 Forms W-2 without following these new guidelines, they may need to file Form W-2c to correct any errors. Refer to the General Instructions for Forms W-2 and W-3 for details on when and how to file Form W-2c.
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FS-2024-28: IRS reminds taxpayers of important tax guidelines involving contributions and distributions from online crowdfunding
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News EssentialsThe Newsroom TopicsIRS Resources | Issue Number: FS-2024-28Inside This IssueIRS reminds taxpayers of important tax guidelines involving contributions and distributions from online crowdfunding FS-2024-28, August 2024 Crowdfunding distributions may be includible in the gross income of the person receiving them depending on the facts and circumstances. The crowdfunding website or its payment processor may be required to report distributions of money raised if the amount distributed meets certain reporting thresholds. Here are some important basics to keep in mind. Crowdfunding is a method of raising money through websites by soliciting contributions from a large number of people. The contributions may be solicited to fund businesses, for charitable donations or for gifts. In some cases, the money raised through crowdfunding is solicited by crowdfunding organizers on behalf of other people or businesses. In other cases, people establish crowdfunding campaigns to raise money for themselves or their businesses. Receipt of a Form 1099-K for distributions of money raised through crowdfunding The crowdfunding website or its payment processor may be required to report distributions of money raised, if the amount distributed meets certain reporting thresholds, by filing Form 1099-K, Payment Card and Third Party Network Transactions, with the IRS. If required to file a Form 1099-K with the IRS, the crowdfunding website or its payment processor must also furnish a copy of that form to the person to whom the distributions are made. The American Rescue Plan Act (ARPA) clarifies that the crowdfunding website or its payment processor is not required to file Form 1099-K with the IRS or furnish it to the person to whom the distributions are made if the payments are not made in exchange for goods or services. The reporting thresholds for a crowdfunding website or payment processor to file and furnish Form 1099-K are: Note: The ARPA lowered the reporting threshold for third party settlement organizations (TPSOs) so that TPSOs are only required to report on Forms 1099-K if the total of all payments distributed to a payee in a calendar year exceeds $600, regardless of the number of transactions. However, implementation of this lower threshold has been delayed. Crowdfunding distributions may be made to the crowdfunding organizer, or directly to individuals or businesses for whom the organizer solicited funds. A Form 1099-K must be filed with the IRS and furnished to the person or entity that received the payments if the reporting threshold is met for the year in which the distributions were made. A person receiving a Form 1099-K for distributions of money raised through crowdfunding may not recognize the filer's name on the form. Sometimes the payment processor used by the crowdfunding website, rather than the crowdfunding website itself, will furnish the Form 1099-K and will be listed as the filer on the form. If the recipient of a Form 1099-K does not recognize the filer's name or the amounts included on the Form 1099-K, the recipient can use the filer's telephone number listed on the form to contact a person knowledgeable about the payments reported. Box 1 on the Form 1099-K will show the gross amount of the distributions made to a person during the calendar year. But the furnishing of a Form 1099-K doesn't automatically mean the amount reported on the form is taxable to the person receiving the form. If non-taxable distributions are reported on Form 1099-K, the recipient should report the transaction on Form 1040, Schedule 1, as follows: • Part I – Line 8z, Other Income – "Form 1099-K Received for Non-Taxable Crowdfunding Distributions" to show the gross proceeds from the distributions reported on Form 1099-K. The net effect of these two adjustments on income is $0. Alternatively, if non-taxable distributions are reported on Form 1099-K and the recipient does not report the transaction on their tax return, the IRS may contact the recipient for more information. The recipient will have the opportunity to explain why the crowdfunding distributions were not reported on their tax return. As discussed below, the income tax consequences depend on all the facts and circumstances. Tax treatment of money raised through crowdfunding Under federal tax law, gross income includes all income from whatever source derived unless it is specifically excluded from gross income by law. Whether crowdfunding distributions are includible in the gross income of the person receiving them depends on all the facts and circumstances of the distribution. In most cases, property received as a gift is not includible in the gross income of the person receiving the gift. If crowdfunding contributions are made as a result of the contributors' detached and disinterested generosity, and without the contributors receiving or expecting to receive anything in return, the amounts may be gifts and therefore may not be includible in the gross income of those for whom the campaign was organized. Contributions to crowdfunding campaigns are not necessarily a result of detached and disinterested generosity, and therefore may not be gifts. Additionally, contributions to crowdfunding campaigns by an employer to, or for the benefit of, an employee are generally includible in the employee's gross income. If a crowdfunding organizer solicits contributions on behalf of others, distributions of the money raised to the organizer may not be includible in the organizer's gross income if the organizer further distributes the money raised to those for whom the crowdfunding campaign was organized. More information is available to help taxpayers determine what their tax obligations are in connection with their Form 1099-K at Understanding Your Form 1099-K. Taxpayers may want to consult a trusted tax professional for information and advice regarding how to treat amounts received from crowdfunding campaigns. Recordkeeping for money raised through crowdfunding Crowdfunding organizers and any person receiving amounts from crowdfunding should keep complete and accurate records of all facts and circumstances surrounding the fundraising and disposition of funds for at least three years. More Information
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