​Internal Revenue Code Updates – Income/Franchise Tax​

1. Are withdrawals from a college savings account to pay for apprenticeship program fees and student loans considered qualified expenses for Wisconsin?​

   Yes. Wisconsin adopted this federal tax treatment for distributions made after December 31, 2018 (Section 302 of Division O of Public Law 116-94 was adopted in 2021 WI Act 1​).

2. Will a penalty apply to withdrawals from a college savings account which are not used for qualified expenses?

   No. Wisconsin does not impose a penalty for withdrawals not used for qualified higher education expenses. However, an addition to income may apply if the amount was previously claimed as a subtraction from income (sec. 71.05(6)(a)26., Wis. Stats.).

3. Does Wisconsin follow the federal tax treatment of income and expenses relating to the original and subsequent Paycheck Protection Programs (PPP)?

   Yes. Wisconsin adopted section 1106 of Division A of Public Law 116-136 and sections 276(a) and (b) and 278(a) of Division N of Public Law 116-260, regarding the tax treatment of income and expenses relating to the original and subsequent Paycheck Protection Programs (PPP). Taxpayers may exclude from income the forgiveness of debt on PPP loan proceeds and deduct expenses paid with PPP loan proceeds that are otherwise deductible.

   Note: These provisions apply for Wisconsin tax purposes at the same time as for federal income tax purposes. For example, fiscal year filers who qualify for the federal PPP loan forgiveness rules will also qualify for Wisconsin purposes.

4. What is the impact on the manufacturing and agriculture credit from expenses paid with PPP loan funds which are forgiven?

   Expenses associated with forgivable PPP loans that are deductible under the Internal Revenue Code are also deducted in computing qualified production activities income for the manufacturing and agriculture credits on Schedules MA-M or MA-A. Wisconsin adopted secs. 276(a) and 278(a) of Division N of Public Law 116-260 in 2021 WI Act 1. Forgiveness of original and subsequent PPP loans and the loan proceeds are not considered production gross receipts.

5. Is there a limitation on charitable contributions for individuals?

   Section 2205 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act removed the limitation of 50% of a taxpayer's adjusted gross income relating to charitable contributions for individuals for tax year 2020. Wisconsin adopted this federal provision in 2019 Wisconsin Act 185. The taxpayer is still subject to the limitation of the excess of the taxpayer's contribution base over the amount of all other charitable contributions allowed.

6. Does Wisconsin require an adjustment on Schedule I for the $300 above-the-line deduction for charitable cash contributions?

   No. Wisconsin adopted sec. 2204 of the Cares Act relating to the federal $300 above-the-line charitable contribution deduction in 2019 Wisconsin Act 185. Therefore, it applies for Wisconsin purposes as card for tax year 2020.

7. ​​A taxpayer may only claim the $300 above-the-line deduction for charitable cash contributions if they are not claiming the amount as an itemized deduction for federal purposes. If a taxpayer claims the $300 above-the-line deduction for federal purposes, can this amount be used for purposes of Wisconsin's itemized deduction credit?

   No. Wisconsin only allows amounts for the itemized deduction credit which are allowed as itemized deductions under the Internal Revenue Code in effect for Wisconsin. Since amounts claimed for the above-the-line deduction cannot be claimed as an itemized deduction under the Internal Revenue Code, the amounts cannot also be claimed for Wisconsin's itemized deduction credit.

8. Did Wisconsin adopt sec. 2307 of the CARES Act relating to reclassifying qualified improvement property as 15-year property?

   Yes. Wisconsin adopted this federal provision in 2019 Wisconsin Act 185.

   Note: The classification of qualified improvement property applies retroactively to taxable years beginning on or after January 1, 2018. As a result, if persons amend their federal income tax return, they must amend their Wisconsin tax returns to recompute depreciation on the qualified improvement property. However, persons cannot claim bonus depreciation for Wisconsin.

9. ​ Does Wisconsin follow the federal use of Form 3115, Application for Change in Accounting Method, to report a change in depreciation method related to qualified improvement property?

   Yes. Wisconsin taxpayers must use the same method of accounting used for federal income tax purposes if the method is authorized under the Internal Revenue Code in effect for Wisconsin. Therefore, Wisconsin follows the federal use of Form 3115 to report a change in depreciation method related to qualified improvement property as provided in IRS Notice 2020-25. No additional Wisconsin form is required.​

10. Will Wisconsin accept the new federal Form 8915-E, Qualified 2020 Disaster Retirement Plan Distributions and Repayments, relating to COVID-19 pandemic distributions?

    Yes. No additional Wisconsin form is required.​​​

11. Does the early withdrawal penalty apply for coronavirus-related withdrawals, as provided in sec. 2202 of the CARES Act, if the amount of the distribution from the retirement plan isn't repaid within three years?

    There is no penalty for qualified withdrawals if the amount is not recontributed to the retirement account. The amount of the withdrawal is taxed over three years, unless an election is made to include the entire amount in the taxable year of withdrawal. However, if the amount is recontributed to the retirement account within those three years, it is not taxable.

12. May a taxpayer elect to pay tax on a coronavirus-related withdrawal in the year of the withdrawal instead of over three years?

    Yes. A taxpayer may elect to pay the tax all in the year of the withdrawal instead of over three years. However, if the amount is recontributed to the retirement account within those three years, it is not taxable.

Miscellaneous - Income/Franchise Tax

1. May a short-year return be filed on a prior-year tax form?

   No. The department asks taxpayers wait to file until the correct tax year form is available and the Modernized e-File (MeF) Fed/State program has been updated to include the correct tax year. If the tax returns are not yet available, wait until the returns become available and file under extension.

2. Why are Form W-2 wages required to be listed on page 1 of Form 1?

   This information is helpful to the department during the processing of the return.
   

3. How is a qualifying opportunity zone investment/gain reported?

   Box 3 of federal Form 1099-B should be checked if the proceeds are from a transaction involving a Qualified Opportunity Fund.

4. Who is eligible to claim the employee college savings account contribution credit?

   A partner of a partnership, a member of a limited liability company (LLC), a corporation, or a shareholder of a tax-option (S) corporation that is an employer and contributes to an employee's college savings account may be eligible to claim the credit. See the Schedule ES Instructions​​ for additional information.
   

5. Are amounts paid to a health care sharing ministry (HCSM) eligible for the medical care insurance subtraction?

   Amounts paid to an HCSM may qualify if the plan qualifies as a medical care insurance policy under sec. 71.05(6)(b)35.a., Wis. Stats. In order to qualify for the medical care insurance subtraction, the amounts paid for health care must be made to a medical care insurance policy that covers the individual, his or her spouse, and the individual's dependents. The plan must provide surgical, medical, hospital, major medical, or other health service coverage, and include payments made for medical care benefits under a self-insured plan. Medical care insurance does not include hospital indemnity policies or policies with ancillary benefits such as accident benefits for loss of income resulting from a total or partial inability to work because of illness, sickness, or injury.

6. With the new Schedules AD, Form 1 - Additions to Income, and SB, Form 1 - Subtractions from Income, has the Schedule I been eliminated?

   No. The schedules are replacing the addition and subtraction lines previously found on the first page of the Form 1. They are not related to the Schedule I.

7. If an Iowa resident has a cabin in Wisconsin and worked remotely from the cabin during the pandemic, would they need to recognize wages earned at their Wisconsin cabin as Wisconsin income if they otherwise would have no Wisconsin income?

   Telecommuting employees report their income based on guidance in Wisconsin Tax Bulletin 171​​.
   

8. ​​ If an Iowa resident is an owner of a business and temporarily staying in Wisconsin during the pandemic, would this cause the business income to be Wisconsin taxable income during the time living in Wisconsin?

   If you are not a resident of Wisconsin and operate a sole proprietorship business partly within and partly outside Wisconsin, you must assign a portion of your business income (from federal Schedule C, C-EZ, or F) to Wisconsin using either the apportionment method or separate accounting. For additional information see Publication 122, Tax Information for Part-Year Residents and Nonresidents of Wisconsin for 2020​, page 13.

Partnerships and Tax-Option (S) Corporations – Entity Level Tax Election

1. When making the entity-level tax election, are signatures required to show consent of the shareholders or partners?

   No. The department does not require signatures to show consent of the shareholders or partners upon filing the entity's return. Upon request from the department however, the electing tax-option (S) corporation or partnership must prove it received consent from shareholders or partners who hold an aggregate of more than 50 percent of the shares of the tax-option (S) corporation or 50 percent of the capital and profits of the partnership on the day of the election.

2. I filed a return for an entity making the entity-level tax election claiming the credit for tax paid to another state. The software I used did not attach the other state’s tax return. How do I send a copy of the other state’s return to the department?

   If the software does not attach the other state's return and you are unable to attach it manually, you can send in the other state's return by mailing it with Form W-RA, Required Attachments for Electronic Filing​, or sending through​ the Electronic W-RA Submission​ on our website.

3. Does the election to pay tax at the entity level need to be made every year?

   Yes.

4. What is the income tax rate for entities making the entity-level tax election?

   The income tax rate for entities making the entity-level tax election is 7.9%.​

We’re All In Small Business Grant - Phase 2 and Wisconsin Farm Support Program

1. Will income received from the We’re All In Small Business Grant - Phase 2 and Wisconsin Farm Support programs be excluded from Wisconsin taxable income in 2020?

   Yes. In addition, expenses paid with income from these programs, that are otherwise be deductible, may be deducted from Wisconsin taxable income.

2. How should income received from the We're All In Small Business Grant - Phase 2 ​and Wisconsin Farm Support programs be reported on the 2020 Wisconsin income tax return?

   Income from these programs is included in federal income pursuant to sec. 61 of the Internal Revenue Code, unless an exception applies.

   For Wisconsin, this income should be excluded from federal adjusted gross income by making a subtraction modification on the appropriate line of the tax return. Expenses paid for with these programs and deducted in the computation of federal adjusted gross income are not required to be added back on the Wisconsin return. Taxpayers should amend their Wisconsin returns if they have already filed and included these amounts in income.​

Sales and Use Tax – Miscellaneous

1. Is the monthly charge for internet access services exempt from sales and use taxes?

   Yes. Charges for furnishing internet access services (e.g., DSL broadband, cable modem broadband) are no longer taxable on and after July 1, 2020.

2. If I pay for a mobile hotspot for internet access, is that considered an internet access service?

   Yes. For additional information on internet access services, see ​​Wisconsin Tax Bulletin 207.

3. When filing credits for refunds on sales tax, do we need to go back to the original sale to get the credit or can we go to a prior sale when we actually paid sales tax?

   Except for subtractions allowable on lines 2 and 4 of Form ST-12, credits for overpayments of tax should be claimed by amending the original return that included the sale. See the Form ST-12 instructions​.​​

4. Has the department published an updated county sales and use tax table?

   Yes. See the tax table showing state, county, and stadium sales and use taxes on the department's Tax Rates web page.
   

5. ​What's the small seller exception threshold for an out-of-state vendor?

   Effective February 20, 2021, pursuant to 2021 WI Act 1​, an out-of-state retailer whose only activities in Wisconsin is making remote sales into Wisconsin (remote seller) is not required to register and collect Wisconsin sales and use taxes if its gross sales into Wisconsin do not exceed $100,000 in the previous or current calendar year. But a remote seller that is not required to register to collect and remit the tax may do so voluntarily to remit the tax that is otherwise due by its purchasers.

6. A seller that erroneously collects the 0.1% stadium tax after it ended March 31, 2020, is supposed to remit the tax to the department if it cannot return the tax to the purchaser. How is the department notified that the seller cannot locate the purchaser?

   If a seller remits the 0.1% tax, the department will assume the purchaser could not be located. If additional information is discovered by or becomes available to the department, the department may work with the seller to determine if the there is a solution to return the tax to the purchaser.​
   

Withholding Tax and Information Retu​rns

1. What is the Wisconsin e-file mandate for Forms W-2 and 1099?

   Forms W-2 and 1099 are required to be filed electronically if there are 10 or more of any one type of information return or wage statement.

2. For the Wisconsin e-file mandate, does this only apply if there is Wisconsin withholding?

   The e-file requirement is based on the number of forms being submitted, regardless of whether there is Wisconsin withholding. See Publication 117, Guide to Wisconsin Wage Statements and Information Returns​.

3. Will withholding tables change for the year 2021?

   Current withholding tax rates continue for 2021. If withholding tax rates change, the department will publish information and update Publication W-166, Withholding Tax Guide​.

4. Is there a generic number to use when filing information returns for payors that do not have a Wisconsin withholding tax account number?

   Yes, use 036-8888888888-01 as the state identification number on the information return.

5. Are Wisconsin identification numbers required on the new Form 1099-NEC, Nonemployee Compensation?

   Yes, the federal employer identification number (FEIN), 15-digit Wisconsin tax account number, and legal name must match the information we have on file for the payor.

6. Are boxes 16 and 17 required to be completed for Form 1099-MISC, Miscellaneous Income, and boxes 6 and 7 for Form 1099-NEC if no withholdings is reported?

   Yes, both boxes are required on both forms.

7. ​Will the Wisconsin Form WT-4 be revised similar to the federal Form W-4?

   No. Wisconsin law still requires persons to claim exemptions from withholding. Persons hired on or after January 1, 2020, or persons wishing to change their exemptions from withholding, must submit Wisconsin Form WT-4 to their employer. The Wisconsin Form WT-4 was revised for 2020​.

8. ​If a Wisconsin business issues Forms 1099-NEC for individuals who do not live in Wisconsin and there is no Wisconsin withholding, are these required to be submitted to the department?

   Yes. Provided the services were performed in Wisconsin and the amount received is $600 or more, the business must submit the Form 1099-NEC to Wisconsin.

My Tax Account​​

1. Will tax preparers be allowed to access their client's individual income tax information in MTA if they are given third party access from their client?

   Yes.

2. Can a third-party designee sign up in MTA and have access to a client's letters in My Case Manager?

   Yes.

3. I do not see the link for My Case Manager in MTA for one of my clients. Is there a specific sign up for it or is the link available on all MTA profiles​?

   My Case Manager is accessible through MTA when applic​​able to the taxpayer.

4. Is there a way for a tax preparer to remove a client that no longer is using the preparer or no longer in business from the account listing on MTA?

   No. The tax preparer must contact the department's customer service bureau by calling (608) 261-5338 or by email at ​DORMyTaxAccountHelp@wisconsin.gov​​.

5. What payments are accepted via MTA and are there any fees associated with paying this way?

   My Tax Account offers the following payment methods:

   • Direct Debit - You will provide your bank routing and account number to authorize the department to debit (withdraw) the requested amount. You may not use a financial institution outside of the United States.
   • Credit Card - You will be directed to http://www.acipayonline.com/​ to set up a credit card payment. ACI Payments, Inc. charges a convenience fee of 2.5% of the payment amount with a $1.00 minimum. DOR does not receive any portion of the convenience fee. To pay by telephone, call toll-free (800) 272-9829.
     
   • Payment Voucher - You will create a payment voucher to print and mail along with your check to the department.
   • EFT (ACH Credit) is a payment option that needs to be set up through your financial institution and is not available through My Tax Account. See the Electronic Funds Transfer Payment Instructions for Financial Institutions​ for more information.
   ​​
6. How does someone access MTA if they have full authority as Power of Attorney (POA) for a taxpayer?

   The POA will need the account number, legal name of the entity, the zip code of the address on file, and either a prior filing amount or the Letter ID from the BTR Greeting Letter. If the account has a Master Account username on file, that Master Account user will need to approve their access.

   For step-by-step instructions of how to access MTA using third-party preparer account registration, see MTA Common Question #4​ on our website. The POA may also call Customer Service at (608) 261-5338 to set up MTA access.

7. Is it necessary for a tax preparer to get another e-mail address for the individual income tax access in MTA if a business account is already in use?

   You can add third-party access in MTA to your individual income tax clients under your existing email address.

8. Is it necessary for a taxpayer to get another e-mail address for the individual income tax access in MTA if a business account is already in use?

   If a taxpayer has their own business account, they should be able to add their individual income tax account as card.

9. Can Form 6, Wisconsin Combined Corporation Franchise or Income Tax Return​, be e-filed via MTA?

   No. Form 6 cannot be e-filed through MTA at this time.

10. Will MTA have an option to file Form 1099-NEC?

    Yes. Form 1099-NEC can be filed through MTA. Please see the November 2020 Withholding Tax Update​ for additional details.

Unclaimed Property

1. Does unclaimed property filing for uncashed payroll checks apply to a local government?

   Yes.

2. Does unclaimed property filing for tax overpayments or accounts payable apply to a local government?

   Please consult your local government attorney. Local governments have some of their own unclaimed property laws.

General

1. If my federal return is accepted and my Wisconsin return is rejected, will I receive notification of the rejection?

   Yes. An acknowledgement is received when the Wisconsin return is accepted or rejected.
   

2. The IRS allows amended individual income tax returns to be submitted electronically for 2019. Are Wisconsin amended individual income tax returns allowed to be submitted electronically for 2019?

   Yes.
   

3. What years will the department accept for submitting amended income tax returns electronically?

   You can electronically file your Wisconsin return using approved third-party software for the current year plus the 2 prior years. The department's Wisconsin e-file​ allows additional years to be filed electronically.​​
   

4. ​Why can't we upload the Social Security PDF for Forms W-2 to Wisconsin anymore?

   The department discontinued that submission method due to low volume and it was difficult to support.

5. Will the department accept another state’s return as an attachment with masked out social security numbers for the credit for tax paid to another state?

   Yes.

6. Is a driver’s license number or state identification number required to file a Wisconsin individual income tax return?

   No.

7. If a taxpayer cannot attach the new required Form 804, Claim for Decedent's Wisconsin Income Tax Refund, with an electronically submitted income tax return, can they submit with Form W-RA and check the other box?

   No. If a taxpayer is unable to attach as a PDF to the return, Form 804 should be sent in by itself without Form W-RA.

8. When e-filing a Wisconsin amended return, are we required to have the taxpayer sign a federal Form 8879?

   The department does not require federal Form 8879 when filing an amended Wisconsin return. For additional information on whether the IRS requires this form with the federal return, see the Form 8879 instructions.

9. Will penalties be assessed for filing paper tax returns if the returns are required to be e-filed and the business does not have a waiver?

   Yes, penalties may be assessed. If there is an e-file mandate in place and the department receives a paper return, the paper return is rejected and the department directs the taxpayer to file electronically. If the return is not filed electronically in the time period specified, the department may assess late filing fees, interest, and other penalties.

10. If a business has closed, is there a box to check on the electronic form that states this, similar to the paper form?

    The account should be ceased upon closing the business. There is no need to check a box saying the business is ceased because closing the account will relay that information. See Closing a Business​ on the department's website.

11. As part of the pandemic relief, did the department extend the time to appeal?

    No extension of time was provided for appeals.

12. What was the filing deadline for 2019 Wisconsin income tax returns?

    For 2019 income tax returns, any federal returns that had a due date on or after April 1, 2020, and before July 15, 2020, were extended to July 15, 2020.

13. ​Is the rent certificate for the homestead credit accepted as a PDF attachment to an electronic-filed return?

    ​Yes.