Government & Payroll Updates

NEW YORK ELIMINATES/REDUCES MTA TAX

gncapa — Fri, 13 Jan 2012 02:59:14 +0000

New York Governor Andrew Cuomo has signed a tax reform bill into law that will create new personal income tax (PIT) rates and brackets, effective for wages paid on or after January 1, 2012. The new law will also reduce or eliminate the Metropolitan Commuter Transportation Mobility Tax (MTA Payroll Tax) for certain employers, effective for the quarter beginning on April 1, 2012.

The MCTMT is imposed on employers conducting business within the Metropolitan Commuter Transportation District (MCTD). Currently, the tax rate is 0.34% of an employer’s total payroll expense for employees employed within the MCTD. Effective April 1, 2012, employers with a payroll expense of $312,500 or less in a calendar quarter will be exempt from the MCTMT. Currently, this threshold is $2,500 in a quarter. Certain educational institutions, including public and private elementary and secondary schools, will also be exempt from the MCTMT, effective April 1, 2012. Also effective April 1, 2012, the MCTMT rate will be reduced for certain employers based on their quarterly payroll expense.

2012 SOCIAL SECURITY WAGE BASE ANNOUNCED

gncapa — Thu, 20 Oct 2011 01:31:05 +0000

On Wednesday, October 19, 2011, the Social Security Administration announced that the 2012 social security wage base will be $110,100. As in prior years, there will be no limit to the wages subject to the Medicare tax; therefore all covered wages will be subject to the 1.45% tax.

The FICA tax rate, which is the combined social security tax rate of 6.2% and the Medicare tax rate of 1.45%, will be 7.65% for 2012. The maximum social security tax employees and employers will each pay in 2012 is $6,826.20. The 2012 FICA rate is scheduled to be 6.2% for both employees and employers. However, bills currently being considered in Congress may change this rate. The 2011 FICA tax rate was 4.2% for employees and 6.2% for employers under the Tax Relief Act of 2010.
The social security wage base for self-employed individuals in 2012 will also be $110,100. There is no limit on covered self-employment income that will be subject to the Medicare tax. The self-employment tax rate will be 15.3%
The threshold for coverage under social security and Medicare for domestic employees will be $1,800 in 2012, The coverage threshold for election workers will be $1,500 in 2012, unchanged from the 2011 threshold.

CALIFORNIA GOVERNOR VETOES PAYCARD BILL

gncapa — Thu, 13 Oct 2011 02:29:00 +0000

On October 9, 2011, California Governor Jerry Brown vetoed S.B. 931, a bill that would have imposed new unnecessary and cost prohibitive requirements for use of payroll cards.

SB 931 goes far beyond ensuring that employees have full access to their wages each pay period and would have imposed a number of costly requirements including that employers provide a number of free banking services to their employees.

The increased costs and administrative burdens would have discouraged the use of paycards because they would have outweighed the benefits the cards provide to employers and employees.

Colorado Adds Assessment to Pay Interest

gncapa — Tue, 28 Jun 2011 22:25:14 +0000

The Colorado Dept of Labor & Employment has had to borrow over $250 million in federal funds due to the insolvency of the state’s unemployment trust fund. Unless Congress waives the interest attributable to this loan, the first interest payment will become due on October 1, 2011. It’s anticipated the interest payment will be approximately $12 million. However, due to the cap on the Solvency Surcharge component of the tax rate, the surcharge will not generate enough funds to cover the interest due.

To cover this shortage, each ratedColoradoemployer will be accessed an additional assessment rate that will be mailed to employers sometime in July. The assessment will be payable 30 days from the billing date. The Department estimates that the cost will be approximately $0.45 – $0.60 per employee.

Mileage Rate Increase Announced by IRS

gncapa — Tue, 28 Jun 2011 22:16:22 +0000

The IRS has announced an increase in the optional standard mileage rates for the final six months of 2011. The IRS has increased the standard business mileage rate from 51 cents to 55.5 cents a mile for all business miles driven from July 1 through December 31, 2011. The increase is due to the rising price of gasoline. The rate for deductible medical or moving expenses is increased from 19 cents to 23.5 cents a mile. Note: The rate for providing services for charitable organizations is set by statute, not the IRS, and remains at 14 cents a mile.

The mileage rate may be used to compute the deductible cost of operating a passenger car (also vans, pickups, or panel trucks) for business purposes. It may also be used by employers to reimburse employees for business use of their personal vehicles and to determine the amount that needs to be imputed to an employee’s income for personal use of certain company-owned or leased non luxury vehicles.

DOL Smartphone App

gncapa — Tue, 28 Jun 2011 22:12:13 +0000

How many hours have you worked this week? Check your phone! The DOL has announced the launch of its first application for smartphones. The app is a timesheet to help employees track regular work hours, lunch breaks and any overtime. The app is free and compatible with the iPhone and IPod Touch.

Payroll with no SIN from OnPayroll.ca

gncapa — Tue, 28 Jun 2011 22:01:44 +0000

Can an Employer withhold pay when they do not have a SIN?

Generally, the answer is no in most jurisdictions. Most of the Provincial and Territorial jurisdictions stipulate that an employee’s wages must be paid to an employee either on the employer’s regular pay day or within a certain number of days from the end of the pay period.

Is The Person You Paying Really an Independent Contractor? from OnPayroll.ca

gncapa — Tue, 28 Jun 2011 21:57:22 +0000

In Canada, how can you tell if a person you are paying is really an Independent Contractor?

This is an age old question, and one of great importance, because if the individual you are paying as an independent contractor is in fact deemed to be an employee by the Canada Revenue Agency, you can face the inconvenience of audits, penalties for failure to withhold and remit employee taxes, CPP premiums and Employment Insurance premiums and as well face complaints under Employment Standards.

There are 4 main factors that need to be taken into consideration when considering an employee/independent contractor relationship.

Control

Does the company set the hours of work and vacation entitlement? Is the work supervised and the person controlled? Is the person required to report to work at a regular location? Does the person work exclusively for one company? Is the worker required to perform services personally?

Ownership of Tools

Does the Company pay for the tools used by the person and provide all the tools and equipment needed?

Chance of Profit/Risk of Loss

Is the worker paid a salary or a wage? Do payments occur even if deadlines are not met or quality of work is poor? Does the employee have to pay expenses related to work? Are company benefits paid for such as health, dental, disability? Are bonuses paid tied to company performance? Is there a company Pension plan or RRSP program in place?

Total Relationship

Is there a written contract indicating an independent contractor relationship? Is there a contract for an indefinite period of time? Does payment occur without invoices? Is there no GST charged by the worker? Is the person paid through payroll?

A very helpful publication is published by the Canada Revenue Agency together with a checklist that you can complete. http://www.cra-arc.gc.ca/E/pub/tg/rc4110/README.html The pamphlet is RC4110 – Employee or Self Employed? Use the checklist and test it contains – it could save you a lot of pain.

Michigan Tax Credit

gncapa — Fri, 20 May 2011 00:23:35 +0000

To partially offset state unemployment taxes, a tax credit is available for Michigan employers. The credit is intended to ease the burden on employers who have paid additional FUTA taxes for 2010 due to outstanding loans from the federal government.

To qualify for the credit, the employer’s Actual Reserve and NBC on the 2010 tax rate determination must be greater than zero and all required quarterly tax reports for 2010 must be filed.

The credit can be applied for through the UIA Employer Web Account Manager (EWAM) at www.michigan.gov/uia or by completing Form UIA 1110. Both application options are available on EWAM. If the application for credit is submitted prior to June 1, 2011, the credit may be used when filing second quarter 2011 Michigan unemployment tax return.

IRS Issues HSA Limits for 2012

gncapa — Thu, 19 May 2011 03:07:08 +0000

For calendar year 2012, the annual limitation on deductions for an individual with self-only coverage under a high-deductible plan is $3,100. For calendar year, the annual limitation on deductions for an individual with family coverage under a high deductible health plan is $6,250. The slight increases represent an adjustment for inflation.