Archive for January, 2012

Workplace Poster Requirements and Compliance Help

Monday, January 30th, 2012

Employment PostersSome of the statutes and regulations enforced by agencies within the Department of Labor require that posters or notices be posted in the workplace. The Department provides electronic copies of the required posters and some of the posters are available in languages other than English.

Please note that posting requirements vary by statute; that is, not all employers are covered by each of the Department’s statutes and thus may not be required to post a specific notice. For example, some small businesses may not be covered by the Family and Medical Leave Act and thus would not be subject to the Act’s posting requirements. For information on coverage, visit the Employment Laws Assistance for Workers and Small Business (elaws) Poster Advisor. You may also contact the Office of Small and Disadvantaged Business Utilization, for assistance with these notice requirements.

To obtain posters or for more information about poster requirements or other compliance assistance matters, you may contact the U.S. Department of Labor at 1-866-4-USA-DOL (1-866-487-2365).

You can maintain your own poster requirements and do it for free by following the instructions found in our past blog post, Employment Posters Made Easy.

Costco has a program which provides all Federal and State required posters along with updates for just $29.95 per year.  Find out more by clicking here.

The Department of Labor also has many other helpful articles that will keep your business in compliance:

Legal Disclaimer: This article is intended for informational purposes only and by no means should replace or substitute other legal documents (governmental or non-governmental) reflecting similar content or advice. If you have any questions concerning your situation or the information provided, please consult with an attorney, CPA or HR Professional.

W2 Reporting of Employer Paid Insurance

Monday, January 30th, 2012

W2 Reporting of Employer Paid InsuranceReporting the employer paid insurance on employee W-2s is voluntary for all employers for 2011 and small employers for 2012.  However, employers with more than 250 W-2s for tax year 2012 will be required to report the employer paid insurance amounts on all employees’ W-2s, due to the Affordable Care Act.

In general, the amount reported should include both the portion paid by the employer and the portion paid by the employee whether or not it was pre-tax.  In the case of a health FSA, the amount reported should not include the amount of any salary reduction contributions.

The cost of these health care benefits will be reported in Box 12 of the Form W-2, with Code DD.  It is listed for informational purposes only, and is not taxable.

For W-2s filed for the 2011 calendar year, employers are not required to report the value of health benefits provided, although they may do so voluntarily. For years after 2011, employers generally are required to report the value of health benefits provided on the Form W-2. Transition relief is available for certain employers and with respect to certain types of coverage.  Reporting for these employers is not required until future guidance is provided. The transition relief applies to the following:

  1. Employers filing fewer than 250 Forms W-2 for the previous calendar year (for example, employers filing fewer than 250 2011 W-2s) will not be required to report the cost of coverage on the 2012 Forms W-2
  2. Multi-employer plans
  3. Health Reimbursement Arrangements
  4. Dental and vision plans that are not integrated into another group health plan
  5. Self-insured plans of employers not subject to COBRA continuation coverage or similar requirements
  6. Employers furnishing Forms W-2 to employees who terminate before the end of a calendar year and request a Form W-2 before the end of that year

Employers are not required to create a W-2 for the sole purpose of reporting health coverage.  Click Here for more detailed information on this topic.

Legal Disclaimer: This article is intended for informational purposes only and by no means should replace or substitute other legal documents (governmental or non-governmental) reflecting similar content or advice. If you have any questions concerning your situation or the information provided, please consult with an attorney, CPA or HR Professional.

Tax Tips for the Self-Employed

Monday, January 30th, 2012

Tips for the Self-EmployedIRS Tax Tip 2012-16, January 25, 2012

There are many benefits that come from being your own boss. If you work for yourself, as an independent contractor, or you carry on a trade or business as a sole proprietor, you are generally considered to be self-employed.

Here are six key points the IRS would like you to know about self-employment and self- employment taxes:

  1. Self-employment can include work in addition to your regular full-time business activities, such as part-time work you do at home or in addition to your regular job.
  2. If you are self-employed you generally have to pay self-employment tax as well as income tax. Self-employment tax is a Social Security and Medicare tax primarily for individuals who work for themselves. It is similar to the Social Security and Medicare taxes withheld from the pay of most wage earners. You figure self-employment tax using a Form 1040 Schedule SE. Also, you can deduct half of your self-employment tax in figuring your adjusted gross income.
  3. You file an IRS Schedule C, Profit or Loss from Business, or C-EZ, Net Profit from Business, with your Form 1040.
  4. If you are self-employed you may have to make estimated tax payments. This applies even if you also have a full-time or part-time job and your employer withholds taxes from your wages. Estimated tax is the method used to pay tax on income that is not subject to withholding. If you fail to make quarterly payments you may be penalized for underpayment at the end of the tax year.
  5. You can deduct the costs of running your business. These costs are known as business expenses. These are costs you do not have to capitalize or include in the cost of goods sold but can deduct in the current year.
  6. To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your field of business. A necessary expense is one that is helpful and appropriate for your business. An expense does not have to be indispensable to be considered necessary.

For more information see the Self-employment Tax Center, IRS Publication 334, Tax Guide for Small Business, IRS Publication 535, Business Expenses and Publication 505, Tax Withholding and Estimated Tax, available at www.irs.gov or by calling the IRS forms and publications order line at 800-TAX-FORM (800-829-3676).

Links:

Form 1040-ES, Estimated Tax for Individuals

Legal Disclaimer: This article is intended for informational purposes only and by no means should replace or substitute other legal documents (governmental or non-governmental) reflecting similar content or advice. If you have any questions concerning your situation or the information provided, please consult with an attorney, CPA or HR Professional.

Federal Tax Info Via Social Media

Monday, January 30th, 2012

IRS Reaches Out With Social MediaIRS Tax Tip 2012-13

Using the latest technologies, the IRS offers multiple avenues for you to get tax information. If you have a smartphone, we have an app! If you like to watch videos from your phone or computer, we have dozens of helpful YouTube videos…and, of course, follow us on Twitter.

Check out how the IRS delivers the latest tax information, initiatives, products and services through social media.

  1. IRS2Go The IRS recently launched a smartphone application that allows you interact with the IRS using your mobile device. Our app can help you get your refund status and tax updates. IRS2Go is available for the iPhone or iTouch and the Android.
  2. YouTube The IRS offers short, informative videos on an assortment of tax-related topics through our YouTube Video channel. The videos are offered in English, American Sign Language and a variety of foreign languages.
  3. Twitter IRS tweets include tax-related announcements, news for tax professionals and updates for job seekers. Follow us @IRSnews.
  4. Audio files for podcasts These short audio recordings provide useful information on one tax-related topic per podcast. They are available on iTunes or through the Multimedia Center on IRS.gov (along with their transcripts).
  5. Widgets These tools, which can be placed on websites, blogs or social media networks, direct others to IRS.gov for information. The widgets feature the latest tax initiatives and programs and can be found on Marketing Express, the marketing site that allows IRS partners and tax preparers to customize their IRS communications products.
  6. RSS Really Simple Syndication, or RSS, is an easy way to gather a wide variety of content in one place on your computer. The IRS now offers RSS feeds. RSS, is an easy way to get the news you want whenever it is updated, even if you are not on our website.

Keep in mind that the IRS uses these tools to share information with you. Do not post any confidential information on new or social media sites, especially your Social Security number. The IRS will not be able to answer personal tax or account questions through any of these services.

To find links to all of IRS’s social media tools, visit www.irs.gov and click on “Social Media.”

Links:

Legal Disclaimer: This article is intended for informational purposes only and by no means should replace or substitute other legal documents (governmental or non-governmental) reflecting similar content or advice. If you have any questions concerning your situation or the information provided, please consult with an attorney, CPA or HR Professional.

Use Your Resources – SBA Website

Monday, January 30th, 2012

SBASince its founding on July 30, 1953, the U.S. Small Business Administration has delivered millions of loans, loan guarantees, contracts, counseling sessions and other forms of assistance to small businesses.

Over the years, the SBA has grown significantly in terms of total assistance provided. and its array of programs have been tailored to encourage small enterprises in all areas. SBA’s programs now include financial and federal contract procurement assistance, management assistance, and specialized outreach to women, minorities and armed forces veterans. SBA also provides loans to victims of natural disasters and specialized advice and assistance in international trade.  All of these resources, and much more is available via the SBA website, www.SBA.gov.

Working On Your Behalf

Advocacy The voice of small business on Capitol Hill since it was created in 1976, the Office of Advocacy works to protect, strengthen and represent the interests of the nation’s small businesses within the Federal Government.

Ombudsman If excessive fines, penalties, or unfair regulatory enforcement by federal agencies are problems for your small business, you have a voice in Washington, D.C., through SBA’s Office of the National Ombudsman.

Inspector General The Office of the Inspector General conducts audits, investigations and other reviews to deter and detect waste, fraud and abuse in SBA programs and operations and to promote agency efficiency and effectiveness.

SBA Programs Small business is America’s most powerful engine of opportunity and economic growth. That’s where SBA comes in. SBA offers a variety of programs and support services to help you navigate the issues you face with your initial applications, and resources to help after you open for business.

Starting and Managing a Business

The SBA provides complete information which is segmented into three categories:

  • Thinking about starting a new business? Click here to access an assessment tool designed to help you better understand your readiness for starting a small business. It is simple to use and will take less than five minutes to complete. The tool will prompt you with questions and assist you in evaluating skills, characteristics and experience as they relate to your preparedness for starting a business.
  • Starting a Business? Click here to learn the aspects of starting a business, plus get the answers and information you need to startup.
  • Growing Your Business? Click here for help and advice about forecasting, technology, financing, franchising and many other ideas that can help you grow.

Legal Disclaimer: This article is intended for informational purposes only and by no means should replace or substitute other legal documents (governmental or non-governmental) reflecting similar content or advice. If you have any questions concerning your situation or the information provided, please consult with an attorney, CPA or HR Professional.

Why Did My Taxes Change?

Tuesday, January 17th, 2012

Employee Net PayEach year, payroll departments are inundated with inquiries about changes to the net pay employees receive.  In most cases, a simple reminder that the tax tables change as of January 1st is enough, but some employees will want to confirm that the correct amount of tax was withheld from their paycheck.  Here’s a simple way employees can do their own verification by using the tables in the “Wage Bracket Method for Income Tax Withholding” section in the IRS Publication 15, the Employer’s Tax Guide.

This IRS publication, which also includes a lot of other useful information about income taxes, can be found by clicking here.

Six Important Facts about Dependents and Exemptions

IRS TAX TIP 2012-07, January 11, 2012
Even though each individual tax return is different, some tax rules affect every person who may have to file a federal income tax return. These rules include dependents and exemptions. The IRS has six important facts about dependents and exemptions that will help you file your 2011 tax return.

  1. Exemptions reduce your taxable income. There are two types of exemptions: personal exemptions and exemptions for dependents. For each exemption you can deduct $3,700 on your 2011 tax return.
  2. Your spouse is never considered your dependent. On a joint return, you may claim one exemption for yourself and one for your spouse. If you’re filing a separate return, you may claim the exemption for your spouse only if they had no gross income, are not filing a joint return, and were not the dependent of another taxpayer.
  3. Exemptions for dependents. You generally can take an exemption for each of your dependents. A dependent is your qualifying child or qualifying relative. You must list the Social Security number of any dependent for whom you claim an exemption.
  4. If someone else claims you as a dependent, you may still be required to file your own tax return. Whether you must file a return depends on several factors including the amount of your unearned, earned or gross income, your marital status and any special taxes you owe.
  5. If you are a dependent, you may not claim an exemption. If someone else – such as your parent – claims you as a dependent, you may not claim your personal exemption on your own tax return.
  6. Some people cannot be claimed as your dependent. Generally, you may not claim a married person as a dependent if they file a joint return with their spouse. Also, to claim someone as a dependent, that person must be a U.S. citizen, U.S. resident alien, U.S. national or resident of Canada or Mexico for some part of the year. There is an exception to this rule for certain adopted children. See IRS Publication 501, Exemptions, Standard Deduction, and Filing Information for additional tests to determine who can be claimed as a dependent.

For more information on exemptions, dependents and whether you or your dependent needs to file a tax return, see IRS Publication 501. The publication is available at www.irs.gov or can be ordered by calling 800-TAX-FORM (800-829-3676). You can also use the Interactive Tax Assistant at www.irs.gov to determine who you can claim as a dependent and how much you can deduct for each exemption you claim. The ITA tool is a tax law resource on the IRS website that takes you through a series of questions and provides you with responses to tax law questions.

Link: IRS Publication 501, Exemptions, Standard Deduction, and Filing Information

Legal Disclaimer: This article is intended for informational purposes only and by no means should replace or substitute other legal documents (governmental or non-governmental) reflecting similar content or advice. If you have any questions concerning your situation or the information provided, please consult with an attorney, CPA or HR Professional.

How Do I Read My W-2?

Wednesday, January 11th, 2012

W-2 Form1)     What do I do if my name or SSN is wrong?   Answer: Speak to your payroll department; a W-2c should be filed in replacement of the incorrect W2.

2)     What do I do if my address is wrong?  Answer: It is OK if your address on your W-2 is not accurate.  You just need to use your correct address on your tax returns and it is OK if it is different from your W-2.

3)     Why doesn’t the YTD on my last paycheck of the year match my W-2 amounts? Answer: Box 1 of your W2 is for federal taxable wages. To determine the amount in box 1, your total compensation is reduced by any pre-tax deductions or deferred earnings you’ve had within the year.

4)     Why are boxes 3 and 5 different than box 1?  Answer:  Box 3 and 5 are for SS & Med taxable wages. Some earnings and/or deductions, such as, 401K, 403B, or SIMPLE are SS & Med taxable but not taxable for Federal Income Tax (Box 1).  If boxes 3 and 5 don’t match each other, the employee probably reached the Social Security wage cap.  Social Security is only taxed on the first $106,800 wages (2011 cap) but Medicare does not have a cap.

5)     How can I prevent owing taxes when I file my annual return? Answer: Verify that your employer has an accurate W-4 Form on file, listing the proper number of withholding allowances, for your current situation.  For guidance on choosing your proper withholding allowance, visit www.irs.gov to access the “IRS Withholding Calculator” tool along with many other resources available, including the 2012 W-4 Form and instructions.

6)     Where are my pre-tax deductions shown on the W-2? Answer: Pre-tax deductions are not necessarily shown on your W-2.  There are only a few specific pre-tax deductions that are required to be specified or shown on your W-2.

7)     Why is the amount I had deducted for my HSA different than the amount in box 12W? Answer: The IRS requires the combined employee and employer HSA amounts to be included in box 12W.  Your last paystub of the year can be used to determine the employee contribution amount and the employer contribution amount.

Legal Disclaimer: This article is intended for informational purposes only and by no means should replace or substitute other legal documents (governmental or non-governmental) reflecting similar content or advice. If you have any questions concerning your situation or the information provided, please consult with an attorney, CPA or HR Professional.