On December 18, 2015, President Obama signed the Omnibus Spending Bill H.R. 2029 and the PATH Act (Protecting Americans from Tax Hikes Act of 2015) into law, which among other provisions, provides a five-year extension to the Work Opportunity Tax Credit (WOTC) program, as well as expands its scope of eligible groups. The WOTC is basically a tax incentive for employers to hire and retain individuals from specific target groups. The groups include certain Veterans, Temporary Assistance for Needy Families (TANF) recipients, Food Stamp recipients, Supplemental Security Income (SSI) recipients, Vocational Rehabilitation (VR) Referred Individuals, Ex-Felons, and Summer Youth employees.…
I have a client with a very interesting scenario in regards to Affordable Care Act (ACA) compliance and their desire to abide by the law. This client is defined as an Applicable Large Employer (ALE) by having greater than 50 Full-time Equivalent employees, therefore is bound by the Employer Shared Responsibility provisions under 4980H of the Internal Revenue Code. If they do not offer affordable health coverage to their full-time employees, they may be subject to a penalty of $2,000 per employee. In this case, the company, not wanting to be penalized, sought a health insurance agent to obtain a…
Under the provisions of the American Federal Unemployment Tax Act (FUTA), a Federal tax is levied on employers covered by the Unemployment Insurance program at a current rate of 6.0% on wages up to $7,000 a year paid to a worker. The law, however, provides a credit against federal tax liability of up to 5.4% to employers who pay state taxes timely under an approved state UI program. Accordingly, in states meeting the specified requirements, employers pay an effective Federal tax of 0.6%, or a maximum of $42 per covered worker, per year. The credit against the Federal tax may…
As 2015 is just starting to wind down, the government has already set many limits for 2016. In general, the limitations will not change as a result of the cost of living index not meeting the statutory thresholds that trigger a change. The Old-Age, Survivors, and Disability Insurance (OASDI), aka Social Security, wage limit remains unchanged at $118,500 and a tax rate of 6.20%. The last time the OASDI wage limit did not increase was between 2009 to 2011 where it remained at $106,800. Prior to 2009, the limit had always increased going all the way back to 1950. The deferral limits for your pension…
There is a phenomenon that can occur about once every 5 to 11 years, depending upon whether you pay your employees weekly or biweekly. It is that instance of an extra pay day within the calendar year. For many companies, we find that it passes without a second thought, but should it? First off, why does it happen? The root of the problem is that 365 days in the year is not divisible by a 7 day work week. There is a remainder, and over time, that remainder will add up to a whole number, thus another pay period. 365…
This past week, the Internal Revenue Service has published the final versions of Forms 1094-C and 1095-C, and their respective instructions for tax year 2015. These forms will be used by employers to report offers of health insurance coverage made to their full-time employees after year end. While not much has changed on the forms themselves from the earlier draft, there has been some clarification in reporting in the final version of the instructions. Applicable large employers (ALE) must file these forms with the IRS annually, no later than February 28 (March 31 if filed electronically) of the year immediately…
The Equal Employment Opportunity Commission (EEOC) requires certain companies over a certain size to submit a report categorizing their employees by race/ethnicity, gender, and job category. This demographic survey, called the EEO-1, is due by October 30th, which gives you an additional month from the original deadline of September 30th. Companies that meet the following criteria are required to file the report: • Have 100 or more employees; or • Have fewer than 100 employees if the company is owned by or affiliated with another company and the entire enterprise employs a total of 100 or more employees; or •…
Be aware that you must classify your employees correctly. If you do not, and you are audited, you may face payment of back wages plus taxes and fines. If you are paying anyone via a 1099 form, re-evaluate and make sure they do not fall within the IRS guidelines for employees. The IRS has 3 categories in determining whether or not someone is an employee or an independent contractor. Behavioral: Does the company control or have the right to control what the worker does and how the worker does his/her job? Financial: Are the business aspects of the worker’s job…