Alice Gliman

The Affordable Care Act (ACA) didn’t go into effect for all employers at the same time. Instead, the IRS provided some employers with transition relief, which delayed the onset of the law’s play-or-pay requirements and the accompanying free-rider penalties. All of this transition relief comes to an end with the 2016 plan year, which is next month for calendar year plans.

Currently, the IRS holds both a professional employer organization (PEO), also known as an employee leasing organization, and the client (you) responsible if your PEO defaults on remitting your payroll taxes. However, last year’s tax extenders law gave a big boost to PEOs by allowing the IRS to certify PEOs, which, in turn, allows the PEOs to become solely responsible for your payroll taxes.

Beware serial W-4 filers

November 24, 2015

It’s that time of year again—bonus time—because my local newspaper is running ads for all sorts of ridiculously expensive jewelry. It’s also the time of year when employees who know just a little about their W-4s (probably from their accountants) game the system to avoid income tax withholding on those bonuses by refiling their W-4s to claim an exemption from withholding or a greater number of allowances, which has the same effect. Once they receive their bonuses, they refile again, claiming fewer allowances. All of this refiling can create a paperwork nightmare for you. But by taking this one simple step now, you can minimize this paperwork burden.

Employees have only a handful more weeks to spend the money they salted away into their health flexible spending accounts (FSAs) this year. Unless your FSA plan gives employees a grace period or rollover option, anything left in their accounts on Dec. 31 will be forfeited to the plan.

Welcome to the new gig economy, where a tech company’s smartphone app connects you to waiting clients. Or maybe not. Consider Uber’s very bad luck. It won a skirmish in New York City earlier this year, but that victory had nothing to do with the employment status of its drivers—whether they’re employees or independent contractors. On that front, Uber’s lost a lot of the time.
Small employers have usually found it challenging to offer decent group health plans to their employees. So in addition to creating the individual exchanges, the Affordable Care Act (ACA) also created another exchange, called SHOPs—the Small Business Health Options Program—exclusively for small employers. While the individual exchanges have received a lot of attention, the SHOPs are the poor stepchildren, having received relatively little press and technological assistance. However, the ACA contains another provision to help small employers (usually defined under state law as employers with no more than 50 employees) offer group benefits to their employees. And now is the time to explore it.
The IRS released everything you wanted to know about 2016 taxes but were afraid to ask. Here’s the roundup. (Rev. Proc. 2016-53, IRB 2016-44)

The amount employees can contribution into their 401(k) or 403(b) plan accounts remains $18,000 for 2016, the IRS announced. Also unchanged from 2015, employees who are at least 50 years old may contribute $6,000 in pretax catch-up contributions. Other inflation-adjusted amounts for qualified pension plans include the following.

No one likes a surprise tax bill. That’s especially true of employees, who think withholding means everything’s under control. You know better. Now is the time to reach out to everyone, and let them know that they still have time to adjust their 2015 W-4s to take account of any unexpected underwithholding situations. And don’t forget the new health care information reporting forms. New tax forms are bound to cause employees a great deal of consternation. Here’s what employees need to know.
The Social Security Administration has announced that the 2016 taxable wage base for the Social Security portion of FICA will remain $118,500. The 6.2% Social Security tax is payable by both employers and employees; in 2016, the maximum tax is $7,347. Except for pretax medical and tax-free fringe benefits, all wages are subject to the 1.45% Medicare portion of FICA or the 2.35% Medicare portion of FICA for employees earning more than $200,000, since there’s no wage base. (SSA Fact Sheet, 10-15-15)