February 2013 wwwpwccom Agenda 2 February 2013 SVAPA Fiscal CliffAmerican Taxpayer Relief Act New York MCTMT ruling Healthcare Reform Health Coverage Reporting Medicare Increase Quality Stores Decision ID: 789420
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Slide1
Employment Tax Update: Fiscal Cliff and Other Entertaining Stuff
February 2013
www.pwc.com
Slide2Agenda
2
February 2013
SVAPA
Fiscal Cliff-American Taxpayer Relief Act
New York – MCTMT ruling
Healthcare Reform
Health Coverage Reporting
Medicare Increase
Quality Stores Decision
Federal Payroll Changes
State and Local Payroll Changes
Work Life Balance
Slide3Fiscal Cliff - An update
Employee Social Security tax rate returns to 6.2%Employers have until Feb 15 to implement new rate
Social Security fund is expected to start going bankrupt in 2033
Withholding Rate changes
Employers have until Feb 15 to implement new rates
Increase top tax rate in 2013 from 35% to 39.6%
Supplemental rate is 25%
Supplemental rate for payments greater than $1m is 39.6%
February 2013
3
SVAPA
Slide4Fiscal Cliff-An update
Transportation FringeRetroactively increases the tax-free exclusion for mass transit expenses for 1/1/12 to 12/31/12 to $240, 01/01/13 now $245
Adjustments are not optional-amended returns must be filed
Form 941 “Special Administrative Procedure’ announced in Notice 2013-8
If you provided more than $125 but less than $240 in transit benefits out of your funds or through salary reduction, it should be excluded from income.
Form 941-X
If no W-2s to SSA yet, you can VOID
If W2s have been sent, you have
to create a W2c
SVAPA
4
February 2013
Slide5Fiscal Cliff-An Update
Educational AssistancePermanently extended at $5,250
Adoption Assistance
Permanently extended and currently at $12,970
Emergency Unemployment Extended Benefits
Extended through January 1, 2014
WOTC will be retroactively extended from 1/1/12 to 12/31/13
SVAPA
5
February 2013
Slide6Fiscal Cliff-An update
Backup withholdingStill at 28%
Employer credit for employer-provided child care facilities is maintained
Child care expense credit is $3,000 for one child and $6,000 for two or more children
SVAPA
6
February 2013
Slide7New York - MCTMT
New York Metropolitan Commuter Transportation Mobility Tax ruling
A Nassau County Supreme Court decision found the MCTMT to be unconstitutional on August 22, 2012. This litigation is not concluded.
Taxpayers who have been paying this tax should continue to pay and file returns.
Protective claims and process for filing.
If this requirement changes, the New York Department of Taxation and Finance will notify taxpayers.
7
February 2013
SVAPA
Slide8Health Coverage Reporting
The Affordable Care Act requires employers to report the cost of coverage under an employer-sponsored group health plan.
Box 12, Code DD
IRS has issued a table this shows exactly what should be reported
Employer and employee portions of health care cost
Coordination with HR
Have you started gathering the data?
Are you prepared and have you tested the upload?
Coordination with vendor / W-2 preparer
8
February 2013
SVAPA
Slide9Increased Medicare Withholding
For tax years beginning after December 31, 2012, an additional 0.9% hospital insurance
tax (Medicare) applies to high-earning workers and self employed.
Code
Sec. 3101(b)(
2), employment wages
received
in excess of: $250,000 for joint returns; $125,000 for married taxpayers filing a separate return; and $200,000 in all other cases.
Under
Code Sec. 1401(b)(2), the additional 0.9%
Medicare
tax
applies
to self-employment income for the tax year in excess of the above
figures.
Employers are obligated to withhold the additional 0.9% Medicare tax only on the individual's wages in excess of $200,000 (disregard wages received by the spouse).
If the additional Medicare tax is not collected by the employer withholding, the individual is obligated to pay the tax.
There is no employer match for the additional Medicare tax.
The IRS said it does not plan to add additional boxes to Form W-2.
9
February 2013
SVAPA
Slide10Increased Medicare Withholding
FAQs provided by the IRS Married co-workers Mergers/Acquisitions Agent payments
Paymaster
941 to be changed
SVAPA
10
February 2013
Slide11Quality Stores
Sixth Circuit Affirms Quality Stores Decision on FICA Taxation of Severance Pay – Billions of Dollars in Refund Claims Are at Issue
Severance payments made to employees pursuant to an involuntary reduction in force were not "wages" for FICA tax purposes
The statute of limitations for filing a refund claim for severance payments made in 2009 closes on April 15, 2013. See §6513(c).
Where the Sixth Court decision is applicable:
Kentucky
Michigan
Ohio
Tennessee
11
February 2013
SVAPA
Slide12Federal Taxes in 2013
FICA Base $113,700
Medicare 1.45% for first $200k
2.35% for wages greater than $200k
401k, 403b $17,500
Catch up Contribution $5,500
Annual Comp Limit $255,000
Mileage 56.5 cents
Mileage for moving 24 cents
Foreign Earned Income Exclusion $97,600
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February 2013
SVAPA
Slide13Federal Taxes in 2013
Flexible Spending Limit $2,500Health Savings Account Annual deductible for individual coverage $1,250, family $2,500 Maximum annual election for
individuals $3,250 and $6,450 for family coverage
Form 941 Schedule R Agents must complete when filing an aggregate return preparing the allocation schedule
SVAPA
13
February 2013
Slide14SUTA Affects on FUTA
FUTA tax (normally $42 per employee annually) is expected to nearly triple to an average of $124 per employee by 2014.
At least 23 states have depleted state UI trust funds, and have had to draw from a special federal UI loan fund as of May 21, 2012.
Nineteen States are now FUTA Credit Reductions for 2012.
14
February 2013
SVAPA
Slide15State Income Tax Withholding - Mobility
3485/H.R. 1864, the Mobile Workforce State Income Tax Simplification Act of
2012
To limit the authority of States to tax certain income of employees for employment duties performed in other States
IN THE SENATE OF THE UNITED STATES August 2, 2012
Mr. BROWN of Ohio introduced the bill which was read twice and referred to the Committee on Finance
Letter to Senate committee from 184 employer asking the Senate to pass the bill
15
February 2013
SVAPA
Slide16Audit Activity at the State and Federal Level
IRS auditsContractor focused
Nonresident withholding
State audits
NY
CA
Locals
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February 2013
SVAPA
Slide17California Specific Items
California Garnishments: Effective July 1, 2013 Lesser of 25% of the employee’s disposable income; or the amount by which the employee’s disposable earnings for the week exceeds 40 times the state minimum hourly wage ($8/hour)
Currently 30 times
San Jose Minimum Wage
Effective 3-11-13, raised to $10 an hour for employees working in San Jose
Business Day Replaces Banking Day
Effective 1-1-13
SVAPA
17
February 2013
Slide18Work Life Balance
My life as a motivational speaker I haven’t climbed Mount Everest
I haven’t had my leg gnawed off by wild ferrets
Nine Methods of Life Balance
February 2013
Paytech
Slide19Nine Methods for Life Balance
SVAPA
Healthy Living is About More Than Diet
Being true to yourself and being present
Peace and a Positive Mind
Minimize distractions personally and professionally
The Value of a Giving Heart and Spirit
Give and you will receive
Live in your POWER
Perspective, Ownership, Wisdom, Engagement, Reward
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February 2013
Slide20Nine Methods for Life Balance
SVAPA
Work to Maximize Your Opportunities
Recognize your achievements
Happy is a Choice
Contentment and joy are lifestyles
Build Lasting Confidence
True confidence should come from a life well lived and enjoyed
8
. The Courage to Be Faithful
Faithful to who you are
Exponential Living
Comfortable with who you are, not only what you do
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February 2013
Slide21Thank you
© 2013 PwC. All rights reserved. In this document, "PwC" refers to PricewaterhouseCoopers LLP, a Delaware limited liability partnership, which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity. This document is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.