January 2024 Compliance Updates: IRS Releases FUTA Tax Return

Annual IRS Unemployment Tax Forms Confirm FUTA Credit Reduction States

The Internal Revenue Service (IRS) has released the annual Form 940, known as the Employer's Annual Federal Unemployment (FUTA) Tax Return. Along with it are the instructions and Schedule A (Form 940), which provides information on Multi-State Employer and Credit Reduction. These documents confirm the FUTA credit reduction states for the upcoming tax year of 2023.

Form 940 is an essential tool for employers to report their annual Federal Unemployment Tax Act (FUTA) tax. Employers generally have a liability for this tax if they have paid wages of $1,500 or more to their employees in any calendar quarter during the years 2022 and 2023. Alternatively, they may also have a liability if they have employed one or more individuals for at least a part of a day in 20 or more different weeks in those years.

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IRS Issues 2024 Standard Mileage Rates

The IRS has recently released the standard mileage rates for 2024, which are used to calculate the deductible expenses of operating a vehicle for various purposes such as business, charitable, medical, or moving. The Notice also includes the maximum allowable automobile cost for fixed and variable rate plans, as well as the maximum fair market value of employer-provided vehicles for fleet-average valuation or vehicle cents-per-mile valuation purposes (IR 2023-239, 12/14/2023; Notice 2024-8, 2024-2 IRB).

Starting from January 1, 2024, the standard mileage rates for cars, vans, pickups, or panel trucks will be as follows:

• For business use, the rate will be 67¢ per mile driven, which is an increase of 1.5¢ from 2023.
• For medical or qualified moving purposes, the rate will be 21¢ per mile driven, a decrease of 1¢ from 2023.
• For driving in service of charitable organizations, the rate will remain unchanged from 2023 at 14¢ per mile. (This rate is determined by statute and does not change.)

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IRS Releases 2024 Form W-2

The Internal Revenue Service (IRS) has recently unveiled the updated versions of the Form W-2, Wage and Tax Statement, as well as the Form W-2VI for the U.S. Virgin Islands and the Form W-2AS for American Samoa.

Form W-2 is a mandatory filing requirement that must be submitted by January 31 of the year following the applicable tax year. Employers are responsible for providing copies of this form to their employees, the Social Security Administration, and any states that require them.

In the 2024 versions of these forms, there have been adjustments made to reflect the higher withholding thresholds for Social Security taxes and Railroad Retirement Taxes. Specifically, the Social Security wage base limit for 2024 is now set at $168,600. Additionally, there have been updates to the deferral limits.

Employers have an obligation to furnish Copies B, C, and 2 to each employee during the 2024 tax year no later than January 31, 2025. Furthermore, Copy A of the Forms W-2 and W-3 must be submitted to the Social Security Administration by the same deadline in 2025.

It is worth noting that there is a reduced electronic filing threshold that will be applicable starting from the 2024 filing year (corresponding to the 2023 tax year). Taxpayers who file a total of 10 or more information returns will be required to file electronically, as emphasized in the note for employers.