UPDATE: On November 22, 2016 a federal judge in Texas issued a nationwide injunction on this regulation update, meaning that it will not go into effect on December 1. We will continue to monitor the story to see whether that ruling becomes permanent.
FLSA rules update about to kick in
On December 1, 2016, revisions to the Fair Labor Standards Act (FLSA) go into effect. These changes govern the treatment of overtime-exempt ‘white collar’ workers. Most significantly, the minimum compensation thresholds for such employees have been raised significantly – they have nearly doubled. In addition to the compensation changes, this is a good time to review your exempt employees to ensure that the pass the “duties” test (which has not changed). The link below will take you to the Department of Labor’s comprehensive guide for small businesses.
If for any reason you determine that a currently salaried employee will need to begin receiving overtime payments, we recommend simply converting them to hourly employees with 40 default hours per week. That way, should overtime need to be paid, it is an easy addition.
If you need help tracking overtime and maintaining your employees’ attendance record, we have a time and attendance solution to simplify your life! Contact your payroll specialist to receive more information.
IRS Extends Due Dates for New 2015 Information Reporting Requirements
On Dec. 28th, the IRS announced that they have extended the due dates for new health care information reporting forms.
Applicable large employers now have additional time to provide health coverage information for 2015 to individual taxpayers and the IRS. Form 1095-C must be delivered to full-time employees by March 31, 2016.
Due to these extensions, some individual taxpayers may not receive a Form 1095-C by the time they are ready to file their 2015 tax return. While the information on these forms may assist in preparing a return, they are not required in 2015. Individuals do not have to wait for their Form 1095-C in order to file.
Last chance to submit 2015 payroll data
Year-end is upon us! By now you should have already reported the following to us:
• Group term life insurance premiums over $50,000
• Medical and dental premiums for 2% owners of Sub-S corporations
• Personal use of company owned autos
• Third party paid sick pay made under a company paid disability policy
• Year end bonuses (we highly recommend running as a separate payroll)
• Unreported voids on checks previously issued
If you have missed any of these things, please report them to us so that we can include them in your 2015 payroll data.
W-2s for your employees will be distributed with payrolls beginning January 11, 2015.
Affordable Care Act Reporting Begins in 2015
Tax filing season for 2015 is nearly upon us. Employers with 50 or more full-time or full-time equivalent employees will have new forms to comply with this year – Forms 1094-C and 1095-C – related to the Affordable Care Act.
Determining whether your company meets this criteria is one of the significant hurdles to compliance. A good, digestible source of information can be found here at the Moulder Law blog.
Datapay can help our payroll clients comply with these filing requirements. If you are a current client, or a company looking for help, please contact us and we can get you up and running.
Security Awareness For Taxpayers
The IRS, the states and the tax industry are committed to protecting you from identity theft. Working together, they have made many changes to combat identity theft. However, cyber-criminals are constantly evolving. The IRS is working hand-in-hand with your state revenue officials, your tax software provider and your tax preparer.
By taking a few simple steps, you can better protect your personal and financial data online and at home. Please consider these steps to protect yourselves from identity thieves:
Keep Your Computer Secure
Use security software and make sure it updates automatically; essential tools include:
• Virus/malware protection
• File encryption for sensitive data
• Treat your personal information like cash, don’t leave it lying around
• Check out companies to find out who you’re really dealing with
• Give personal information only over encrypted websites – look for “https” addresses.
• Use strong passwords and protect them
• Back up your files
Avoid Phishing and Malware
• Avoid phishing emails, texts or calls that appear to be from the IRS and companies you know and trust, go directly to their websites instead
• Don’t open attachments in emails unless you know who sent it and what it is
• Download and install software only from websites you know and trust
• Use a pop-up blocker
• Talk to your family about safe computing
Protect Personal Information
Don’t routinely carry your social security card or documents with your SSN. Do not overshare personal information on social media. Information about past addresses, a new car, a new home and your children help identity thieves pose as you. Keep old tax returns and tax records under lock and key or encrypted if electronic. Shred tax documents before trashing.
Avoid IRS Impersonators. The IRS will not call you with threats of jail or lawsuits. The IRS will not send you an unsolicited email suggesting you have a refund or that you need to update your account. The IRS will not request any sensitive information online. These are all scams, and they are persistent. Don’t fall for them. Forward IRS-related scam emails to email@example.com. Report IRS-impersonation telephone calls at www.tigta.gov.
• Check your credit report annually; check your bank and credit card statements often;
• Review your Social Security Administration records annually: Sign up for My Social Security at www.ssa.gov.
• If you are an identity theft victim whose tax account is affected, review www.irs.gov/identitytheft for details.
CT remains a credit reduction state
The US Department of Labor has released their final list of 2015 Federal Unemployment Tax Act (FUTA) Credit Reductions. As in each of the past several years, CT employers will face credit reductions measuring 2.1% above and beyond the 0.6% that is taken into escrow throughout the year.
To estimate the ADDITIONAL amount that Datapay will escrow in January, multiply the Year to Date column of the Total Federal Tax from the PAYROLL UI TOTALS report by 3.5. Using the example below, multiplying $335.99 by 3.5 totals $1,175.97. This approximates the amount that will be added to your Form 940 (unemployment tax return) on line 11. This estimate will be most accurate using your reports from your final 2015 payroll, but may be used in the interim to help estimate your future obligation.
RI has fulfilled its obligation; CT remains a credit reduction state
The US Department of Labor has released their final 2014 Federal Unemployment Tax Act (FUTA) Credit Reductions for 2014. RI employers will be pleased to learn that the state has repaid its debt to the federal government and that no additional FUTA tax will be due at year end. CT employers will face credit reductions measuring 1.7% above the normal 0.6% that is taken into escrow throughout the year.
To estimate the ADDITIONAL amount that Datapay will escrow in January, multiply the Year to Date column of the Total Federal Tax from the PAYROLL UI TOTALS report by 2.83. Using the example below, multiplying $294.00 by 2.83 totals $832.02. This approximates the amount that will be added to your Form 940 (unemployment tax return) on line 11. This estimate will be most accurate using your reports from your final 2014 payroll, but may be used in the interim to help ballpark your future obligation.
Datapay will debit this surcharge from client accounts on January 21, 2015
As in recent years, Massachusetts is not credit reduction states.
CT Employers should expect a direct UI billing
In Connecticut, Unemployment Insurance (UI) benefit payments have greatly exceeded UI tax revenues since 2007. To make up for that shortfall, the state is issuing an assessment to all employers as it has for the past several years.
CT employers should expect a direct billing in the mail. While the amount that you will be billed is calculated using taxable payroll totals, this assessment is separate from and in addition to normal contributions through payroll.
Per the special assessment bill, payroll services, including Datapay, do NOT remit this payment – please send the amount due directly into the state.
Be aware of a fraudulent tax notice being distributed
The state of Rhode Island has issued an alert to corporate taxpayers. The full alert can be read here: http://www.tax.ri.gov/Tax%20Website/TAX/Advisory/ADV%202014-09.pdf.
An example of what the message that is being distributed looks is posted below. While the grammar errors in this particular messages are an immediate red flag, it serves as a good reminder to be diligent about email monitoring.
IRS Small Business Tax Center Has Everything You Need
You don’t need to be a tax expert to run a business, but knowing the basics about taxes can help you run it better. You’ll find the basics and much more at the IRS.gov Small Business and Self-Employed Tax Center.
Whether you’re new to a business or been with it awhile, the Tax Center can help. You can apply for an Employer Identification Number, get a form or learn about employment taxes. The Center also includes these resources:
- IRS Video Portal. Watch helpful videos and webinars on many topics. Find out about filing and paying business taxes or about how the IRS audit process works. Under the ‘Businesses’ tab, look for the ’Small Biz Workshop.’ Watch it when you want to learn the basics about small business taxes.
- Online Tools and Educational Products. The list of Small Business products includes theTax Calendar for Small Businesses and Self-Employed. Install the IRS CalendarConnector tool and access important tax dates and tips right from your smart phone or computer, even when you’re offline.
- Small Business Events. Find out about free IRS small business workshops and other events planned in your state.
Go to the Small Business and Self-Employed Tax Center and use the A-Z index to find whatever you need.