Tax Year 2017 IRS/SSA Updates
Renumbered Box 10: The 2016 Box 10 Other is now Box 11 Other.
Box 10: Number of mortgage properties.
Limited penalty relief. For the 2017 calendar year, Announcement 2016-42, available at https://www.irs.gov/irb/2016-49_IRB/ar10.html, provides that no penalties will be imposed under section 6721 or 6722 for reporting the aggregate amount billed, instead of the aggregate amount of payments received, for qualified tuition and related expenses on Form 1098-T. Beginning in 2018, only the qualified tuition and related expenses actually paid can be reported on Form 1098-T.
Rcp Tin Checkbox: STUDENT'S taxpayer identification no. checkbox.
Foreign Transferors. A new checkbox has been added as box 5 to report the transfer of real estate by a foreign person. Previous box 5, Buyer's Part of Real Estate Tax, is now box 6.
Box 5 Checkbox: Transfer of real estate by a foreign person.
New Box 12 Code FF. A new box 12 Code FF has been added to report the total amount of permitted benefits under a qualified small employer health reimbursement arrangement (QSEHRA). These new QSEHRAs allow eligible employers to pay or reimburse medical care expenses of eligible employees after the employees provide proof of coverage. The maximum reimbursement for an eligible employee under a QSEHRA is $4,950 ($10,000 if it also provides reimbursements for family members), before indexing for inflation.
Leave-based donation programs to aid victims of the severe storms and flooding in Louisiana. Under these programs, employees may donate their vacation, sick, or personal leave in exchange for employer cash payments made before January 1, 2018, to qualified tax-exempt organizations providing relief for the victims of the severe storms and flooding in Louisiana that began on August 11, 2016. The donated leave will 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 Notice 2016-55, 2016-40 I.R.B. 432, available at https://IRS.gov/irb/2016-40_IRB/ar08.html.
Leave-based donation programs to aid victims of Hurricane Matthew. Under these programs, employees may donate their vacation, sick, or personal leave in exchange for employer cash payments made before January 1, 2018, to qualified tax-exempt organizations providing relief for the victims of Hurricane Matthew. The donated leave will 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 Notice 2016-69, 2016-51 I.R.B. 832, available at https://IRS.gov/irb/2016-51_IRB/ar11.html.
Federal employers in the CNMI. The U.S. Treasury Department and the CNMI Division of Revenue and Taxation entered into an agreement under 5 U.S.C. 5517 (“5517 agreement”) in December 2006. Under this agreement, all federal employers (including the Department of Defense) are required to withhold CNMI income taxes, rather than federal income taxes, and deposit the CNMI taxes with the CNMI Treasury for employees who are subject to CNMI taxes and whose regular place of federal employment is in the CNMI. New guidance for completing Forms W-2 for these employees is available at https://IRS.gov/individuals/international-taxpayers/special-withholding-rules-for-us-federal-agencyemployers-with-employees-in-cnmi-or-puerto-rico.
Pentalties 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, 2017.
De minimis error safe harbor. Notice 2017-9, 2017-4 I.R.B. 542, available at https://IRS.gov/irb/2017-04_IRB/ar11.html, provides new information regarding the de minimis error safe harbor.
The text in Box 1 of Form W-2G has been changed from "Gross winnings" to "Reportable winnings". This change clarifies that for certain types of gambling activity, the amount shown in box 1 is gross winnings less the amounts of the wager or buy-in.
Reporting late rollover contributions to an IRA. Report late rollover contributions certified by the participant in boxes 13a and 13b on Form 5498. Report the self-certification code in box 13c.
Unique form identifier. Beginning in 2017, withholding agents will be required to assign a unique identifying number to each Form 1042-S they file. This identifying number is used, for example, to identify which information return is being corrected or amended when multiple information returns are filed by a withholding agent with respect to the same recipient. The unique identifying number cannot be the recipient's U.S. or foreign TIN. The unique identifying number must be numeric. The length of a given identifying number must be exactly 10 digits. The identifying number must be unique to each original Form 1042-S filed for the current year. The identifying number can be used on a new original form in a subsequent year.
Amended forms. Beginning in 2017, withholding agents filing an amended form must indicate the amendment number (see top of form below title, to the right of the "Amended" checkbox). Any amended form must have the same unique form identifier as the original form that is being amended. Each time that you amend the same form (as determined by the unique form identifier), you must provide the amendment number in the box provided on the form (using "1" for the first amendment and increasing sequentially for each subsequent amendment). See Amended Forms, later, for more information.
Pro-rata reporting. The "Pro-Rata Reporting" box was moved from the top of the form (below the title) down to new box 15.
Qualified derivatives dealers (QDDs). To facilitate implementation of the withholding requirements associated with QDDs, the instructions add a new chapter 3 exemption code that applies for payments to a QDD and a new chapter 3 status code for a QDD. For more information on the use of these codes, see Boxes 3a and 4a, Chapter 3 and Chapter 4 Exemption Codes, and Boxes 13f and 13g, Recipient's Chapter 3 and Chapter 4 Status Codes, later. For more information on the withholding and reporting requirements associated with payments made to and by QDDs, see Revenue Procedure 2017-15.
Code Changes. The 2017 Form 1042-S includes new pooled reporting codes 36, 37, and 38 (related to dividend equivalent offsetting payments) as well as existing code 33 (for joint account withholding rate pools). Based on the final QI agreement applicable for 2017 (Revenue Procedure 2017-15), these codes are no longer valid and withholding agents should not use these codes for Form 1042-S reporting purposes. These instructions were issued subsequent to the form and the four codes in question are included on page 22 of these instructions, but with the notation that they are not to be used. The four codes in question will be removed from the 2018 form. Also note that parts of footnote 9 have been amended in these instructions. This change will also be made to the 2018 form.
Other changes to codes. Income code 54 has been changed from “Other income” to “Substitute payments - interest from certain actively
traded or publicly offered securities.” Withholding agents should use income code 23 (Gross income - Other) to report payments of income for which no other
income code applies. Withholding agents should use code 54 to report payments of interest on actively traded or publicly offered securities if the
interest is described in Treasury Regulations section 1.1441-6(c)(2) and the withholding agent reduced the rate of withholding under an income tax
treaty. A chapter 4 exemption code has been added for payments that are not subject to chapter 4 withholding and for CAUTION ! which no other chapter 4
exemption code applies. For more information on using this exemption code, see Boxes 3a and 4a, Chapter 3 and Chapter 4 Exemption Codes, later. The
chapter 4 exemption codes for excluded payments on offshore obligations and collateral have been removed as these exemptions do not apply after
the 2016 calendar year. See Treasury Regulations section 1.1473-1(a)(4)(vi) and (vii). The chapter 4 status codes for limited FFIs and branches that
are treated as nonparticipating FFIs have also been removed as these are not valid statuses for purposes of chapter 4 after the 2016 calendar year.
See Notice 2015-66.
List of foreign country codes. Beginning in 2017, Form 1042-S filers will use the same list of country codes used on other IRS forms (for example, Forms 926, 1118, 3520, and 8805). This list of foreign country codes may be found at https://www.irs.gov/countrycodes. Note. Although the list of country codes is maintained by Modernized e-File, Form 1042-S filers who file electronically will continue to use the FIRE system. See instructions for Electronic Reporting on page 3. Also, if applicable, the option to file Form 1042-S by paper is still available.
Foreign taxpayer identifying number and date of birth. Beginning in 2017, a financial institution that files a Form 1042-S with respect to a payment on an obligation that it maintains at its U.S. office or U.S. branch must report the recipient's foreign taxpayer identifying number (FTIN) and date of birth (if the recipient is an individual). See Box 13i, Recipient's Foreign Taxpayer Identifying Number, and Box 13l, Recipient's Date of Birth, later, for additional information regarding this requirement.
Amount repaid to recipient. The instructions now clarify that a withholding agent that repays over withheld tax to a recipient under the set-off procedure should report the repayment in box 11 if the repayment is made in the year following the calendar year of over withholding. See Box 11, Amount Repaid to Recipient, later, and the instructions to Form 1042 for more information.
Recipient's U.S. TIN Type to Reserved. (Removed)
U.S. Federal Tax Withheld Indicator to Reserved. (Removed)