During the first few weeks of each year, tax offices are hustling to gather clients’ year-end information forms. As the new tax season approaches, a time-saving overview of those forms is invaluable.

Drake Software is proud to host NATP’s Preparing Year-End Tax Forms webinar.

Attendees will be guided through information forms that clients will likely need to file, recipients for each form, deadlines for filing, penalties if deadlines are missed and correcting forms if necessary.

Information forms that will be reviewed in the webinar include:

• W-2, Wage and Tax Statement
• 1099-MISC, Miscellaneous Income
• 1099-NEC, Nonemployee Compensation
• 941, Employer’s Quarterly Federal Tax Return
• 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return

Questions often arise during information-dense webinars, so subject matter experts will be present to provide answers throughout the presentation. At the close of the webinar, attendees will have access to presentation slides, top questions, and a recording of the webinar — plus, up to 2 CPE course credits, depending on their field of study.

Don’t forget - If you are a Drake Tax user, all these forms are included with your software package, with no extra charges or surprises.

The Preparing Year-End Tax Forms webinar is Thursday, Dec. 15, 2:00 p.m. - 4:00 p.m. CT, and Friday, Dec. 16, 10:00 a.m. - 12:00 p.m. CT.

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About Drake Software

Drake Software, a private company founded in 1977, provides experience, stability and value to over 70,000 tax offices every year. Drake Software products like Drake Tax, Drake Accounting, Drake Documents and Drake Portals are consistently recognized for excellence in tax industry surveys for customer satisfaction, ease of use, overall performance, quality and support. Committed to providing the best service to its customers, Drake also offers CPE opportunities, webinars, online tax research resources and regular tax industry updates.

Question: Your client, Mark, is the sole owner of an S corporation. He lives in a non-community property state with his wife and daughter. Mark would like to gift some of the stock in his S corporation to his daughter this year. He would like to give the maximum amount possible without triggering a reportable gift transaction. When he gifts the stock to his daughter, can he and his wife elect to split the gift between them to double the annual gift tax exclusion amount?

Answer: Yes. To qualify for gift-splitting, three requirements must be met [§2513(a)]:

1. The spouses must be legally married to each other at the time the gift is made. Gifts made prior to divorce or death of a spouse are eligible as long as the surviving spouse (or either spouse, in the case of a divorce) does not remarry during the tax year.

2. Both spouses must be U.S. citizens or residents on the date of the gift.

3. One spouse may not create a general power of appointment in the other spouse over the property transferred.

Because Mark and his wife meet all three requirements, they may elect gift-splitting in this case, even though Mark is the sole owner of the S corporation stock.

Now is a great time to remind your clients to check their tax withholding while there’s time left in 2022 to take advantage of any necessary changes. An adjustment made now may help your client avoid a big surprise, such as a big refund or a balance due, at tax time in 2023.

Life brings constant changes to individual financial situations. Events like marriage, divorce, new tax laws, a new child or home purchase can all be reasons to adjust withholding. You can refer your clients to the IRS withholding estimator, or encourage them to set up a time to meet with you, to review their financial situation and make any necessary adjustments to their withholding.

Tax Withholding Estimator
The IRS’s tax withholding estimator, also available in Spanish, can help taxpayers determine if too much income tax is being withheld and show them the adjustments that can be made to put more cash into their own pocket. In other cases, it can help them see that they should increase their withholding or make an estimated tax payment to avoid a tax bill when they file next year.

The estimator offers workers, retirees, self-employed individuals and other taxpayers a user-friendly, step-by-step tool for effectively tailoring the amount of income tax they should have withheld from wages and pension payments based on their personal circumstances.

Pay As You Go
Taxes are generally paid throughout the year, whether from salary withholding, quarterly estimated payments or a combination of both. However, about 70% of taxpayers withhold too much every year. This typically results in a refund. The average refund in 2022 was just under $3,000.

A few other facts about refunds:

1. Taxpayers do not have to get one. Proper withholding adjustments can help boost take-home pay rather than be over withheld and get it back as a tax refund.
2. While most are issued in 21 days or less from the filing of an error-free and paperless tax return, many take longer for different reasons.
3. Taxpayers are advised not to rely on their refund to pay for big purchases.
4. Direct deposit is the easiest and most convenient way to get a refund. More than 90% of all refunds are issued this way.
5. Paper return processing delays stemming from the pandemic are six months or more. The IRS’s COVID-19 operations page offers complete details.

Other Items That May Affect 2022 Taxes
Some unforeseen events can trigger withholding adjustments. They include:
1. Coronavirus tax relief provided help for taxpayers, businesses, tax-exempt organizations and others – including health plans – affected by the coronavirus (COVID-19).
2. Disasters such as wildfires and hurricanes may trigger tax law provisions that help taxpayers and businesses recover financially from the impact of a disaster, especially when the federal government declares their location a major disaster area.
3. Job losses can create new tax issues. IRS Publication 4128, Tax Impact of Job Loss, explains the tax implications of this unfortunate circumstance.
4. Employees subject to payroll withholding moving into the gig economy due to the pandemic. The IRS advises people earning income in the gig economy to consider estimated tax payments to avoid a balance due or penalties when they file.