As 2024 draws to a close, we’d like to take a moment to recap on some of the IRS Form updates from the past year. Big or small, each update could cost you valuable time and increase the risk of making your organization non-compliant.
If you haven’t already, make sure to download our comprehensive Year-End Guide for 2024. It’s packed with valuable news and information to support you throughout 2025, along with insights into the form updates highlighted below. To download your free copy, click here.
Noteworthy Updates Form W-8EXP
As of November 2023, the IRS released the latest version of Form W-8EXP (Rev. October 2023) with clarified instructions. The updates emphasize withholding exemptions and include adjustments for qualified foreign pension funds. The following adjustments noted by the IRS were made.
Purpose of form W-8EXP
This section has been revised to provide additional background on the withholding regimes that may apply to payments to foreign entities and the exemptions to withholding that may be claimed with Form W8EXP. These revisions are not intended to be substantive changes.
Qualified foreign pension funds
These instructions have been updated to reflect final regulations published in December 2022 (87 FR 80042) regarding qualified foreign pension funds and claiming an exemption to withholding under section 1445.
Non-private foundation status
The instructions to line 13c have been updated for revisions to the supporting information required for an entity qualifying under section 501(c)(3) to represent that it is not a foreign private foundation. These revisions generally relate to modifications to Rev. Proc. 92-94, 1992-2 C.B. 507 (previously referenced in these instructions) that were made in Rev. Proc. 2017-53, 2017-40 I.R.B. 263.
Noteworthy Updates Form W-9
In March 2024, the IRS issued the latest revision of the Form W-9 (Rev. March 2024). The latest form revision includes two notable changes:
- Language was added to Line 3a to clarify how disregarded entities should complete the Form W-9: “Note: Check the “LLC” box above and, in the entry space, enter the appropriate code (C, S, or P) for the tax classification of the LLC, unless it is a disregarded entity. A disregarded entity should instead check the appropriate box for the tax classification of its owner.”
- Line 3b, which appears identical to the draft version, has been incorporated into the final form. This requires flow-through entities to indicate if they have direct or indirect foreign partners, owners, or beneficiaries in order to satisfy any applicable reporting requirements.
Noteworthy Updates Form 1099-K
The IRS plans to phase in a new $5,000 reporting threshold for Form 1099-K in 2024, reducing the previous threshold of $20,000 and 200 transactions.
This applies to transactions processed by third-party service providers (TPSO’s) and underscores the need for compliant reporting for online payments and sales. Instructions to the Form 1099-K can be found here.
Noteworthy Updates Form 1042
Electronic filing of Form 1042 remains mandatory for any business with 10 or more information returns. Instructions to the Form 1042 can be found here.
With 2025 already shaping up to be a year of change, it is likely that we should anticipate many more regulatory changes and new drafts coming into effect. It’s more important now than ever to ensure your company maintains its tax compliance in order to avoid costly penalties. To learn more about our products that can help automate the collection and management of these IRS forms, click here.
Don’t forget, we’re currently offering a comprehensive guide for year-end updates. Packed with valuable insights on the updates mentioned above, it also covers what to expect in 2025, DAC7 updates, and ensures you stay informed with the latest industry news and IRS form updates from us!
Grab your free copy here.
