IRS Reporting Procedures for Tax Year 2016 Release ,

Transcription

1 IRS Reporting Procedures for Tax Year 2016 Release , Summary: This document describes the required procedures for reporting tax information to the Internal Revenue Service, and for printing IRS tax forms for the members. This includes the reporting of: Mortgage loan interest (form 1098) Student loan interest (form 1098-E) Cancellation of debts (form 1099-C) Dividends/interest (form 1099-INT) Dividends/interest for Non-Resident Alien members (form 1042-S) Miscellaneous Income (form 1099-MISC) Original issue discounts for certificates with terms greater than one year and interest deferred until maturity (form 1099-OID) Coverdell ESA distributions (form 1099-Q) and contributions (form 5498-ESA) IRA distributions (form 1099-R) and contributions (form 5498) HSA distributions (form 1099-SA) and contributions (form 5498-SA). ****NEW FOR 2016**** IRS Changes completed for Issue 10028: All forms and files have been updated with all modifications per IRS regulations. Form 1098 The following changes were made to the forms and tape file: 1. Tape file - amount code 6 (Outstanding Mortgage Principal as of 1/1/2016) was added to the Payer A record. Form - Box 2 was added to the form. The data for this field will be populated using the mb-ytd.bal-fwd-amt[1] field. 2. Tape file Positions (Mortgage Origination Date) were added to the Payee B record. Form Box 3 was added to the form. The data for this field will be populated from the orig-ln-dt field in g-ln-dt. 3. Tape file Position 552 (Property Securing Mortgage Indicator) was added to the Payee B record. Form A check-box was added to the form. 1

2 A new check-box (Property Address Same as Mailing Address was added to the Loan Properties-Mortgage tab in a new Property Info section. On a new loan if the address in the Property tab of loan setup is blank the checkbox will be checked. If the address in the Property tab of loan setup is the same as the mailing address the box will be checked. If the address in the Property tab of loan setup is different than the mailing address the box will be left un-checked. If this box is checked the indicator will be placed on the tape file and the check-box will be checked on the form. If the box is checked on the form no address will be populated in the tape file or in box 8 on the form. See the description of the irsupdate.p program to see how information will be converted for this check-box. 4. Tape file Positions (Property Securing Mortgage) were added to the Payee B record. Form Box 8 (Address of property securing mortgage) was added to the form. New address lines were added to the Loan Properties Mortgage tab in a new Property Info section. On a new loan the address in the Property tab is blank no address will be placed in the address fields and the box will be checked. If the address in the Property tab is the same as the mailing address that address will be populated in the address fields and the box will be checked. If the address is different than the mailing address the address will be populated in the address fields, the box will be left unchecked and that address will be populated in the tape file and on the form. See the description of the irsupdate.p program to see how information will be converted for this check-box. 5. Tape File Positions (Description of Property) were added to the Payee B record. Form Box 9 (Property Description) was added to the form. A new PID# field was added to the Loan Properties Mortgage tab in a new Property Info section. On a new loan if the PID# field is populated in the Property tab of the Loan Setup screen it will be populated in the new field of the Mortgage tab. If there is a PID# in the field in the Mortgage tab and the Indicator is un-checked and there is no address in the Mortgage tab the PID # will be reported in the tape file and printed on the form. 6. The forms were changed from three forms to a page to two forms to a page. Changes were made to make the fields print correctly on the new forms. Form 1099-INT In the Payer A record, amount code E was added. This resulted in no changes to the printed form. Form 1099-OID In the Payer A record, amount code 5 was added. This resulted in no changes to the printed form. Form 1042-S In the tape file position 784 was changed to report a 3 and print a 3 on the form in place of a X. Irsupdates.p The irsupdates.p program was modified to convert information in the new Property Infor fields of the Mortgage tab of Loan Properties. The program will look for 2

3 existing records in the ln-appl.property-addr, city, state and zip fields. If found, it will compare the first six characters in the ln-appl.property-addr field to the mb.mail-addr1 first six characters. If they match the address will be added to the new screen in the Property Info section of the Mortgage tab of Loan Properties and the Property Address Same AS Mailing Address box will be checked. When the address first six characters don t match the address will be populated in the Proper Info section and the box will be left unchecked. If there is no address in the Property screen the Property Address Same as Mailing Address box will be checked. In this case the property address should be verified to make sure it is the same as the mailing address or the property address should be maintained in the Property Info field. Issue 8509 Form 1099-MISC was modified so that the second address line of the Vendor Maintenance screen will be added to the IRS tape file. This was done to make it consistent with other IRS forms. This will aid credit unions who use the IRS tape files to have a third party vendor print their IRS forms. The IRA Owner Update program was modified to set the 2017 contribution amount for a single person at $3, Reporting Procedures: 1098 records are created for each member that has YTD interest paid, points paid for current reporting year, or mortgage insurance premiums for current reporting year on all loans designated for 1098 reporting in excess of the minimum amount to be reported entered by the user. Only Loan Types with an IRS 1098 Stmnt flag checked [x] are included in calculating reportable 1098 loan interest for each member. Creating the 1098 files: From the Back-Office Workspace under IRS Reporting, select 1098 Rpt/Form/Tape. From Member #: Enter the beginning member number to report. Thru Member #: Enter the ending member number to report. Sort By: Use the combo box to select a sort preference. Create Report: Check this box to create a 1098 report. Create Forms: Check this box if you want to print Laser 1098 forms. Corrected file: Check this box to create corrected 1098s. Test File: Check this box if creating a test tape/diskette file. Mort Group Min Amount: Enter the minimum YTD interest amount to report for mort group Loan Types. Other Groups Min Amount: Enter the minimum YTD interest amount to report for non- mort group Loan Types designated for 1098 reporting. Printing 1098 laser forms (optional): From the IRS Manager browser, highlight the file to be printed (e.g. 1098mort1.form) right-click and Submitting the 1098 data to IRS: 3

4 /tmp/tape/1098mort1.tape) E Reporting Procedures: 1098-E records are created for each member that has YTD interest paid on all loans for the specified loan type in excess of the minimum amount to be reported entered by the user. Creating the 1098-E files: From the Back-Office Workspace under IRS Reporting, select 1098-E Rpt/Form/Tape. From Member #: Enter the beginning member number to report. Thru Member #: Enter the ending member number to report. Sort By: Use the combo box to select a sort preference. Create Report: Check this box to create a 1098E report. Create Forms: Check this box if you want to print Laser 1098E forms. Corrected File: Check this box to create corrected 1098E s. Replacement File: Check this box if creating a replacement tape. Test File: Check this box if creating a test tape/diskette file. Min Amount: Enter the minimum YTD interest amount to be reported. Printing 1098-E laser forms (optional): From the IRS Manager browser, highlight the file to be printed (e.g. 1098e1.form) right-click and Submitting the 1098-E data to IRS: /tmp/relrpt/1098e1.tape) C Reporting Procedures: 1099-C records are created for each charged-off loan (status code co ) where the debt has been cancelled by the credit union. The member is required to report this as income for the year. Note: The status of the loan must remain co in order for the cancelled debt to be reported on a 1099-C and the following maintenance must be performed prior to running the 1099-C program: In Charge Off Maintenance the following fields must be filled in to complete a 1099-C: Cancelled Date (must be dated for this tax reporting year) Cancel Amount Enter the amount of debt canceled Interest Enter the amount of interest canceled Bankruptcy Check box if borrower filed bankruptcy Recourse Debt Check box if this was a recourse debt Market Value Enter the market value of property Debt Description Enter a description of the debt 4

5 Creating the 1099-C file: From the Back- Office Workspace under IRS Reporting, select, 1099-C Rpt/Forms/Tape. From Member #: Enter the beginning member number to report. Thru Member #: Enter the ending member number to report. Sort By: Use the combo box to select a sort preference. Create Report: Check this box to create a 1099-C report. Create Forms: Check this box if you want to print Laser 1099-C forms. Corrected: Check this box to create corrected 1099-Cs. Replacement: Check this box if creating a replacement tape file. Test Tape: Check this box if creating a test tape file. Printing 1099-C laser forms (optional): From the IRS Manager browser, highlight the file to be printed (e.g. 1099c1.form) right-click and Submitting the 1099-C file to IRS: /tmp/relrpt/1099c1.tape) INT Reporting Procedures: 1099-INT records are created for each member that has YTD dividends/interest in excess of the Minimum Reportable Amount selected by the user. Each member s YTD dividend/interest amount is calculated using the YTD dividends/interest in each deposit record of the member (excluding IRA account types), and any savings bond interest records established for the member in the Sharetec Savings Bond FM (sbndmt) table. The credit union has the option to include/exclude OID certificates. Sharetec has coded to recognize OID certificates with a term > 366 days and a dividend frequency lump sum. If included, OID certificates will only be reported only for the year dividends are actually posted to the certificate (i.e. the total amount of dividends paid at maturity). Creating the 1099-INT files: From the Back-Office Workspace under IRS Reporting, select, 1099-INT/Rpt/Forms/Tape. From Member #: Enter the beginning member number to report. Thru Member #: Enter the ending member number to report. Sort By: Use the combo box to select a sort preference. Create Report: Check this box to create a 1099-INT report. Create Forms: Check this box if you want to print Laser 1099-INT forms. Corrected File: Check this box to create corrected 1099-INTs. Test File: Check this box if creating a test tape file Min Reportable Amt: Enter the minimum YTD interest amount to be reported to the IRS. Include1099-OID s: Check this box to include OID certificates. Print Bad Addresses: Check this box to print forms for members with bad addresses. 5

6 Printing 1099-INT laser forms (optional): From the IRS Manager browser, highlight the file to be printed (e.g. 1099int1.form) right-click and Submitting the 1099-INT files to IRS: /tmp/relrpt/1099int1.tape) MISC Reporting Procedures: 1099-MISC records are created for each vendor that has YTD funds paid to them in excess of the Minimum Reportable Amount for the current reporting year. They also must have the 1099-MISC check-box checked in the Vendor Properties record. Creating the 1099-MISC files: From the Back-Office Workspace under IRS Reporting, select 1098 Rpt/Form/Tape. From Vendor #: Enter the beginning vendor number to report. Thru Vendor #: Enter the ending Vendor number to report. Sort By: Use the combo box to select a sort preference. File Count: Enter the first file number to process (Enter 1 if processing all vendors). Create Report: Check this box to create a 1099-MISC report. Create Forms: Check this box if you want to print Laser 1099-MISC forms. Corrected file: Check this box to create corrected 1099-MISCs. Test File: Check this box if creating a test tape/diskette file. Minimum Reportable Amount: Verify the minimum reportable amount is setup in the IRS Tax Properties section of the IRS Reporting tab of the Credit Union record. Printing 1099-MISC laser forms (optional): From the IRS Manager browser, highlight the file to be printed (e.g. 1099misc1.form) right-click and Submitting the 1098MISC data to IRS: /tmp/relrpt/1099misc1.tape). 6

7 1099-OID Reporting Procedures: 1099-OID records are created for members with certificates that have a term > 1 year and a dividend frequency lump sum (i.e. interest/dividend payments deferred until maturity). These types of certificates will report the YTD interest/dividends earned during the reporting year (accrued or paid) on form 1099-OID: Requirements for Reporting OID Certificates (file maintenance may be required) Certificate term must be > 366 days. Sharetec calculates the number of days from Open Date through Maturity Date to determine an OID certificate. Certificate Div Pay Freq must be lump sum. Certificate cannot auto renew. The credit union must manually close and issue a new certificate. Certificate must have both a valid Open Date and Close Date after reaching maturity to generate a correct OID record for the year in which the certificate matures. Creating the 1099-OID files: From the Back-Office Workspace under IRS Reporting, select, 1099-OID Rpt/Forms/Tape. From Member #: Enter the beginning member number to report. Thru Member #: Enter the ending member number to report. Sort By: Use the combo box to select a sort preference. Create Report: Check this box to create a 1099-OID report. Create Forms: Check this box if you want to print Laser 1099-OID forms. Corrected File: Check this box to create corrected 1099-OIDs. Test File: Check this box if creating a test tape file. Min Reportable Amt: Enter the minimum YTD interest amount to be reported to the IRS. Print Bad Addresses: Check this box to print forms for members with bad addresses. Printing 1099-OID laser forms (optional): From the IRS Manager browser, highlight the file to be printed (e.g. 1099oid1.form) right-click and Submitting the 1099-OID files to IRS: /tmp/relrpt/1099oid1.tape) Q Reporting Procedures 1099-Q records are created for each Coverdell ESA account with distributions during the tax year. Distributions are tracked by the IRA Purpose Code selected when funds are withdrawn from a Coverdell ESA Deposit Type. Creating the 1099-Q files: From the Back-Office Workspace under IRS Reporting, select, 1099Q Rpt/Forms/Tape. From Member: Enter the beginning member number to report. Thru Member: Enter the last member number to report. Create Report: Check this box to create a 1099Q report. 7

8 Create Forms: Check this box if you want to print Laser 1099Q forms. Corrected File: Check this box to create corrected 1099Qs. Test File: Check this box if creating a test tape file. Printing 1099-Q laser forms (optional): From the IRS Manager browser, highlight the file to be printed (e.g. 1099q1.form) right-click and Submitting the 1099-Q files to IRS: /tmp/relrpt/1099q1.tape). IRS 1099-Q Purpose Codes: The following list of distribution codes for Coverdell ESA accounts is from the IRS Instructions for Form 1099-Q. This table details the proper codes to report Coverdell ESA distributions on form 1099-Q: Sharetec Purpose Code Description IRS Purpose Code E1 ESA Normal Distributions 1 E2 ESA 2016 Excess contribution plus earnings 2 E3 ESA 2015 Excess contribution plus earnings 3 E4 ESA Disability distribution 4 E5 ESA Death distribution 5 E6 ESA Prohibited transaction 6 ET ESA Trustee-to-Trustee Transfer 1 Each Sharetec user should review their list of Purpose Codes that they use when processing Coverdell ESA distributions (these are stored in the IRA Reasons Code FM (iraremt) table) to make sure that they have created codes that correspond with the required IRS reporting codes. SINCE THE IRS USES DUPLICATE DISTRIBUTION CODES THAT HAVE DIFFERENT MEANINGS FOR IRAs VS. ESAs, IT IS RECOMMENDED THAT UNIQUE PURPOSE CODES BE CREATED FOR ESA DISTRIBUTIONS. If a distribution was performed with an incorrect IRS Purpose Code, it can be corrected prior to 1099-Q reporting by manually updating the ira-tran.purp-cd in the IRA transaction history record (IRA Transactions IQ/FM (iratran)) with the correct IRS Purpose Code R Reporting Procedures: 1099-R records are created for each Regular IRA, Simple IRA, SEP, and Roth IRA with reportable distributions during the tax year. Reportable distributions are tracked by the IRA Purpose Code selected when funds are withdrawn from an IRA Deposit Type. The IRA Purpose Code record (IRA Reasons Code FM (iraremt)) controls if the transaction is a reportable distribution, and how it is reported to the IRS. Creating the 1099-R files: From the Back-Office Workspace under IRS Reporting, select 1099R IRA Rpt/Forms/Tape. From Member: Enter the beginning member number to report. Thru Member: Enter the last member number to report. Create Report: Check this box to create a 1099R report. 8

9 Create Forms: Check this box if you want to print Laser 1099R forms. Corrected File: Check this box to create corrected 1099Rs. Test File: Check this box if creating a test tape file. Printing 1099-R laser forms (optional): From the IRS Manager browser, highlight the file to be printed (e.g. 1099r1.form) right-click and select Print. Submitting the 1099-R files to IRS: /tmp/relrpt/1099r1.tape). IRS 1099-R Purpose Codes. The following table is from the IRS Instructions for Forms 1099-R and 5498, and also displays the Sharetec Purpose Code (STEC Code). This table details the proper codes to use when reporting IRA distributions on form 1099-R (Box 7). Each Sharetec user should review their list of Purpose Codes that they use when processing IRA distributions (these are stored in the IRA Reasons Code FM (iraremt) table) to make sure that they have created codes that correspond with the required IRS reporting codes. If a distribution was performed with an incorrect IRS Purpose Code, it can be corrected prior to 1099-R reporting by manually updating the iratran.purp-cd in the IRA transaction history record (IRA Transactions IQ/FM (iratran)) with the correct IRS Purpose Code: Guide to Distribution Codes STEC CODE IRS Distribution Codes Explanations 01 1 Early distribution, no known exception. 2 2 Early distribution, exception applies. Use Code 1 only if the participant has not reached age 5912, and you do not know if any of the exceptions under Code 2, 3, or 4 apply. However, use Code 1 even if the distribution is made for medical expenses, health insurance premiums, qualified higher education expenses, a first-time home purchase, or a qualified reservist distribution under section 72(t)(2)(B), (D), (E), (F), or (G). Code 1 must also be used even if a taxpayer is 5912 or older and he or she modifies a series of substantially equal periodic payments under section 72(q), (t), or (v) prior to the end of the 5-year period which began with the first payment Use Code 2 only if the participant has not reached age 5912 and you know the distribution is: A Roth IRA conversion (an IRA converted to a Roth IRA). A distribution made from a qualified retirement plan or IRA because of an IRS levy under section A governmental section 457(b) plan distribution that is not subject to the additional 10% tax. But see Governmental section 457(b) plan distributions, earlier, for information on distributions that may be subject to the 10% additional tax. A distribution from a qualified retirement plan after separation from service in or after the year the participant has reached age 55. A distribution from a governmental defined benefit plan to a public safety employee (as defined in 72(t)(10)(B)) after separation from service in or after the year the employee has reached age 50. A distribution that is part of a series of substantially equal periodic payments as described in section 72(q), (t), (u), or (v). *Used with code...(if applicable) 8, B,D,K, L, or P 8,B, D,K, or P 9

10 A distribution that is a permissible withdrawal under an eligible automatic contribution arrangement (EACA). Any other distribution subject to an exception under section 72(q), (t), (u), or (v) that is not required to be reported using Code 1, 3, or Disability. For these purposes, see section 72 (m)(7). D 04 4 Death. Use Code 4 regardless of the age of the participant to indicate payment to a decedent's beneficiary, including an estate or trust. Also use it for death benefit payments made by an employer but not made as part of a pension, profit-sharing, or retirement plan Prohibited transaction. 6 Section 1035 exchange. Use Code 5 if there was a prohibited transaction involving the IRA account. Code 5 means the account is no longer an IRA. Use Code 6 to indicate the tax-free exchange of life insurance, annuity, long-term care insurance, or endowment contracts under section Normal distribution. Use Code 7: (a) for a normal distribution from a plan, including a traditional IRA, section 401(k), or section 403(b) plan, if the employee/taxpayer is at least age 59 12, (b) for a Roth IRA conversion if the participant is at least age 5912, and (c) to report a distribution from a life insurance, annuity, or endowment contract and for reporting income from a failed life insurance contract under sections 7702(g) and (h). See Rev. Proc , I.R.B. 160, available at _IRB/ar19.html. Generally, use Code 7 if no other code applies. Do not use Code 7 for a Roth IRA. Note: Code 1 must be used even if a taxpayer is 5912 or older and he or she modifies a series of substantially equal periodic payments under section 72(q), (t), or (v) prior to the end of the 5-year period which began with the first payment Excess contributions plus earnings/ excess deferrals (and/or earnings) taxable this year. 9 Cost of current life insurance protection. Use Code 8 for an IRA distribution under section 408(d)(4), unless Code P applies. Also use this code for corrective distributions of excess deferrals, excess contributions, and excess aggregate contributions, unless Code P applies. See Corrective Distributions, earlier, and IRA Revocation or Account Closure, earlier, for more information. Use Code 9 to report premiums paid by a trustee or custodian for current life or other insurance protection. See the instructions for box 2a, earlier, for more information. 8, A,B,D,G, H,K,L, or P W A,B,D, or K 1, 2, 4,B,J, or K A May be eligible for 10-year tax option. B Designated Roth Account Distribution Use Code A only for participants born before January 2, 1936, or their beneficiaries to indicate the distribution may be eligible for the 10-year tax option method of computing the tax on lump-sum distributions (on Form 4972, Tax on Lump-Sum Distributions). To determine whether the distribution may be eligible for the tax option, you need not consider whether the recipient used this method (or capital gain treatment) in the past. Use Code B for a distribution from a designated Roth account. But use Code E for a section 415 distribution under EPCRS (see Code E) or Code H for a direct rollover to a Roth IRA. 4 or 7 1, 2, 4,7, 8, G, L,P, or U D D Annuity Payments from nonqualified annuities and distributions from life insurance contracts that may be subject to tax under section 1411 E Distributions under Employee Plans Compliance Resolution System (EPCRS). F Charitable gift annuity. Use Code D for a distribution from any plan or arrangement not described in sections 401(a), 403(a), 403(b), 408, 408A, or 457(b). See Distributions under Employee Plans Compliance Resolution System (EPCRS), earlier. See Charitable gift annuities, earlier. 1, 2, 3, 4, or 7 10

11 G H J K N P Q R G Direct rollover and direct payment. H Direct rollover of a designated Roth account distribution to a Roth IRA J Early distribution from a Roth IRA. K Distribution of IRA assets not having a readily available FMV. L Loans treated as deemed distributions under section 72(p). N Recharacterized IRA contribution made for current tax year. P Excess contributions plus earnings/ excess deferrals taxable in the prior year. Q Qualified distribution from a Roth IRA. R Recharacterized IRA contribution made last year. Use Code G for a direct rollover from a qualified plan, a section 403(b) plan or a governmental section 457(b) plan to an eligible retirement plan (another qualified plan, a section 403(b) plan, a governmental section 457(b) plan, or an IRA). See Direct Rollovers, earlier. Also use Code G for a direct payment from an IRA to an accepting employer plan, and for IRRs that are direct rollovers. Note: Do not use Code G for a direct rollover from a designated Roth account to a Roth IRA. Use Code H. Use Code H for a direct rollover of a distribution from a designated Roth account to a Roth IRA. Use Code J for a distribution from a Roth IRA when Code Q or Code T does not apply. But use Code 2 for an IRS levy and Code 5 for a prohibited transaction. Use Code K to report distributions of IRA assets not having a readily available FMV. These assets may include: stocks, short or long-term obligations, ownership interests in limited liability companies (LLCs), partnerships, trusts, or similar entities, not readily tradable on an established US or foreign securities market, real estate, or option contracts or similar products not offered for trade on an established US or foreign option exchange. CAUTION Use of Code K is optional for 2014 Do not use Code L to report a loan offset. See Loans Treated as Distributions, earlier. Use Code N for a recharacterization of an IRA contribution made this tax year and recharacterized in the same tax year to another type of IRA by a trustee-to-trustee transfer or with the same trustee. See the explanation for Code 8. The IRS suggests that anyone using Code P for the refund of an IRA contribution under section 408(d) (4), including excess Roth IRA contributions, advise payees, at the time the distribution is made, that the earnings are taxable in the year in which the contributions were made. Use Code Q for a distribution from a Roth IRA if you know that the participant meets the 5-year holding period and: The participant has reached age 5912, The participant died, or The participant is disabled. Note: If any other code, such as 8 or P, applies, use Code J. Use Code R for a recharacterization of an IRA contribution made last year and recharacterized in the current tax year to another type of IRA by a trustee-to-trustee transfer or with the same trustee. 4,B, or K 4 8 or P 1,2,4,7, or G 1, 4 or B 1, 2, 4, B, or J S T S Early distribution from a SIMPLE IRA in the first 2 years, no known exception. T Roth IRA distribution, exception applies. U Dividends distributed from an ESOP under section 404(k). W Charges or payments for purchasing qualified long-term care insurance contracts under combined arrangements. Use Code S only if the distribution is from a SIMPLE IRA in the first 2 years, the employee/taxpayer has not reached age 5912, and none of the exceptions under section 72(t) are known to apply when the distribution is made. The 2-year period begins on the day contributions are first deposited in the individual's SIMPLE IRA. Do not use Code S if Code 3 or 4 applies. Use Code T for a distribution from a Roth IRA if you do not know if the 5-year holding period has been met but: The participant has reached age 5912, The participant died, or The participant is disabled. Note: If any other code, such as 8 or P, applies, use Code J. Use Code U for a distribution of dividends from an employee stock ownership plan (ESOP) under section 404(k). These are not eligible rollover distributions. Note: Do not report dividends paid by the corporation directly to plan participants or their beneficiaries. Continue to report those dividends on Form 1099-DIV. Use Code W for charges or payments for purchasing qualified longterm care insurance contracts under combined arrangements which are excludible under section 72(e)(11) against the cash value of an annuity contract or the cash surrender value of a life insurance contract. B 6 11

12 1099 SA Reporting Procedures: 1099-SA records are created for each HSA account with distributions during the tax year. Distributions are tracked by the IRA Purpose Code selected when funds are withdrawn from the HSA Account. Creating the 1099-SA files: From the Back-Office Workspace under IRS Reporting, select 1099SA Rpt/Forms/Tape. From Member: Enter the beginning member number to report. Thru Member: Enter the last member number to report. Create Report: Check this box to create a 1099SA report. Create Forms: Check this box if you want to print Laser 1099SA forms. Corrected File: Check this box to create corrected 1099SAs. Test File: Check this box if creating a test tape file. Printing 1099-SA laser forms (optional): From the IRS Manager browser, highlight the file to be printed (e.g. 1099sa1.form) right-click and Submitting the 1099-SA files to IRS: /tmp/relrpt/1099sa1.tape). IRS 1099-SA Purpose Codes. The following list of distribution codes for HSA accounts is from the IRS Instructions for Form 1099-SA.quit This table details the proper codes to report HSA distributions on form 1099-SA: Sharetec Description IRS Purpose Code Purpose Code H1 HSA Normal Distributions 1 H2 HSA Excess contribution 2 H3 HSA Disability distribution 3 H4 HSA Death distribution other than code 6 4 H5 HSA Prohibited transaction 5 H6 HSA Death distribution after year of death to a non-spouse beneficiary 6 Each Sharetec user should review their list of Purpose Codes that they use when processing HSA distributions (these are stored in the IRA Reasons Code FM (iraremt) table) to make sure that they have created codes that correspond with the required IRS reporting codes. SINCE THE IRS USES DUPLICATE DISTRIBUTION CODES THAT HAVE DIFFERENT MEANINGS FOR IRAs VS. HSAs, IT IS RECOMMENDED THAT UNIQUE PURPOSE CODES BE CREATED FOR HSA DISTRIBUTIONS. If a distribution was performed with an incorrect IRS Purpose Code, it can be corrected prior to 1099-SA reporting by manually updating the ira-tran.purp-cd in the IRA transaction history record (IRA Transactions IQ/FM (iratran)) with the correct IRS Purpose Code. 12

13 5498 Reporting Procedures (for Regular IRA, Roth IRA, Simple IRA, and SEP accounts): 5498 records are created for each IRA account type. If a member has more than one type of IRA account (e.g. Regular IRA and Roth IRA), a separate record/form will be created for each. The Fair Market Value as of December 31of the tax reporting year, rollover contributions, and reportable contributions for the tax reporting year that were made through April 15 of the following year, are reported. The Fair Market Value for each IRA account type owned by the member is calculated by totaling their year-end account balances for the Deposit Types selected to be reported. Reportable contributions are tracked by the IRA Purpose Code selected when funds are deposited into an IRA Deposit Type. The IRA Purpose Code record (IRA Reasons Code FM (iraremt)) controls the type of contribution, if it is reportable, and how it is reported to the IRS. Creating the 5498 files: From the Back-Office Workspace under IRS Reporting, select IRS 5498 Rpt/Tape/Form. From Member: Enter the beginning member number to report. Thru Member: Enter the last member number to report. Create Report: Check this box to create a 5498 report. Create Forms: Check this box if you want to print Laser 5498 forms. Corrected File: Check this box to create corrected 5498 s. Test File: Check this box if creating a test tape file. The Fair Market Value for each IRA account type is calculated using only the Deposit Types selected. Contributions reported on Form 5498 will be based on IRA contributions that were made with IRA Purpose Codes that are maintained in the IRA Reasons Code FM (iraremt) table with the Contribution flag checked [x] and the Report flag checked [x]. Rollover contributions reported on Form 5498 will be based on IRA contributions that were made with IRA Purpose Codes that are maintained in the IRA Reasons Code FM (iraremt) table with the Rollover flag checked [x] and the Report flag checked [x]. Roth IRA Conversion rollover contributions reported on Form 5498 will be based on IRA contributions that were made with the IRA Purpose Codes tagged in the Conv Reason Code selection list. Printing 5498 laser forms (optional): From the IRS Manager browser, highlight the file to be printed (e.g. 5498f1.form) right-click and select Print. Submitting the 5498 files to IRS. /tmp/relrpt/5498f1.tape). 5498ESA Reporting Procedures (for Coverdell ESA accounts): 5498ESA records are created for each member with a Coverdell ESA account type that had a rollover contribution and/or reportable contributions for the tax reporting year that were made through April 15 of the following year. Reportable contributions are tracked by the IRA Purpose Code selected when funds are deposited into an IRA Deposit Type. The IRA Purpose Code record (IRA Reasons Code FM (iraremt)) controls the type of contribution, if it is reportable, and how it is reported to the IRS. Creating the 5498-ESA files: From the Back-Office Workspace under IRS Reporting, select IRS 5498ESA Rpt/Tape/Form. 13

14 From Member: Enter the beginning member number to report. Thru Member: Enter the last member number to report. Create Report: Check this box to create a 5498ESA report. Create Forms: Check this box if you want to print Laser 5498ESA forms. Corrected File: Check this box to create corrected 5498ESA s. Test File: Check this box if creating a test tape file. Printing 5498-ESA laser forms (optional): From the IRS Manager browser, highlight the file to be printed (e.g. 5498esaf1.form) right-click and Submitting the 5498-ESA files to IRS: The file(s) will be located in the directory specified in the taxdsk backoffice control record. (e.g. /tmp/relrpt/5498esaf1.tape) SA Reporting Procedures (for HSA s): 5498-SA records are created for each member with an HSA account type that has reportable contributions for the tax reporting year that were made through April 15 of the following year. Reportable contributions are tracked by the IRA Purpose Code selected when funds are deposited into the HSA Account. The IRA Purpose Code record (IRA Reasons Code FM (iraremt)) controls the type of contribution, if it is reportable, and how it is reported to the IRS. Creating the 5498-SA files: From the Back-Office Workspace under IRS Reporting, select IRS 5498-SA Rpt/Forms/Tape. From Member: Enter the beginning member number to report. Thru Member: Enter the last member number to report. Create Report: Check this box to create a 5498SA report. Create Forms: Check this box if you want to print Laser 5498SA forms. Corrected File: Check this box to create corrected 5498SA s. Test File: Check this box if creating a test tape file. Printing 5498-SA laser forms (optional): From the IRS Manager browser, highlight the file to be printed (e.g. 5498saf1.form) right-click and Submitting the 5498-SA files to IRS. 14

15 /tmp/relrpt/5498saf1.tape) S Reporting Procedures: 1042-S records are created for each non resident alien member that has YTD dividends/interest in excess of the Minimum Reportable Amount selected by the user. Each member s YTD dividend/interest amount is calculated using the YTD dividends/interest in each deposit record of the member (excluding IRA account types), and any savings bond interest records established for the member in the Sharetec Savings Bond FM (sbndmt) table. Creating the 1042-S files: From the Back-Office Workspace under IRS Reporting, select, 1042-S/Rpt/Forms/Tape. From Member #: Enter the beginning member number to report. Thru Member #: Enter the ending member number to report. Sort By: Use the combo box to select a sort preference. Create Report: Check this box to create a 1042-S report. Create Forms: Check this box if you want to print Laser 1042-S forms. Corrected File: Check this box to create corrected 1042-S forms. Test File: Check this box if creating a test tape file Min Reportable Amt: Enter the minimum YTD interest amount to be reported to the IRS. Print Bad Addresses: Check this box to print forms for members with bad addresses. Printing 1042-S laser forms (optional): From the IRS Manager browser, highlight the file to be printed (e.g. 1042s1.form) right-click and select Print. Submitting the 1042-S files to IRS: Access the IRS reporting website at Partners/Filing-Information-Returns-Electronically-%28FIRE%29 and follow the instructions to submit the files. The file(s) will be located in the directory specified in the taxdsk backoffice control record. (e.g. /tmp/relrpt/1042s1.tape). Note: To submit 1042-S files to the IRS it will be necessary to obtain a new Transmitter control number from the IRS. They require a Transmitter Control number that is different from the number used to file 1098, 1099, and 5498 forms. 15

16 Optional Printing of IRS Forms In order to print IRS forms to a laser printer a printer needs to be setup with the Output Control Properties listed below. If the user tries to print IRS forms without a printer setup with the controls the forms will not print correctly. Device 16

17 Codes IRA Owner Update This program can be run at the beginning of the year to update IRA owner records with the maximum contribution limit allowed by the IRS for the new tax year. From the Sharetec IRS Reporting menu, select IRA Owner Update (iraowm). IRA Types Selection List: Select the IRA Type to update the contribution list or select All to update all IRA types. Use Defaults Checkbox: Check the Use Defaults box to let the program update the contribution amounts for the current Tax Year. Maximum Contribution: Enter the maximum IRA contribution allowed for the tax year. Catch-up Amount: For members over age 50, enter the additional amount over the New Maximum that can be contributed. 17