Social Security – The Social Security wage base increases in 2017 to $127,200, up $8,700 from 2016’s cap. The Social Security tax rate on employers and employees remains at 6.2%. The employer’s share of Medicare tax stays at 1.45% of all pay. The employees’ share is 1.45% too, but they also pay the 0.9% Medicare surtax on wages that exceed $200,000 for singles and $250,000 for married couples. This extra levy doesn’t hit employers. Self-employeds are also subject to the surtax.
Social Security recipients see a tiny 0.3% hike in their benefits in 2017. The earnings test limits head up, too. Individuals who turn 66 in 2017 do not lose any benefits if they earn $44,880 or less before they reach that age. People who are age 62 through 65 by the end of 2017 can make up to $16,920 before they lose any benefits. There is no earnings cap once a beneficiary turns 66. The amount needed to qualify for coverage climbs to $1,300 a quarter. So earning $5,200 anytime during 2017 will net the full four quarters of coverage.For questions pertaining to your social security withholding or taxable earnings contact the professionals at Aberdare Business Solutions. You can reach us Monday through Friday at 281-599-3380 or send us an email at email@example.com
Can you rely on IRS’s frequently asked questions as legal authority? Generally, no the agency says privately.
There are some exceptions, such as in cases where the FAQ’s have been published in the Internal Revenue Bulletin, or when the Service otherwise indicates that the items constitute formal authority and can be used to sustain a legal position.
Otherwise, they are informal guidance, similar to statements found in IRS publications and private letter rulings. If you need IRS review of findings or additional explanations of IRS rules and regulations please contact the professionals at Aberdare Business Solutions. We are available to assist in making sense of the IRS paperwork and making sure you understand notices that you may be recieving. Call us today at 281-599-3380.
Here are a few tips to nurture your common sense:
Dealing with Disasters – With hurricane season approaching, think about disaster preparedness. IRS has some suggestions.
· Safeguard tax records in a protected place.
· Scan important papers into electronic format and make sure to have backup copies.
· Take pictures or videos of the content of your home or business premises, and store images off-site.
Aberdare Business Solutions has an updated RECORDS RETENTION GUIDE. If you would like one sent to you please contact the professionals in our office and we will be happy to mail or email one for your business and personal records. Call Us Today!! 281-599-3380.
Social Security Numbers and Employee Name Reporting Errors
When there is a mismatch in the employee name and/or Social Security number (SSN) as reported on Forms/N-2, compared to records at the Social Security Administration, the wage information reported with the mismatched name posted to suspense, any employee with a non-matching SSN on Form W-2 will lost benefits to which he or she is entitled.
In the case of information returns, such as Form 1099-MISC, under present rules the employer can establish “reasonable cause” for failure to match names and tax identification numbers (TINS), by presenting a properly completed From W-9 (Request for Taxpayer Identification Number and Certification). However, employers do you have an equivalent document to prove due diligence for Form W-2 reporting. Form W4 (Employee’s Withholding Allowance Certificate) has been suggested for this purpose, but there is no current requirement that every employee must file Form W-4 with the employer.
Under the Internal Revenue Code, the penalty for reporting invalid SSN’s on Form W-2 without reasonable cause, may be imposed if the number of incorrectly reported SSN’s for a tax year exceeds the greater of 1- or 0.5% of the information returns required to be filed. The maximum penalty under Code section 6722 is $50 for each incorrect payee statement, up to a maximum aggregate penalty of $100,000 per filer for the tax year.
“Reasonable Cause” Had Been Clarified As An Employer Defense
Employers penalized for putting an incorrect SSN on a Form W-2 are now helped by a seemingly more lenient IRS view of “reasonable cause,” based on the employee’s failure to provide a correct SSN. Specifically, the IRS requires only three things for the “reasonable cause” defense to apply:
· that the employer received an SSN from the employee
· that the employer relied on that number in good faith, entering it into its payroll records and putting it on the employee’s Form W-2; and
· that the employer later received a penalty notice from the IRS notifying the employer that the employee’s SSN was incorrect
In practical terms, the IRS says, “reasonable care” by the employer, justifying waiver by the IRS of the penalty, could work as follows. The employer would have to show that it made an initial request for the employee’s SSN, normally done routinely when the employee begins working for the employers; and that the employer indeed received the SSN from the employee, usually on Form W-4. The employer would not be required to make a further solicitation for the employee’s SSN unless the IRS notifies the employer that the employee’s SSN is incorrect, for example by means of a penalty notice. An employer which receives such a notice may be required to make up to two annual requests after receiving the notice.
If you need assistance with matters relating to 1099's or W2 Social Security Match issues please contact the professionals at Aberdare Business Solutions at firstname.lastname@example.org or 281.599.3380,
Tax Laws Small Business Owners Should Know About
When it comes to taxes, there is no such thing as being over prepared. Unfortunately for busy small business owners, keeping up with the rapidly changing federal and state tax laws can feel like a burden. However, it's crucial to pay attention to your tax responsibilities in order to maximize deductions and prevent liability problems in the future. Whether you hire an outside agency or have an internal accountant helping sort out your finances, here are four important things for small business owners to know about federal income taxes in 2017.
1.) Affordable Care Act: Any business owner who is defined as an applicable large employer (ALE), under the Employer Shared Responsibility Provision (ESR) of the Affordable Care Act (ACA), must include a detailed reporting of healthcare coverage. Businesses with fewer than 50 full-time equivalent employees are exempt from penalties (also known as the Employer Shared Responsibility Payment or "Play or Pay" penalty) faced by larger employers that do not offer coverage. Additionally, you may be eligible for the Small Business Health Care Tax Credit if you cover at least 50% of your full-time employee's premium costs and you have fewer than 25 full-time equivalent employees.
2.) Bonus Depreciation: Under the PATH act, bonus depreciations will expire in 2020. Bonus depreciations are a tax break that allow businesses to deduct 50% of the costs for new capital equipment, such as hardware or software, when it is purchased. However, the percentage will be decreased each year until it expires. In 2017, the deduction will remain at 50%. In 2018, it will be decreased to 40%, and in 2019, it will be decreased to 30%. It may be in your business' best interest to invest in new equipment this year to take advantage of this deduction.
3.) Work Opportunity Tax Credit: The Work Opportunity Tax Credit incentivizes employers to hire certain target individuals, including military veterans, who have been out of work for 27 weeks or more. Through the PATH Act, this credit has been extended through 2019. Eligible businesses can receive up to 40% of qualified first year wages up to $6,000 through this credit.
4.) R&D Tax Credit: A change through the PATH ACT gives businesses that make less than $50 million annually and invest heavily in research the opportunity to offset the R&D credit against the alternative minimum tax (AMT). Businesses that specialize in areas like construction, software, aerospace subcontracting, bio-tech, and manufacturing can leverage this if they have engineers, scientists or product development employees on staff. Section 121(c) of the PATH Act also adds a new section to IRC 41 stating that qualified small businesses will be able to elect to use part of the current-year credit, all of the current-year credit, or even a carryforward credit against payroll tax. This will allow smaller businesses that may not have a lot of regular income tax liability to still take advantage of the R&D credit benefit.
Save yourself time and stress this tax season by working with our trusted Aberdare Business Solutions advisers. For more information or a business evaluation please call our office at 281.599.3380 or email email@example.com
Even though we are mid way through the tax year, it never hurts to just brush up on a few of the 2017 tax changes for the year and see if they impact you. This gives you 6 months to make any adjustments necessary, to bring you to a good place by the end of the year.
****The Social Security wage base increases in 2017 to $127,200, up $8,700 from 2016’s cap . The Social Security tax rate on employers and employees remains at 6.2%. The employer’s share of Medicare tax stays at 1.45% of all pay. The employees share is 1.45%, too, but they also pay the 0.9% Medicare surtax on wages that exceed $200,000 for singles and $250,000 for married couples. This extra levy doesn’t hit employers. Self-employeds are also subject to the surtax.
Social Security recipients see a tiny 0.3% hike in their benefits in 2017. The earnings test limits head up, too. Individuals who turn 66 in 2017 do not lose any benefits if they earn $44,880 or less before they reach that age. People who are age 62 through 65 by the end of 2017 can make up to $16,920 before they lose any benefits. There is no earnings cap once a beneficiary turns 66. The amount needed to qualify for coverage climbs to $1,300 a quarter. So earning $5,200 anytime during 2017 will net the full four quarters of coverage.
**** Businesses that hire the long-term unemployed get a tax credit . The work opportunity tax credit is expanded to cover employers that hire people who’ve been out of work for 27 weeks or more and received unemployment benefits. The 40% credit on the first $6,000 in wages applies for those beginning work after 2015.
**** The 2017 standard mileage rate for business driving falls to 53 -1/2 cent a mile, a 0.5 cent drop . The rate decreases to 17 cent a mile for travel for medical purposes and job-related moves. But the rate for charitable driving remains at 14cent per mile.
If you have questions or would like to arrange a meeting to see how these changes impact your business please do not hesitate to contact our office to set up a meeting or conference call with one of our professionals. Aberdare Business Solutions 281.599.3380
Combating payroll tax fraud is a high priority for IRS and the Justice Dept. Department Of Justice is pursuing an increasing number of civil injunctions against businesses, and their officers, that have repeatedly failed to deposit taxes withheld from workers.
These serial offenders must timely pay their employment taxes and notify the Service after making payroll deposits. They can’t transfer assets or establish a new business until the bill is fully paid. There are more criminal prosecutions of willful violators, too.
If you need assistance processing your payroll or calcuating your payroll taxes contact the payroll professionals at Aberdare Business Solutions, where are ready to assist. 281.599.3380