New requirement when claiming salaries and wage deduction on entity tax returns
With recent IRS procedural changes, you might find your CPA or tax preparer asking for additional information when completing your 2016 entity federal and state tax returns. Specifically, the IRS is now requiring individuals preparing your corporation, S-corporation, or partnership tax return to report the number of W-2’s your entity completed and sent out to employees if you are claiming a deduction for salaries and wages expense.
This change is the culmination of recent efforts by the IRS to reduce the number of fraudulently filed tax returns that are becoming increasingly prevalent. As you meet with your CPA or tax preparer to discuss the preparation of your farm, or agriculture related entity’s tax return this year, please keep in mind that that you will be required to furnish this information. While this is additional step may seem cumbersome, we believe that it will serve to help limit the amount of fraudulently filed returns that are affecting farm businesses around the country.
Special thanks to Michael Lemon for writing this post.