Posts Tagged ‘Payroll’

2013 FUTA Credit Reduction Impacts 14 States

Tuesday, December 3rd, 2013

FUTA Credit Reduction

This article will briefly discuss FUTA Credit reduction and how this may affect your business.

Federal Unemployment insurance tax is a flat rate of 6.0% on the first $7000 in employee wages.  However, the federal government provides a 5.4% tax credit to companies that pay their state unemployment taxes on time.  This results in an effective federal unemployment tax rate of 0.6% on the first $7000 in wages (or $42 per employee, per year).

According to federal law, states with a high rate of unemployment and difficulty meeting their benefit obligations can borrow money from the FUTA account. If a state has an outstanding loan on January 1 for two consecutive years, and does not repay the full amount by November 10 of the second year, the FUTA credit rate for employers in that state will be reduced until the loan is repaid.

A state with an outstanding loan can avoid a credit reduction by repaying the loan by November 10th of the year the reduction is scheduled to take effect.  If the loan is not repaid by that date, a credit reduction of 0.3% goes into effect, with employers in that state having their maximum credit reduced to 5.1% (5.4% – 0.3%) and their effective FUTA tax rate increased to 0.9% (0.6% + 0.3%) or $63 per employee in the first year of reduction.  Each year a loan remains unpaid, the credit reduction increases by 0.3%, although there are limits for states that have made efforts to keep their balances in check.

How will this affect your company?

If you were required to pay state unemployment in any of the impacted states during 2013, you should expect to pay additional Federal Unemployment Tax on the wages paid in these states when the 940 return is filed for 2013 (due January 31, 2014).

The credit reduction increase of 0.3% is an additional $21 per employee, 0.6% is an additional $42 per employee, 0.9% is an additional $63 per employee and 1.2% is an additional $84 per employee.  The FUTA liability will appear on the Schedule A form, which is filed with the 940 return in the 4th quarter packet.

States

Reduction Rate

Additional Amt Per Employee

 Arkansas

.009

$63

 California

.009

$63

 Connecticut

.009

$63

 Delaware

.006

$42

 Georgia

.009

$63

 Indiana

.012

$84

 Kentucky

.009

$63

 Missouri

.009

$63

 New York

.009

$63

 North Carolina

.009

$63

 Ohio

.009

$63

 Rhode Island

.009

$63

 Virgin Islands

.012

$84

 Wisconsin

.009

$63

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.

Unclaimed Paychecks

Tuesday, February 26th, 2013

Out-Standing ChecksEmployers must follow state laws for any unclaimed paychecks so audits need to be periodically done to review which paychecks have not been cashed.  After a certain amount of time specified by state laws, the unclaimed wages become “abandoned property” and the employers then have an obligation to forward the funds to the appropriate state agency.  The state laws that govern the abandoned property are called escheat laws.

Most states require employers to attempt to contact employees with unclaimed checks to make efforts to prevent these wages from becoming abandoned property.  Many states also require reports of abandoned property to be filed annually and some require the records of the abandoned property to be retained for a specific number of years.  Some states also have penalties for employers who fail to remit unclaimed wages, fail to remit them by the deadline and/or fail to file the required reports.

Here are the steps to take when you have outstanding paychecks for your employee(s) that have expired or have been outstanding for an extended period of time:

First, attempt to contact the employee(s) and resend the owed wages to them.

  • If the employee can be located: Issue a new check to the employee and send it to him/her as a replacement payment and inform them that the prior check is invalid.
    1. No record is needed in the payroll system since this is a reissue of a prior check that is already in the pay history.
    2. If you have the OBC service, submit the OBC Refund Request form to PCS.
  • If the employee cannot be located: Follow the employee’s State law on unclaimed property.
    1. No record is needed in the payroll system since this is a reissue of a prior check that is already in the pay history.
    2. If you have the OBC service, submit the OBC Refund Request form to PCS.
    3. If the employee contacts you after the wages have been sent to the state, instruct them to contact the state agency for the unclaimed property.

The National Association of Unclaimed Property Administrators (NAUPA) provides links of the laws for each state, click here to visit their website.

Article Provided By the Minneapolis CBIZ Payroll Services Team

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.

Health Care Reform Overview

Thursday, August 2nd, 2012

Health Care ReformHealth care reform legislation has added a number of new taxes and made various other changes which will help finance the reform. The legislation also made several health care related changes which benefit certain taxpayers:

  • A credit to offset part of the costs of health insurance for low to middle income individuals and families.
  • A credit to offset the costs to small businesses which provide health insurance for their employees.

Here is a list of some of the tax related items from the health care reform legislation that were upheld as a result of the Court’s decision:

Provisions Already in Effect

  • Small Business Tax Credit: Small businesses, defined as businesses with 25 or fewer employees and average annual wages of $50,000 or less, are eligible for a credit of up to 50% of nonelective contributions the business makes on behalf of their employees for insurance premiums.
  • Tax on Health Savings Account (HSA) Distributions: Additional tax on distributions from an HSA or an Archer Medical Savings Account (MSA) that are not used for qualified medical expenses is increased to 20% of the disbursed amount.
  • SIMPLE Cafeteria Plans for Small Business: An eligible small employer is provided with a safe harbor from the nondiscrimination requirements for cafeteria plans as well as from the nondiscrimination requirements for specified qualified benefits offered under a cafeteria plan.
  • Adult Dependent Insurance Coverage: If dependent coverage is provided, plans must allow coverage for children up to age 26 regardless of student or marital status.  Employers may exclude the cost of dependent coverage for children under age 27 from an employee’s taxable income.
  • Restrictions on Use of HSA and FSA Funds: Over the counter medications are no longer 213D qualified medical expenses.  This change makes these medications ineligible for FSA, HRA and H.S.A. reimbursement.  Prescribed drugs and insulin are still considered to be 213D qualified eligible expenses.
  • Information Reporting: If your company filed 250 or more W-2s in 2011, then you must report the health insurance premium for each participating employee on 2012 W-2’s.  Companies with fewer than 250 employees will need to comply with this requirement beginning with 2013 W-2 reporting. Premiums for standalone vision and dental plans, Group Term Life, Group Short Term Disability and Group Long Term Disability are not included.  Although the premium for health contributions is reported on the W-2 form, they are not taxable.
  • Preexisting Conditions: Plans may not impose any preexisting condition exclusion for children under age 19.
  • No Lifetime Limits on coverage of ‘Essential Benefits’: (as defined by the Department of Health and Human Services). May only impose restricted annual limits on the dollar value of ‘Essential Benefits’.
  • Preventive Health Services: (as defined by the Department of Health and Human Services) must be covered and no cost sharing requirements may be imposed for these services.
  • Medical Loss Ratio – 80/20 Rule: requires health insurance companies (depending on their size) to spend at least 80 percent of premium dollars on health insurance claims and clinical activities for improved healthcare quality. Insurance companies that do not meet the 80/20 Medical Loss Ratio (MLR) standard must provide their policyholders a rebate for the difference no later than August 1, 2012. (Additional clarification provided below.)

Effective in 2013

  • Additional Hospital Insurance Tax on High-Income Taxpayers: Starting in 2013, high-income individuals will pay an additional 0.9 percentage points on earned income over $200,000 ($250,000 if married). Currently, the Medicare payroll tax is 2.9% on all wages — with the worker and employer each paying 1.45%.
  • Medicare Tax on Investment Income: Imposes a tax on individuals equal to 3.8% of the lesser of the individual’s net investment income for the year or the amount the individual’s modified AGI exceeds a threshold amount.
  • Medical Care Itemized Deduction Threshold: Threshold for the itemized deduction for unreimbursed medical expenses is increased from 7.5% of adjusted gross income (AGI) to 10% of AGI for regular income tax purposes. (Effective 2013 generally, 2017 for certain taxpayers).
  • Health Flexible Spending Arrangements: Beginning with 2013 plan years, the maximum for Flex Spending Account (FSA) pretax salary deferral is $2500.  Be sure to amend your FSA plan at renewal time accordingly.

Effective in 2014

  • Premium-Assistance Credit: Refundable tax credits that eligible taxpayers can use to help cover the cost of health insurance premiums for individuals and families who purchase health insurance through a state health benefit exchange.
  • Reporting Requirements: Requires insurers (including employers who self-insure) that provide minimum essential coverage to any individual during a calendar year to report certain health insurance coverage information to both the covered individual and to the IRS.
  • Cafeteria Plans: A qualified health plan offered through a health insurance exchange is a qualified benefit under a cafeteria plan of a qualified employer.
  • Employer Responsibility: An “applicable large employer” that does not offer coverage for all its full-time employees; offers minimum essential coverage that is unaffordable; or offers minimum essential coverage that consists of a plan under which the plan’s share of the total allowed cost of benefits is less than 60%; is required to pay a penalty if any full-time employee is certified to the employer as having purchased health insurance through a state exchange with respect to which a tax credit or cost-sharing reduction is allowed or paid to the employee.If a large employer does not offer qualified affordable coverage then an employee can go to the exchange.  If the employee gets a subsidy then the employer must pay a $250 a month tax penalty (not deductible) for each employee receiving coverage through the exchange that gets a subsidy not to exceed the aggregate penalty for not offering coverage.

    Any large group employer not offering coverage and having at least 1 employee obtaining coverage through an exchange with a subsidy must pay a $166 per month tax penalty (not deductible) to the government (this equates to a $2,000 Annual penalty).

    In 2014, small employers of fewer than 50 employees have no penalties.  If they offer coverage that is affordable and qualified (no more than 9.5% of pay for employee coverage and at least a bronze level coverage) then the employee is not eligible to buy coverage through the exchange.

Additional Details You Should Know About:

Medical Loss Ratio (MLR) Rebate Distribution
If you receive a MLR distribution, you will be required to develop a plan to distribute the rebates that your insurance carrier declares.  As of today, HealthPartners is the only local carrier to announce they will be issuing an MLR rebate and only to a very small subset of their clients.  HealthPartners has already contacted those affected.

For future reference, if you receive an MLR rebate, the method of allocating the rebate has been provided in Health and Human Services interim regulations, and directs insurers to distribute the entire rebate to the group policyholder.  The group policyholder is required to use the portion of the rebates attributable to the amount of premiums paid by the subscribers for the benefit of the subscribers, insuring that enrollees in such plans receive the benefit of the rebates.

Three methods of distribution are allowed:

  1. to reduce the subscribers portion of the annual premium for the subsequent policy year for all subscribers covered under the group health policy in the subsequent year; or
  2. to reduce subscribers portion of the annual premium for subsequent policy year for only those subscribers covered by the group health policy in the year for which the rebate was based; or
  3. to provide a cash refund only to subscribers that were covered by the group health policy on which the rebate is based.

All three options are acceptable.  The most administratively simple process is to issue a premium reduction in the subsequent year for those participating in the plan in the subsequent year.

If you are currently covered by HealthPartners, an MLR rebate may be announced in the near future.  Otherwise, it is unlikely this provision will apply to you this year.

Summary of Benefits (SBC’s)/Uniform Glossary (UG)
Watch for the Summary of Benefits and Coverage (SBC) and Uniform Glossary that your insurance carrier has developed, and include those new documents in Open Enrollment packets for 2013. These new documents must be provided to employees at least 30 days prior to renewal (or as early as reasonably possible) for plans renewing after 9/23/12.  SBC’s will also be required for HRA’s and Flexible Spending Accounts.

Patient Centered Outcomes Research
Determine if your plan is subject to a “PCOR” fee (Patient Centered Outcomes Research) also known as “CER” (Comparative Effectiveness Research).

This fee applies to insured plans (fee paid by the insurer) and self-insured plans (fee paid by the plan sponsor). Self-insured plans include HRAs.  For plan/policy years ending on or after October 1, 2012 and before October 1, 2013, the fee is $1, multiplied by the average number of covered lives (including dependents). The fee is increased to $2 for plan years ending on or after October 1, 2013 and may be further increased on or after October 1, 2014. Your TPA will have additional information.

Health Insurance Exchange
Prepare to notify employees of the availability of Health Insurance Exchanges by March of 2013.  (While this notification will be required, at this time we are waiting for additional guidance regarding the availability of the health exchange in Minnesota, since Minnesota has not passed a specific Exchange bill yet.)

Links to More Information
PPACA timeline for implementation
Impact to Individuals
Impact to Small Companies
Impact to Large Companies

Article Contributors:

Gary Helm
Bearence Management Group
651.379.7906 Direct
Email Gary

John Cleveland
The Cleveland Company, Inc.
952.885.2701 Direct
Email John

PCS Tax and Support Departments

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.

PCS Timekeeping Products Create Efficiency

Thursday, May 31st, 2012

TimekeepingToday’s automated timekeeping technology is a powerful resource for businesses, both large and small. It is designed to offer exceptional convenience, and to substantially improve profit margins by reducing the cost of labor.

Our integrated timekeeping packages offer solutions for all types of businesses. Whether you make use of the traditional badge swipe, utilize the new biometric (fingerprint or hand punch) clocks, or your employees clock in from their PC, you can enjoy a solution, or network of solutions, that make managing your labor efficient.

Staying competitive in business today requires companies to find new, controllable ways to drive revenues and profitability. On that note, many companies today do not realize that they can significantly reduce the cost of one of their greatest expenses, employee labor, thus increasing company profitability.

The American Payroll Association (APA) has declared numerous ways in which companies are hurting their profitability by not implementing today’s automated timekeeping technology. Take a look, and evaluate where your company could save:

Cost 1:  Human Error

The APA estimates that the rate of human error in time card preparation and totaling is between 1% and 8%. Therefore, a conservative 2% error rate on a $12,000 payroll would equal $240 in erroneous wages.

Cost 2:  Wasted Labor Minutes

Did you know that just 15 employees receiving pay for merely 4 minutes of “wasted” time per day (untracked breaks, extended lunches, over-approximated punch times, etc.) will total 1380 minutes (23 hours) of additional pay per month?

Cost 3:  Manual Time Card Totaling

The average payroll clerk spends 7 minutes per time card each pay period:

  • Preparing and handling time cards
  • Computing time card totals
  • Verifying time card totals
  • Computing shift and department totals
  • Reconstructing lost or damaged time cards

The Cost: Preparing 100 time cards will take an estimated 11.67 hours to complete.  Therefore, at an average clerical wage of $15.00 per hour, time card preparation would cost $175.05 per pay period.

Today’s automated timekeeping technology is a valuable resource as it is able to eliminate these costs, and save you significant amounts of time.

For more information on PCS Timekeeping products and services, click here.

Submitted By:

Christopher Flynn, MBA
Timekeeping Services Manager
Payroll Control Systems
763.746.1923 Direct
Email Chris

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.

New Tax Credits and Tax Relief Available

Wednesday, May 30th, 2012

Tax CreditsUpdated 5/30/2012.

IR-2012-56, May 23, 2012

WASHINGTON — The Internal Revenue Service is marking Small Business Week, May 20 to 26, by encouraging small business owners to check out two key tax credits and a special relief program that could provide significant tax benefits during 2012.

Both the expanded credit for hiring veterans and the credit for employer-provided health care coverage can provide tax savings to eligible small businesses when they file their 2012 federal income tax returns. In addition, substantial relief from past payroll tax obligations is available to eligible employers who agree to reclassify their workers as employees in the future. Here are details on each of these benefits.

Expanded Tax Credit for Hiring Veterans

A law change enacted late last year now provides an expanded Work Opportunity Tax Credit (WOTC) to employers that hire eligible unemployed veterans. The credit can be as high as $9,600 per veteran for for-profit employers or up to $6,240 for tax-exempt organizations. The amount of the credit depends on a number of factors, including the length of the veteran’s unemployment before hire, hours a veteran works and the amount of first-year wages paid. Employers who hire veterans with service-related disabilities may be eligible for the maximum credit.

Certification requirements apply to these new hires. Normally, an eligible employer must file Form 8850 with the state workforce agency within 28 days after the eligible worker begins work. But under a special rule, employers have until June 19, 2012, to complete and file this form for veterans hired on or after Nov. 22, 2011, and before May 22, 2012. The 28-day rule will again apply to eligible veterans hired on or after May 22. This form can be faxed or electronically transmitted to the state workforce agency, as long as the agency is able to receive the certification forms that way.

Businesses claim the credit on their income tax return using Form 5884 and Form 3800. A separate claim procedure using Form 5884-C applies to eligible tax-exempt organizations. Details are on IRS.gov.

Credit Helps Small Employers Provide Health Care Coverage

Small employers that pay at least half of the premiums for employee health insurance coverage under a qualifying arrangement may be eligible for the small business health care tax credit. Enacted two years ago, the credit is designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have.

Eligible small employers can claim the credit for 2010 through 2013 and for two additional years beginning in 2014. Targeted to small employers that primarily employ low-and moderate-income workers, the maximum credit, in tax-years 2010 through 2013, is 35 percent of premiums paid by small businesses and 25 percent of premiums paid by tax-exempt organizations, increasing to 50 percent and 35 percent, respectively, in 2014.

Small businesses claim the credit on their income tax return using Form 8941 and Form 3800. Tax-exempt organizations also use Form 8941 and then claim the credit on Form 990-T.

The recently-revamped Small Business Health Care Tax Credit page on IRS.gov is packed with information and resources designed to help small employers see if they qualify for the credit and then figure it correctly. These include a step-by-step guide for determining eligibility, examples of typical tax savings under various scenarios, answers to frequently-asked questions, a YouTube video and a webinar.

Many Businesses can qualify for Substantial Payroll Tax Relief

Many businesses can now resolve past worker classification issues at a low cost by voluntarily reclassifying their workers. Better yet, they don’t have to wait for an IRS audit to do so.

By prospectively reclassifying workers, making a minimal payment and meeting a few other requirements, eligible businesses can achieve greater certainty for themselves, their workers and the government. Already, 540 employers have been approved to participate in the new IRS Voluntary Classification Settlement Program (VCSP) since it was launched last September.

The VCSP is available to many businesses, tax-exempt organizations and government entities that erroneously treat their workers or a class or group of workers as non-employees or independent contractors, and now want to correctly treat these workers as employees in the future. To be eligible, an employer must:

  • Consistently have treated the workers in the past as non-employees,
  • Have filed all required Forms 1099 for the workers for the previous three years
  • Not currently be under audit by the IRS
  • Not currently be under audit by the Department of Labor or a state agency concerning the classification of these workers

Interested employers can apply for the program by filing Form 8952. Employers accepted into the program will pay an amount effectively equaling just over one percent of the wages paid to the reclassified workers for the past year. It’s that simple. Moreover, employers will not be audited on payroll taxes related to these workers for prior years. Further details are available on the Employment Tax pages of IRS.gov, and in Announcement 2011-64.

Details on these and other tax benefits are on IRS.gov. In addition, the Small Business Tax Center (www.irs.gov/smallbiz) has links to a variety of useful tax tools for small business, including the Virtual Small Business Tax Workshop, a downloadable tax calendar, common forms and their instructions and help on everything from how to get an Employer Identification Number (EIN) online to how to engage with the IRS in the event of an audit.

PCS has partnered with TaxBreak, LLC to provide assistance with tax credits.  For more information, visit our website or contact us.

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.