Payroll Today

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)

I was at my local ATM withdrawing money the other day. The welcome screen wasn’t the typical ad for the bank’s services. Instead, I was asked whether I’d like to make a charitable donation to help the victims of the recent floods in South Carolina. Maybe some of your employees saw something similar. Or maybe they received an alert on their phones. Unfortunately, natural disasters bring out scam artists of all stripes. Here are some tips you can pass along to employees before they hit the “Yes” button or key in their credit card information.

You don’t know where you’re going unless you know where you’ve been. That’s especially true for year-end payroll duties. To help you get your bearings for year-end 2015, we’ve pulled together a list of critical action items for your immediate consideration.

If you have an employee benefits plan, like a retirement plan or a cafeteria plan, you must e-file an annual information return on Form 5500 with the Department of Labor (DOL). The consequences for failing to file can be draconian: Your plan may lose its tax-favored status. And, of course, unless you have reasonable cause, penalties apply to nonfilers. The IRS’ Employee Plans Compliance Unit (EPCU) has announced that it’s collaborating with the DOL’s Office of the Chief Accountant to contact Form 5500 filers who haven’t filed for plan years ending in 2011. Nonfilers will be identified using payroll and plan data in the EPCU’s records.

Cutting employees’ travel expenses without raising their ire can be like trying to buy dinner using change found in the sofa. In other words, it’s difficult. The federal government wants to help. If you use the fed’s per diem rates, employees can travel without having to book rooms at the Bates Motel. With per diems, you pay employees a predetermined flat, daily amount for their hotel, meals and incidental expenses, instead of reimbursing them for the full cost.

It’s crunch time for health care information reporting. Under the Affordable Care Act (ACA), all large employers—employers with at least 50 full-time employees, including full-time equivalent employees (FTEs)—must report offers of health coverage to full-time employees on Form 1095-C and file those forms, along with the transmittal, Form 1094-C, with the IRS.

Under the Affordable Care Act (ACA) you must offer full-time employees affordable group health benefits that provide minimum value, in other words, play, or pay a free-rider penalty if even one employee buys insurance on the individual exchange and qualifies for a premium tax credit. In my last blog post, we sketched out who qualifies as full-time employees. This week, I’m outlining the affordable coverage/minimum value mandates for group health plans.