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New Overtime Rules on Hold

November 29th, 2016
On November 22, a federal judge in Texas granted a preliminary injunction blocking the December 1, 2016 implementation of the Department of Labor’s new overtime rules. These rules, as discussed in previous PayDay newsletters, would increase the minimum salary for exempt employees from $455 to $913 per week.
The injunction was the result of a complaint filed on September 19 by a coalition of 21 states, later joined by business organizations led by the US Chamber of Commerce. The complaint claims that the Department of Labor overstepped its authority in the drafting of the final overtime rule changes, specifically in regard to the increased exempt salary limits and automatic increases going forward. Upon initial review, the court determined the complaint had merit, citing evidence that the new rules were in violation of Congress’s original intent – which was to use an employee’s “actual duties,” rather than salary, to determine exemption from overtime pay. The court granted the states’ motion for a nationwide, temporary injunction. In the meantime, the court will continue to review the case until a final determination can be made.
What Now?
At this point, it is unknown whether the rules originally set to go into effect on December 1 will be implemented at a later date, will be implemented in part, or will be determined unlawful.
For employers who have already increased employee wages based on the proposed exempt limit, it is recommended by organizations such as SHRM that these changes be kept in place. Taking back raises, unless the expense jeopardizes a business’s viability, may have more negative impact than spending extra money on salaries. Employers who have already paid employees at a higher rate cannot take this money back. If deciding to reduce wages going forward, employers should pay attention to state laws that require advance notice of wage reduction. (Indiana does not have such a law.)
Employers who have not yet implemented changes to comply with the new overtime laws would be wise to postpone these decisions until the final ruling is made.
As of today, the future of the DOL’s new overtime rules is still unknown. While employers can now legally postpone any sweeping internal changes, they should not assume that the overtime rules have been permanently barred. Employers would be wise to have a plan in place if and when it becomes necessary.
AccuPay’s HR Support Center has added the video, “What the Overtime Injunction Means for You” which we are making available to you here.  Our HR experts are also available to help you strategize for handling overtime or any other HR issues. For more information about the HR Support Center or HR consulting through AccuPay HR, call Betsy or Laura at 317-885-7600.
 
PayDay is an email communication of payroll news, legal updates and tax considerations intended to inform clients and colleagues of AccuPay about current payroll issues and planning techniques.  You should consult with your CPA or tax advisor before implementing any ideas, comments or planning techniques.

Impact of New FLSA Rule Changes Webinar

November 15th, 2016
The Department of Labor has proposed rule changes to overtime eligibility that could make more than five million new white collar workers previously classified as “exempt” eligible for overtime pay.  The changes, which take effect on December 1st, could mean increased payroll costs, unhappy employees, and headaches for management.
Register now for the November 16th webinar, The Unintended Consequences of New OT Rules, to learn more about the rule changes and get valuable tips on controlling payroll costs, including:
  • The 4 requirements of the Fair Labor Standards Act (FLSA) under the new rules
  • 2 ways the new overtime changes will impact reclassified employees, managers, timekeeping editors, and approvers
  • 2 ways the new overtime changes will impact job descriptions, job satisfaction, and retention
  • Best practices for overtime management in the face of the new regulations
When registering for the session, please ensure that you put our full company name in the registration field that reads, “Please provide the name of the company that referred you to this webinar.”
This webinar is being hosted by ChrysMarie Suby, President-CEO of the Labor Management Institute, who brings over 35 years of workforce amnagement experience and has been featured in numerous industry publication.  Register today to prepare for the upcoming overtime changes.
P.S. Even if you can’t attend the webinar, be sure to register now to receive exclusive access to the webinar replay.

 

Have Questions?
Call one of AccuPay’s many CPP/CPA service teams at 317-885-7600.

ACA 101 For Employers

October 18th, 2016

Employers of all sizes need to review the impact of the Affordable Care Act, also known as Obamacare, on their responsibilities as to notifying employees, providing medical benefits, reporting payroll/benefits information to the IRS, and reviewing both Marketplace and IRS notices for possible ACA penalties.

This PayDay will provide all employers with a basic overview of the Affordable Care Act, to include both required and recommended action steps employers should take regarding the ACA.

Purpose of the ACA

The express purpose of the Affordable Care Act is to provide insurance to all Americans in an affordable manner. A key driver in meeting this objective is a system of penalties/fines which can be imposed on both individuals and employers.

Here are the basics:

Individuals – Virtually everybody is required to obtain health insurance or pay a penalty for not doing so (termed the individual mandate). The amount of the individual penalty has increased dramatically from its inception in 2014 to the thousands of dollars for families without coverage in 2016. Individuals can obtain their coverage through brokers, government exchanges/marketplace, or through their employers. A key component of the ACA is that individuals at lower income levels may be able to obtain cost subsidies or insurance at discounted premiums from government exchanges.

Employers – Employers which average 50 or more “full time equivalent employees” are deemed “large employers” and are required to offer coverage to their employees or potentially pay penalties. The ACA is essentially telling large employers that they are required to offer affordable, minimum essential value insurance coverage, or to instead potentially pay fines/penalties to the IRS. An employer’s payment of penalties in lieu of offering group insurance to employees helps finance the cost subsidies which the government exchanges provide to lower income individuals who procure medical insurance on a government exchange.

Employer Action Step #1 – Are You A Large Employer? 

The ACA’s intent is to mandate large employers to either offer group health insurance or help finance America’s health care costs by paying penalties to the IRS. The ACA relieves smaller employers from the requirement to provide insurance coverage or pay penalties.

A large employer is one which employs 50 or more full time equivalents (so called FTEs) based on monthly averages of FTE’s during a calendar year.

Your FTE count is figured as follows (must be calculated every month):

  • Add up all of your employees who work at least 30 hours per week; plus
  • Add the total hours of all remaining part time employees and divide those total part time monthly hours by 120 hours per month

*Special Note – Employers who are affiliated with one another due to common ownership or a management company services group, are generally required to be counted as a single employer for FTE “large employer” purposes. One of our AccuPay ACA experts can help you determine if you have a controlled group of employers (IRC Section 414).

Counting your FTEs every month is required to determine whether you are a large employer for ACA purposes. AccuPay’s staff includes two Certified Healthcare Reform Specialists who can help you count FTEs and determine if you are a large employer.

 

Less Than 50 FTEs – Small Employer

Small employers are not required to offer health benefits to employees and are not subject to IRS fines/penalties.

Small employers should take the following action steps regarding ACA:     

  • Provide every new employee with a Department of Labor (DOL) notice which explains whether you offer insurance or not, and also informs new employees about government exchanges. AccuPay’s website has copies of “model DOL ACA notices” which you can download and use for your new employees;
  • If you do offer medical insurance/benefits to your employees, the coverages must meet various ACA requirements. Your insurance broker/benefits consultant will make sure your plan meets ACA standards; and
  • Small employers may receive letters/notices from the government marketplace which provides information about employees who have obtained cost subsidies on their marketplace insurance. Small employers may wish to appeal any marketplace notices they feel are incorrect.

Large Employers  

If you count your full time equivalent employees each month and your annual average monthly FTE counts average 50 or more you are deemed to be a “large employer” for the succeeding/next year.

Responsibilities of a “large employer” are all of the following:  

  • Provide DOL notices to your new hires;
  • Maintain detailed records of hours worked for each of your employees so that you can make FTE counts every month and very importantly identify your full time employees every month (for ACA employer reporting to the IRS and to your employees); and
  • Make sure that you carefully evaluate your “pay or play” ACA strategy – the costs and business values of offering group insurance compared to estimated non-tax deductible IRS penalties for not offering insurance;

AccuPay can help you calculate your “pay or play” costs, net of tax benefits, in conjunction with your benefits consultant (who needs to thoroughly understand ACA law);

  • If you decide to “play” and offer group coverage (most employers do), you need to make sure that your coverage meets ACA standards (your benefits consultant will know this);

As a large employer, you are required to report month-to-month annual information for all of your full time employees (generally those who work 30 or more hours per week). Your employee ACA information is reported on IRS 1095-C form and is due January 31st of each year.

  • This information is detailed, complex, and requires information as to hours worked and medical benefit offers made (or not made) to every employee for every month of the calendar year.

AccuPay prepared and mailed thousands of IRS 1095-C forms for year 2015 for our large employer clients. Both of our payroll software platforms (PayChoice by Sage and SaaShr by Kronos) will produce annual employee 1095-C forms.

  • As a large employer you are also required to file an annual Form 1094-C with the IRS by February 29th (March 31st if filing electronically as AccuPay does). The 1094-C form calculates an employer’s number of full time employees each month for the reporting year.

Make sure your payroll company, benefits broker, etc. knows how to accurately prepare your employee 1095-C and IRS 1094-C forms. IRS penalties for errors and omissions are onerous.

In Conclusion

AccuPay assisted about 100 employers with ACA reporting (both employee 1095-C and employer 1094-C) services for the inaugural reporting year of 2015. Accurate ACA reporting requires knowledge of the Affordable Care Act laws, coupled with systems/procedures which integrate payroll and benefits information onto the ACA forms.

Now is the time to make sure you are complying with ACA law as to both benefits offered and employee hours/information tracking.

AccuPay’s team has ACA law and systems consultants who are certified in ACA and can help you comply with ACA requirements in the most cost effective manner. Call us at (317) 885-7600 with your ACA questions and/or to schedule an ACA analysis review meeting.

 

This blog and our PayDay newsletters are a communication of payroll news, legal updates and tax considerations intended to inform clients and colleagues of AccuPay about current payroll issues and planning techniques.  You should consult with your CPA or tax advisor before implementing any ideas, comments or planning techniques.

The Importance of Job Descriptions

September 21st, 2016
Job Descriptions create the foundation for recruiting, hiring, managing, and setting expectations of employees. Writing Job Descriptions is a critical step in workforce planning. Job Descriptions should be considered ‘living’ documents that should be updated as job duties change and evolve.
To create a job description, the organization should first conduct a job analysis. The activities included in the Job analysis are:
  • Reviewing the existing job description; and
  • Interviewing the employee in the position, his/her supervisor, and others who work closely with the employee.
Including management and employees in creating job descriptions can promote your organization’s values and re-enforce the company culture.

The benefits of Job Descriptions include:
  • Recruiting Assistance – It relays core job requirements to applicants to attract competent employees and helps develop interview questions.
  • Defines Essential Duties & Qualifications – It clearly communicates the requirements of the position.
  • Creates a Standard for Performance Reviews – It serves as a basis of the job requirements that must be met.
  • Determines Reasonable Accommodations – It can assist in determining reasonable accommodations for compliance with the Americans with Disabilities Act.
  • Liability – It can be used to dispute Unemployment claims and assist in determining proper Workers’ Compensation codes which determine premiums.

Job Descriptions should typically include the following:

  • Job Title – It should include an accurate description of the type of work performed and level of the work.
  • Position Summary – It should provide a basic overview of the purpose and function of the job.
  • Job Duties, Responsibilities, and Tasks – It should have a listing of the primary tasks the jobholder performs.
  • Minimum Job Requirements – It should include education, experience, skills, and any certifications or licenses needed to do the job.
  • A line that states “other duties as assigned” – A job description is subject to change and is not intended to be all inclusive.
  • Title of Direct Supervisor, and other important reporting structure information
  • Physical Requirements – This can include minimum lifting requirements, sitting, standing, walking, climbing, talking, hearing, seeing, tasting, smelling, and use of hands/fingers.
  • Work Environment – This should, if applicable, include noise level, extreme temperatures, weather conditions, and various types of exposure.
  • FLSA status (Exempt or Non-Exempt) – By spelling out the FLSA status you set the parameters for work hours, pay type, and overtime.
  • A line for the employee to sign as proof they have reviewed and understand the job description.  Once the employee has signed the job description, give one copy to the employee, and place the original in the employee’s personnel file.

AccuPay HR is available to help clients create and/or update Job Descriptions, as well as most other HR needs. Please call our Certified HR Professionals, Betsy Wilson or Laura Buchanan at (317) 885-7600 for more information about AccuPay HR services and pricing. 

PayDay is an email communication of payroll news, legal updates and tax considerations intended to inform clients and colleagues of AccuPay about current payroll issues and planning techniques.  You should consult with your CPA or tax advisor before implementing any ideas, comments or planning techniques.

Are You Ready for the New Overtime Rules?

September 21st, 2016

As most employers know, the U.S. Department of Labor has increased the required salary which must be paid to an employee who is otherwise “exempt” from overtime pay.Effective December 1, 2016, an employee who is exempt from overtime pay must be paid at least $47,476 annually ($913 or more per week). This increased salary amount compares to the current required annual salary of $23,660 (or $455 per week).

AccuPay has partnered with HR Answerlink to provide you with a 45 minute on-demand video titled “FLSA Overtime Changes – What Every Employer Needs to Know.” Employers, whether for-profit or not-for-profit, and of all sizes, should watch this video presentation and apply its content to your own unique employee demographics. Also linked here is the U.S. Department of Labor’s Q & A information about overtime rules.

AccuPay HR

As federal, state, and local governments continue to issue increasing regulations pertaining to various aspects of human resources and the dynamics of employer-employee relationships, we have noticed an increasing demand for HR advice from small to medium employers. In response to increasing needs for HR consulting from employers with 1 to 500 employees, we have formed AccuPay HR to assist our payroll clients with their HR needs and concerns.

AccuPay’s staff currently includes three HR Professionals, each certified by the Human Resources Certification Institute (HRCI), as a PHR (Professional in Human Resources) or SPHR (Senior Professional in Human Resources), and each have varied experiences dealing with various types of HR issues. AccuPay’s team also includes two professionals with certifications in the Affordable Care Act (ACA), and whose ACA experiences include both ACA strategic planning with employers and also ACA reporting requirements.

AccuPay HR’s objective is to provide HR/ACA consulting to our clients at budget-friendly rates. Our clients frequently tell us that they need some HR help, but well short of hiring a dedicated HR Director. On demand HR services (phone calls, local face-to-face visits, or specific HR projects) are priced so that our payroll clients can purchase 5 or 10 hour packages of HR time for a year at a time, and we will invoice the HR charges ratably per payroll. OurAccuPay HR one page flyer details some of the more common HR services provided by our team of HR Professionals.

HR Software

AccuPay is a “channel partner” and licensee of a cloud based Human Resource Information System (HRIS) software which helps larger employers (generally 50 plus) manage payroll, HR, time/attendance, benefits enrollment, ACA, and recruitment/onboarding for their workforce/employees. The system is robust in functionality, and is intended to serve a market of employers who have more complex HR needs. A YouTube video of our Kronos Workforce Ready system overview can be seen here.

In Conclusion

AccuPay is growing and evolving to meet the increased HR needs of our clients. We currently have software which meet the payroll, tax, and HR needs of various complexity levels of our clients. As our competitors increasingly focus on do-it-yourself software technology (which is important!), we will continue to focus on people and client service. As always, address your questions and information requests to your dedicated payroll specialist at 317-885-7600.

PayDay is an email communication of payroll news, legal updates and tax considerations intended to inform clients and colleagues of AccuPay about current payroll issues and planning techniques.  You should consult with your CPA or tax advisor before implementing any ideas, comments or planning techniques.

Review Your 2016 Tax Targets

September 5th, 2016
REVIEW YOUR 2016 TAX TARGETS
 
Mid-year is an excellent time for both employees and employers to make sure they will reach their payroll, tax and financial objectives for calendar year 2016. The following items should be reviewed for possible action steps before your last payroll of 2016. 

ARE YOUR TAX WITHHOLDINGS ON TRACK?

Now is the time for every employee to review their 2016 payroll income tax withholdings to prevent April 15, 2017 “tax surprises”. This is particularly important for business owners and households in which both spouses are employed. AccuPay would be pleased to adjust your remaining 2016 tax withholdings upon your instruction. Not sure if your withholding is adequate? Visit our website and plug your information in to the IRS Withholding Calculator for a quick review.

ON TRACK TO MEET YOUR RETIREMENT FUNDING OBJECTIVE?

An employee can contribute up to $18,000 this year from payroll as “elective deferrals” to their 401(k) and 403(b) retirement accounts. If an employee is at least age 50 by 12/31/16,an additional $6,000 can be contributed as a “catch-up” contribution. If you are participating in a SIMPLE-IRA plan through your employer, the maximum 2016 employee contribution amount is $12,500, plus $3,000 as an additional “catch-up” for those at least age 50.

Review your year-to-date payroll details to determine if you will “hit” your retirement plan targets for 2016.

HSA TARGETS ON TRACK FOR 2016?

Maximum permitted funding for 2016 to health savings accounts is $3,350 for a “self-only” HSA and $6,750 for a “family” HSA. For those employees at least age 55 this year, you can add an additional $1,000 to your maximum allowable 2016 HSA funding.

These HSA funding limits are the total combined amounts which can be contributed by an employee plus any employer matching contributions.

FLEXIBLE SPENDING ACCOUNTS (FSA’s)

Those employees who are enrolled in employer “flexible spending account” programs should review their 2016 FSA contributions (limit of $2,550 for 2016),  how much they have spent, and how much remains to be spent by year-end (or a later “grace period date” early 2017 if the employer plan includes a grace period). If the employer has amended their Section 125 plan to include a “rollover provision”, an employee can carry/roll over up to $500 per year of unused FSA funds to the following year.

COLLEGE CHOICE 529 PLAN FUNDING 

For employees whose employers are sponsoring Indiana College Choice 529 plan payroll deduction plans, the State of Indiana provides an Indiana resident with an income tax credit in the amount of 20% of up to $5,000 of Indiana 529 education plan funding, per household. Essentially, if a household contributes $5,000 into an Indiana 529 education plan, the State of Indiana gives you $1,000 back in the form of a tax credit on your 2016 personal tax return.

AccuPay can help an employer set-up a payroll deduction 529 plan as a no-cost employer – sponsored fringe benefit plan for employees. You can contact AccuPay or click here for program details.

FAMILY MEMBERS ON THE PAYROLL

If a business owner has children or parents who provide services to their business, putting them “on the payroll” saves income taxes if the children or parents are in a lower income tax bracket than the business owner. The business should pay wages which are consistent with the value of the services, based on time spent and job complexity. For 2016, a child can earn up to $6,300 in wages without paying any Federal income tax. If the business sponsors a 401(k) or SIMPLE-IRA plan, consider paying your spouse “on the payroll” so that he/she can also participate in your business retirement plan for 2016.

REIMBURSE EMPLOYEE VEHICLE EXPENSES

The 2016 IRS permitted business mileage rate is 54 cents per mile.

“S” CORPORATION PAYROLL MEDICAL PREMIUMS 

Based on IRS announcements and positions they have taken within the last few years, it is essential that “S” corporation owner – employees have their medical insurance premiums either paid directly by the “S” corporation or personal health insurance premiums reimbursed by the “S” corporation. Health insurance premiums paid personally by the “S” corporation owner-employee and not reimbursed will not be eligible for the “self-employed health insurance deduction”.

Make sure all employed owners of a “S” corporation have been reimbursed for their premiums by 12/31/16 (if not directly paid by the “S” corporation).

“S” CORPORATION OWNER WAGES 

“S” corporations which are profitable are required to pay “reasonable compensation” to their owner-employees. If you own a profitable “S” corporation and have taken little or no wages to date in 2016 consult with your tax advisor as to “catching up” your compensation to a “reasonable level” before the end of 2016.

IN CONCLUSION

Call one of AccuPay’s “CPP/CPA advisor service teams” at 317-885-7600 to discuss any questions or comments you have about payroll tax planning adjustments needed before year-end 2016.  

 

PayDay is an email communication of payroll news, legal updates and tax considerations intended to inform clients and colleagues of AccuPay about current payroll issues and planning techniques.  You should consult with your CPA or tax advisor before implementing any ideas, comments or planning techniques.

The Overtime Final Rule – What’s it Mean to Me?

May 26th, 2016

The Overtime “Final Rule” signed by President Obama last week will have a significant impact on employers, as an estimated 4.2 million workers will become eligible for overtime when the law goes into effect on December 1, 2016. The greatest impact will be on employers whose employees are earning salaries just above the former standard of $455 per week. Below is a Q&A, adapted from FAQ’s created by the Department of Labor (DOL), to help employers create a strategy for dealing with this new legislation.

  • What is the purpose of the new Overtime Final Rule?
    • The main purpose of the Final Rule is to update the regulations that determine whether white collar, salaried employees are exempt from the FLSA’s minimum wage and overtime protection. The regulations were last updated in 2004, when the standard “exempt” salary level was set at $455 per week. The new ruling increases the weekly standard salary to $913 per week or $47,476 per year for a full-time worker. 10% of this amount may come from “non-discretionary” bonuses. This would include commissions or established bonuses based on quotas, etc. and paid at least quarterly, but would not include spontaneous/unplanned merit or performance bonuses. The Final Rule includes provisions for the standard exempt salary to be updated every three years. The ruling does not change the standard duties test, identifying terms by which executive, administrative, or professional employees may be considered exempt. The main purpose of the final ruling is to update the wage requirement for overtime exemption, which in effect increases the number of U.S. workers who are eligible for overtime.

 

  • How do I determine if my employee is exempt?
    • To qualify for exemption, a white collar employee must:
      • be paid a salary – a fixed amount not impacted by quality or quantity or work performed
      • be paid more than $913 per week ($47,476.00 annually)
      • perform executive, administrative, or professional duties as described in the Department of Labor’s duties test (found of the DOL website).
    • In addition, the DOL regulations provide exemption for certain highly compensated employees who earn above an annual compensation of $134,004 under the new rule, and satisfy a minimal duties test.

 

  • How will employers adapt to the changes in the Final Rule? 
    • Employers have a range of options for responding to the updated standard exempt salary level. Some of these options include:
      • increase the employee’s salary to the new standard salary in order to maintain exemption for a currently exempt employee
      • pay overtime at one and a half times the employee’s regular rate for any overtime worked
      • reduce or eliminate overtime hours
      • reduce base salary (as long as employee still earns minimum wage) and pay overtime for any hours worked over 40 each week
    • The response of the employer will be dependent upon each individual employee’s circumstances. Employers may give raises to those close to the new standard salary, maintaining their exempt status, while choosing to pay occasional overtime to those lower-salaried employees who rarely work overtime. It is important to note that nothing in the ruling requires employers to switch newly “non-exempt” employees to hourly. They can remain on salary, but must be paid overtime if working over 40 hours per week. Employers may use the same means to track overtime as they use for hourly employees. (Ask AccuPay if you need help with timekeeping services.)

 

  • Who is covered by the FLSA and required to comply with the Final Rule?
    • The FLSA or Fair Labor Standards Act, establishes minimum wage, overtime pay, recordkeeping, and youth employment standards for employees in the private sector as well as in Federal, state, and local governments. In general, employees of enterprises with an annual gross volume of sales made or business done of $500,000 or more who “engage in commerce or in the production of goods for commerce” are covered by the FLSA. Employees of hospitals, businesses providing medical or nursing care, schools (both for profit and not for profit) and government agencies are covered regardless of sales/income. Individuals may be covered by FLSA even if the business is not. For example, if individual employees initiate interstate commerce, such as ordering supplies, he or she may be eligible for FLSA protection even if the business is not.
    • Non-profits and/or their employees, are likely subject to FLSA, although it is possible some smaller non-profits and churches are not. The DOL will be conducting a webinar for non-profits pertaining to the Final Rule on Tuesday, June 7. Visit the DOL website to register. Determining exemption from FLSA is something that must be carefully considered. Churches and non-profits should review all of the guidelines carefully in light of their specific circumstances before making such a determination. There is no “blanket” exemption for non-profits or churches when it comes to the FLSA, and penalties for non-compliance can be severe.

 

Depending on your workforce, the Final Rule could be significant for your business and your payroll costs. It is important to plan now for how you will implement that new rules when enforced in December. For more information, you can sign up for free webinars conducted by the Department of Labor at https://www.dol.gov/whd/overtime/final2016/webinars.htm. If you would like more one on one assistance, try out AccuPay’s HR Support Center. Our HR On Demand service connects you with an HR expert who can help you navigate the new FLSA rules. These experts are available to you on an unlimited basis for just $40 per month, which includes access to the HR Support Center that is full of resources and information on this and other HR topics. Contact Accupay today for more information at 317-885-7600.

 

PayDay is an email communication of payroll news, legal updates and tax considerations intended to inform clients and colleagues of AccuPay about current payroll issues and planning techniques. You should consult with your CPA, tax, HR or legal advisor before implementing any ideas, comments or planning techniques.

Indiana County Income Tax Rules

January 5th, 2016
In Indiana, it’s important to review your employees’ county tax withholdings at the beginning of each year to ensure that accurate county taxes are withheld with each payroll.  A quick review of county income tax withholding rules is as follows:
  • Where did the employee reside and work on New Year’s Day? Answers to these questions on  Form WH-4 establish an employee’s county tax withholding rate for the entire year (moving from one county to another during the year does not change the county in which taxes are withheld.) Generally, county income tax should be withheld based on each employee’s county of residence on New Year’s Day of each year; 
  •  If an employee resides out-of-state on January 1, 2016, but works in an Indiana county on New Year’s Day, the employee’s county tax withholding should be based on the employer county’s “non-resident” tax rate, which is generally a lower rate (Indiana county income tax withholdings are required even if Indiana state tax is not withheld due to a reciprocity agreement with an adjoining state); and
  • If an employee both lives and works outside Indiana on New Year’s Day, they are not subject to county tax for the entire year even if they move to an Indiana county on January 2.
  • In addition to the federal form W-4, an employer should request a new Indiana Form WH-4 from every employee currently on the payroll who is living or working in Indiana. Make sure AccuPay receives a copy of Form WH-4 for every employee currently on your payroll or that you hire during 2016.
 To access the complete list of Indiana county tax rates, click here: County Tax Rate Table .

PayDay is an email communication of payroll news, legal updates and tax considerations intended to inform clients and colleagues of AccuPay about current payroll issues and planning techniques.  You should consult with your CPA or tax advisor before implementing any ideas, comments or planning techniques. 

Indiana Unemployment Tax – Important!

December 17th, 2015

IMPORTANT!!

The Indiana Department of Workforce Development recently mailed out 2016 “Merit Rate Notices” to all applicable Indiana employers. You and AccuPay need to take the following 2 action steps in response to your 2016 Merit Rate Notice:

SHOULD YOU MAKE A “VOLUNTARY PAYMENT”?

If you are eligible, your Merit Rate Notice will provide you an opportunity to “buy down” your scheduled 2016 Indiana unemployment tax rate to the next lowest schedule rate for 2016.

AccuPay will determine if your “voluntary payment” is a good deal. If we receive your 2016 Merit Rate statement from the Department of Workforce Development, we will complete these calculations for your company. WE DO NOT CHARGE FOR OUR CALCULATIONS! If we determine you will benefit by making the voluntary payment, you will receive a letter explaining your next steps.

WE NEED YOUR 2016 TAX RATE NOTICE

AccuPay needs a copy of your 2016 “Merit Rate Notice” so we can collect the correct amount of Indiana unemployment tax from your first payroll in January 2016. You can fax a copy to us at 317-885-7591 or e-mail it to payroll@accupay.com.

A BIT MORE INFORMATION FROM THE INDIANA UNEMPLOYMENT DIVISION

NO MORE RETROACTIVE FUTA TAX! Indiana repaid its unemployment benefit loan (taken several years ago) to the federal government. This means that Indiana is no longer a “credit reduction state” and Indiana employers will no longer be required to pay extra Federal Unemployment tax at the end of each year!

If you have any questions about your 2016 unemployment taxes, call us at 317-885-7600. We appreciate you as a client and look forward to partnering with you in 2016!

PayDay is an email communication of payroll news, legal updates and tax considerations intended to inform clients and colleagues of AccuPay about current payroll issues and planning techniques. You should consult with your CPA or tax advisor before implementing any ideas, comments or planning techniques.

“S” Corporations – “Don’t Blow This!”

December 14th, 2015

Special rules must be followed so that 2% or more “S” corporation shareholder-employees can deduct health insurance premiums covering the shareholder, his/her spouse and dependents.  IRS Notice 2008-1 permits tax deductions for “S” corporation shareholder-employees who meet the following requirements:

  • The health insurance premiums are either paid directly by the “S” corporation OR are reimbursed to the shareholder-employee, if paid from personal funds; AND
  • The “S” corporation employer must report the amount of health insurance premiums paid or reimbursed as taxable wages in the employee’s Form W-2. The premiums are not taxable for FICA or Medicare taxes.

If the above requirements are met, the “S” corporation deducts the owner’s health insurance as compensation expense, the owner reports the premiums as income included in his/her W-2, and the “S” corporation owner then deducts the same amount as “self-employed health insurance” on his/her Form 1040 personal tax return. 

IRS Notice 2008-1 clearly indicates that the owner’s health insurance deduction is not available if the shareholder-employee personally pays the premium and is not reimbursed and taxed by the “S” corporation on Form W-2.

CONCLUSION

Every “S” corporation should directly pay or reimburse their owners’ health insurance premiums and report the amount at year-end as wages on the owners’ W-2 forms. AccuPay can assist you in reporting the insurance on year-end W-2 forms to ensure annual income tax deductions for the employee-shareholders of the “S” corporation.

PayDay is an email communication of payroll news, legal updates and tax considerations intended to inform clients and colleagues of AccuPay about current payroll issues and planning techniques.  You should consult with your CPA or tax advisor before implementing any ideas, comments or planning techniques.