Posts Tagged ‘tax’

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.
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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. 

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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.

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Budget for Retro FUTA Tax

May 19th, 2015

Indiana employers have been paying extra or above normal Federal Unemployment Tax (FUTA) since the year 2010.
The additional FUTA tax is due to Indiana’s loan from the federal government in 2008 which was used to pay unemployment benefits from a depleted unemployment trust fund. (See attached January 21, 2015 memo here)
The Indiana Department of Workforce Development anticipates that the year 2015 will be the final “credit reduction state” year for Indiana, meaning that the “extra” FUTA tax will end January 31, 2016 for the year 2015.

Budgeting Extra 2015 FUTA Tax

AccuPay recently paid 2015 first quarter FUTA tax and has each employer’s actual FUTA tax amount for the first quarter of 2015.  If you would like to budget funds for the FUTA retroactive tax for 2015, your processor can provide you with your actual first quarter FUTA tax for 2015.  Since the 2015 “extra” FUTA tax rate is three times the “normal” FUTA tax rate, your additional 2015 FUTA tax due is exactly three times the amount of FUTA tax you paid for the first quarter of 2015.  This “three times multiplier” can also be used to calculate your extra FUTA tax for the next three quarters of 2015.  Some employers may choose to accrue this additional expense as a liability in their company financial statements.
AccuPay’s Pay Day from November 10, 2014 also explains the same FUTA tax matter. (More FUTA tax for 2014)  AccuPay can not impound or collect the additional FUTA tax from you since it does not become statutorily due until Indiana repays the Federal government loan on it’s November 10, 2015 due day.  As Indiana has advised, it does not anticipate repayment of the loan until the year 2016.

If you would like to know how much “extra” FUTA tax to accrue for the first quarter of 2015, any of AccuPay’s processors can provide you with your first quarter 2015 actual FUTA tax expense and simply multiply that amount by three.

 

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.

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Indiana County Withholding Tax Rules

February 16th, 2015

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, 2015, 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.

An employer should request a new Indiana Form Wh-4 from every employee who is currently on payroll. Make sure AccuPay receives a copy of Form Wh-4 for every employee currently on your payroll or that you hire during 2015.

To access the complete list of Indiana county tax rates, click here: County Tax Rate Table.

 

This blog is 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 adviser before implementing any ideas, comments or planning techniques. 

 

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