DID YOU KNOW?
EZ IRA – Who said saving for retirement isn’t easy?
We hear a lot about how well Americans are saving – or not – for their retirement. In that spirit, Legg Mason Global Asset Management has unveiled a payroll deduction IRA program intended to provide a way to build that savings rate.
Introducing EZ IRA from Deluxe Payroll, the easiest retirement solution ever, now offered in partnership with Legg Mason Global Asset Management. Using simple, automatic payroll deductions, EZIRA makes it hassle-free for every business – no matter how big or small – to offer a retirement benefit that attracts and retains valued employees.
- No employer contributions required
- One, small annual maintenance fee – no per-employee charges
- No Department of Labor oversight or testing required
- No 5500 form filing requirements or fiduciary liability
- No participation requirements
- Available to any size business
- Dedicated retirement savings managed by Legg Mason
- Convenient, easy set-up
- Automatic payroll deductions
- Multiple investment options: open architecture, multi-fund family and private money management
- Access to financial advisors
- Prior rollover plans accepted
How it Works
1. Simply enroll your business in the Deluxe Payroll EZ IRA program, Deluxe Payroll does all the set up.
2. Each eligible employee must complete the EZ IRA application and agreement. Employees can select how much they wish to deduct from their payroll, and whether they wish to set up a traditional or Roth IRA (based on eligibility and personal choice).
3. Each payroll period, Deluxe Payroll will automatically withhold each employee’s authorized payroll deduction and transmits the funds into the employee’s IRA.
4. Each employee is responsible for managing how his or her funds are invested/allocated, and paying the small, annual maintenance and administrative fees.
Should you have any questions or interest in learning more about this exciting product, please call Deluxe Payroll at 1-800-729-5910 and ask for Mark Marszal or Erica Boritas.
TAX NEWS AND NOTES
The dreaded tax return time has now added just one more step before your federal tax filing can be complete. Under the Affordable Care Act, individuals must now have health insurance coverage and some have found it by accessing coverage through the Health Insurance Marketplace or, more commonly known as the Exchange. On the Exchange individuals can analyze insurance options, purchase qualified health plans and if eligible, receive assistance in paying premiums or out of pocket costs. Proof of coverage is now required each tax year.
The Individual Shared Responsibility Provision also requires individuals to have qualifying coverage either through the Exchange or an employer sponsored group health plan for each month of the year or make a shared responsibility payment on their federal tax return. If the taxpayer and dependents had coverage each month of the year, simply check box 61 indicating coverage on federal filing form 1040. No further action is required. Some taxpayers are exempt from the coverage requirement of the individual shared responsibility provision (SRP) and do not have to make a shared responsibility payment when filing form 1040. Coverage exemptions are available for individuals specifically described as having a religious, economic, or other justification for not having minimum essential coverage. Taxpayers who qualify for an exemption will attach Form 8965, Health Coverage Exemptions, to their federal income tax return to claim that exemption. Taxpayers or any dependents that did not maintain minimum essential coverage for each month of their tax year and did not qualify for a coverage exemption must make an individual shared responsibility payment. The 2014 SRP and the amount is the greater of:
- 1 percent of the household income that is above the tax return filing threshold for the taxpayer’s filing status or
- The family’s flat dollar amount, which is $95 per adult and $47.50 per child (under age 18) limited to a family maximum of $285
PAYROLL HELP DESK
Recently some states have adopted the Mandatory Paid Sick Leave benefit for employees working for employers. California will put this in place effective July 1, 2015 where employees will have 3 days paid sick leave (24 hours) per year which can be accrued and is available after 90 days from hire date.
Massachusetts will also begin awarding sick leave to those employees working for an employer who has greater than 11 employees consistently in their workforce. Employees will be granted 40 hours per year and can roll over up to 40 hours each year in sick pay. Employers in this state having less than 11 employees will not be mandated to provide sick pay.
The state of Connecticut has had mandatory sick pay in effect since 2012 and many cities/states have also adopted paid sick leave policies. Deluxe Payroll can also help with your sick pay accrual requirements in accordance with your state or city regulations making sure you are compliant!
Did you know that Deluxe Payroll has an easy and affordable time and attendance solution to help manage the timekeeping additional of seasonal help? As a SwipeClock reseller, we are able to offer our clients a wide variety of time collection methods with full web-based administration. Your employees can clock in using a pin code, magnetic stripe card, proximity badge, their finger/hand scan or online. Consider these options versus a paper trail of timecards. Time and attendance systems save employers money every day and help to deter time abuse! Contact a Deluxe Payroll representative today to learn more about our customized timekeeping solutions ideally suited to meet your business needs!October 3rd, 2016
Payroll Help Desk
As we celebrate the upcoming Thanksgiving holiday, we reflect back over this year and want to extend Thanks to all of our clients, friends and partners! Caring and sharing is one of our priorities in providing top notch service. Deluxe Payroll has been able to give back this year to many businesses and charitable organizations. Our employees have joined in for our year end giving campaign as well, and will receive certificates reflecting their donated amount along with our Employer Match Campaign.
“Perhaps your business will consider a charitable organization that your employees will embrace?” Deluxe Payroll can help set up the monthly or per pay amounts to make this an easy effort in giving back.
Have a wonderful Thanksgiving holiday, from your friends at Deluxe Payroll!
Tax News and Notes
The IRS just released the 2015 Form W-4, Employee’s Withholding Allowance Certificate Employees who have claimed “Exempt” from taxes on form W-4, must complete a new Form W-4 in 2015 so employers can withhold the correct federal income tax from compensation. The new regulation stipulates that individuals cannot claim exemption from withholding in 2015 if their income exceeds $1,050 and includes more than $350 in unearned income. All new hires must also complete this form at their start of employment.
Did you know?
The IRS has announced some cost of living adjustments for year 2015 on the following items:
- Flexible Spending Accounts – voluntary salary deductions are now available up to $2,550 annually.
- Adoption Assistance – For 2015, the maximum amount that can be excluded from an employee’s gross income for qualified adoption expenses under an employer’s adoption assistance program is $13, 400 ($13,190 in 2014). The maximum amount that can be excluded in connectionw with the adoption of a child with special needs is $13,400 ($13,190 in 2014).
- Standard Deducation – 2015 increase to $12,600 for married couples filing jointly or surviving spouses (up from $12,400 in 2014), $9,250 for heads of household (up from $9,100 in 2014), and $6,300 for single taxpayers and married taxpayers filing separately (up from $6,200 in 2014).
- Personal Exemption – The personal exemption amount for 2015 is $4,000 ($3,950 in 2014).
- Social Security wage base – the 2015 social security wage base will be $118,500, an increase of $1,500 from the 2014 wage base of $117,000. The FICA tax rate, which is combined social security tax rate of 6.2% and the Medicare tax rate of 1.45%, will be 7.65% for 2015 up to the social security wage base. The maximum social security tax employees and employers will each pay in 2015 is $7,347. This will be an increase of $93 for employees and employers.
- 401k, 403b and most 457 plans – increased from %17,500 to $18,000. The catch up contribution limit for employees aged 50 and over, are increased from $5,500 to $6,000.
- IRA contributions remains unchanged at $5,500. The catch up also remains at $1,000.
It’s almost W-2 time! While we are working hard preparing your W2 statements for January there has been a push to accelerate the W2 filing deadline in an effort to minimize fraud. Similar proposals were also in President Obama’s proposed fiscal year 2015 budget. Fraud is a major concern for many! The US Government Accountability office conducted a report in September addressing theft refund fraud. The report suggested that the IRS should investigate the possibility of accelerating filing dates to reduce this type fo fraud. To date, there has been no announcement of the new deadline for filing W2’s or 1099-MISC forms.
In association with tax refund and combating fraud through identity theft, the IRS has new procedures effective January 2015 to limit the number of refunds electronically deposited into a single financial account or prepaid debit card to three. Any subsequent refunds automatically convert to a paper refund check and will be mailed to the taxpayer. This limit is imposed to prevent criminals from easily obtaining multiple refunds. Most will not be affected by this new procedure and are encouraged to continue using direct deposit for prompt and safe refunds.
The IRS has seen an increase in business identity theft. Unfortunately, stolen business entity is used to file fraudulent individual tax returns and obtain the tax refunds of their victims. As a result the IRS is keeping track of business accounts that have been victims of stolen identity.
Dates to Remember
Thursday, November 27th, 2014 – Deluxe Payroll and Banks are closed
Thursday, December 25th, 2014 – Deluxe Payroll and Banks are closed
Thursday, January 1st, 2015 – Deluxe Payroll and Banks are closedOctober 3rd, 2016
Did You Know?
I-9 and E-Verify easily verify employment:
The fast, easy free web-based E-Verify electronic system has a partnership between the U.S. Department of Homeland Security (DHS) and the Social Security Administration (SSA) allowing an employer to verify newly hired employees. What is interesting is that it works seamlessly with form I-9. An employer must complete form I-9 when the employee begins work and can enter form I-9 information into E-Verify for a new hire no later than the third business day after the employee’s start date. Each case submitted will receive a Verification or Tentative Non-confirmation which means that form I-9 did not match the DHS or SSA databases. Job seekers can also make sure their records are accurate before an employer checks their employment eligibility by visiting www.uscis.gov/everifyselfcheck .
Many states have already enacted legislation requiring mandatory use of E-verify. Nearly 24 million cases run in 2013 and as of August this year 22.8 million cases have been run by employers. Employers can take advantage of free webinars to learn the advantages of using E-Verify. Visit www.dhs.gov/E-Verify to learn more.
Tax News & Notes
On July 28th the 2014 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds includes projected increases within the social security system wage base. This report estimates that the social security wage base will be $119,100 in 2015. This represents an increase of $2,100 from this year’s wage base of $117,000. Employee’s wages are currently taxed at 6.2% of the first $117,000 wages.
The formal announcement for the wage base increase will be published in October. More information about the annual projected increase is available on the Social Security Administration’s website at www.ssa.gov/OACT/TR/2014/
Payroll Help Desk
Deluxe Payroll is committed to informing you about the changes in the Affordable Care Act that may affect your business. As of July 2014, federal guidance has updated information for businesses qualifying for transitional relief. But first let’s determine if your business is an “applicable large employer” (ALE) for 2015:
- ✓ An ALE is any organization with at least 50 full-time equivalent employees
- ✓ When counting employees, include all entities owned by a single controlling group. For example, an employer owning 10 franchised eateries would include all 10.
- ✓ Include all employees subject to FLSA, and exclude self- employed individuals like Sole Proprietors, LLP’s, LLC’s, 2% + Shareholders in corporations or correctly classified independent contractors.
- ✓ Calculate the number of full-time equivalents for the year (for 2014 only, a 6-month period of your choosing can be used)
- – Start with the number of full-time employees each month in the year and add any employee who averaged over 30 hours per week
- – For each month, add in full-time equivalents by taking the total number of hours worked (for employees working under 30 hours per week) divided by 120, rounding the fractions to the nearest one hundredth
- – Add the sum of FT and FTE count to get your monthly ACA total employees. You may exclude Seasonal workers who work less than 4 months
- ✓ Based on the calculated ACA count:
- – Under 50: you are not a Large Employer
- – Between 50-99: you are a Large Employer for 2015; however, you may be eligible for Transition relief to avoid “pay or play penalties” until 2016.
- – Over 100: Your business is a Large Employer for 2015, but may also be eligible for short-term transition relief.
- To see if your business is eligible for transition relief go to http://www.gpo.gov/fdsys/pkg/FR-2014-02-12/pdf/2014-03082.pdf
- Deluxe Payroll can provide monthly reporting of employee hours for ACA compliance, and can assist in determining your large employer status using the calculations above. Please contact your Deluxe Payroll representative for assistance.
National Payroll week is September 1 – 5. Every year, as payroll professionals, we celebrate this week at Deluxe Payroll because it is an honor to compute and deliver to our employers their valued employee paychecks. At present there are over 156 million wage earners in America! Did you know that 68.9% of the annual revenue of the United States Treasury is attributed to workers’ tax withholding through each paycheck. Celebrate along with us as we enjoy getting paid in America!October 3rd, 2016
Did You Know?
BITCOIN, a Virtual form of Currency and wage payments:
Digital currencies like Bitcoin can be used to pay wages owed to employees. Digital payments made to employees are considered taxable and must be reported on form W2 (annual Wage and Tax Statement). According to the IRS, the wages are subject to payroll taxes and federal income withholding covering past and future payment transactions as of March, 2014.
Payments using virtual currency made to independent contractors would also be taxable and self-employment tax rules would apply. Deluxe Payroll has not seen any requests for this type of payment to date.
Tax News & Notes
As each New Year begins, employer tax frequencies can change as well. The frequency of your federal 941 payments sent to the IRS are determined by a lookback period of tax liabilities paid in the previous years from July 2012 through June 2013. For the 2014 Monthly payment schedule, your 941 tax deposit should not have exceeded $50,000. Any amounts over the $50,000 would require your company to file on the most accelerated method of Semi-weekly depositor. The lookback period allows the IRS to see the annual amount of taxes paid and if the employer tax frequency should be adjusted in frequency to meet their deposit requirements.
The IRS will always communicate by mail and will notify your business before the new year begins. Notices will arrive only if the frequency changed. Please forward your change notifications immediately to our Deluxe Payroll Tax Department for any federal or state changes.
The easiest way to monitor your company tax payments is to use the IRS Electronic Federal Tax Payment System (EFTPS) at www.eftps.com. EFTPS will reflect all payments made by your company or by your third party provider. Recently the IRS began mailing notices to small businesses announcing the benefits of using EFTPS and included a unique PIN # for each business to enroll immediately. The IRS wants to encourage tax payment awareness and the employer responsibility to monitor the tax payments. Deluxe Payroll encourages all businesses to look for your letter and enroll!
Payroll Help Desk
Many states are either in the process or have already approved minimum wage increases for low wage earners. Maryland has elected to gradually increase wages over a period of time in order to ease the effect on employers beginning at $8 in January 2015 and ending at $10.10 per hour effective July 18, 2018.
Employers should be mindful of wage garnishments in payroll where deduction amounts will change as wage rates increase. Consider the possible issues of paying the same employee(s) whose minimum wage has now been increased:
- Under current federal law, to garnish wages, an individual’s minimum disposable earnings must be 30 times the federal hourly minimum wage of $7.25, or $217.50 a week. Now, an employee making the higher hourly wage will change the amount of minimum take home per week.
- Several states apply 40 times the federal minimum wage, two states apply 50 times the federal minimum wage and a few years ago, Washington changed its statutory exemption formula to 35 times the federal minimum wage, from 30. States may substitute the federal minimum wage for the state minimum wage, however, when the state wage rate increases, it is important to ensure systems are updated for the first pay day on or after the change.
- If the federal government were to increase the minimum wage then a statutory exemption based on the federal minimum wage would possibly be greater than that of a state minimum wage. In referencing statutory exemption, whatever provides the higher rate of pay to the employee is what the employer must use.
- As minimum wage rates change, employees may want to complete a new W4 form or applicable state withholding form to increase withholding on larger net incomes.
It’s time for vacation and summer holidays! Do you know the rules regarding vacation and holiday pay outs?
- Fair Labor Standards Act (FLSA – US Department of Labor) does not require payment for time not worked such as vacation, sick time, holiday etc. However, each employer should refer to their handbook for the company rules regarding leave payouts surrounding a holiday and/or vacation time.
- In order to avoid confusion, review your handbook with all employees so they are aware of the company policies regarding leave payouts.
- Pay periods for an employer can include a combination of regular hours worked and holiday or leave pay (vacation, sick, PTO time off). If the number of regular hours worked does not exceed 40/week, FLSA states that any leave pay hours during the pay period issued in conjunction with regular hours will not require overtime payment.
Payroll Help Desk
There will certainly be some attention given to the current Insurance Marketplace (Exchanges) opening on October 1st. Estimations of over 17 million uninsured are expected to begin shopping for health insurance designed to comply with the Affordable Care Act.
As part of Act, all Americans will need to be insured starting in 2014, or pay a penalty. Companies with 50+ employees will be required to provide health insurance to their employees, while employees at smaller companies that do not provide insurance will need to purchase their own.
Individuals can begin the planning stages for their mandated insurance options by visiting their state insurance marketplace, commonly referred to as the “Exchange”. Small businesses can also utilize the exchanges to select a Carrier Option to offer their employees, known as Employer Choice. Using this option, the employer can choose one plan among selected insurers (carriers) or they can opt to select one of the “metal plans” (Platinum, Gold, Silver or Bronze) and then employees can choose among all the health carriers that offer coverage for that particular “metal” level.
In short, every small business is different and their needs are unique. Our approach is to inform businesses of their options. SHOP (Small Business Health Options Program) is located on the web! For more information on the Marketplace go to www.healthcare.gov. Deluxe Payroll will continue to provide updates as the Affordable Care Act is rolled out.
Tax News and Notes
The impact of the Affordable Care Act on self-insured health plans (commonly known as Health Reimbursement arrangements or Medical Reimbursement plans) will now require payment of PCORI (Patient Centered Outcomes Research Institute) fees of $1 Per Member, Per Year (PMPY) from 2012 to 2018. The new annual excise tax must be reported on IRS form 720. This form is not a payroll tax form and therefore, will not be supplied by Payce.
Assessment of fees is based on the average number of lives covered in the plan for the prior year. The PCORI fees must also be calculated on each employee as well as spouse and any number of dependents associated with each employee. For the plan year 2012 the tax was due by July 31st. The fee will rise to $2 for 2014 PMPY. Although form 720 is filed quarterly, the PCORI fees are to be filed annually. Self-insured plans with fiscal year ending 1/31/13 through 9/30/13 will not file their first submission until 7/31/14. If you have a self-insured plan feel free to contact your accountant for more information on PCORI fees and form 720 preparation.
Did You Know?
What is Unemployment Integrity? According to the Trade Adjustment Extension Act of 2011 state Unemployment agencies must not be able to relieve employers of unemployment benefit charges to their accounts if the following occur:
- Unemployment insurance benefits were improperly paid to a previous employee because the employer or their agent did not respond in a timely fashion to the state agency’s request for information relating to the employee claim
- The employer or agent continues to fail to respond timely to future claims or does not respond adequately to all requests for information by the state where unemployment insurance is claimed.
In plain terms, every employer should answer the state requests for information on previous employees immediately, even if there is no contest to the claim. The federal requirement for compliance supported by this Act will be in full force and effect by October 21, 2013. If a “pattern of failure” continues it could result in flat rated penalties to the employer on the first occurrence and escalated fees thereafter. If lack of response continues, the employer can be held liable for charges paid and/or loss of all further appeal rights.
If you would like assistance with Unemployment claim management please contact your Deluxe Payroll specialist today.
As part of the Patient Protection and Affordable Care Act, seasonal employees working 120 days or less are not expected to be offered health insurance coverage. The Act provides an exception for employers of seasonal workers who perform services such as retail workers employed during the holiday season or agricultural workers. Here is how the calculation works:
If the employer’s workforce exceeds 50 full time employees for 120 days or less per calendar year and if, the employees in excess of 50 were seasonal, then the employer is not considered an “applicable large employer”.October 3rd, 2016
Payroll Help Desk
For those employers who rely on Payroll Service bureaus to assist with payroll, you are in good hands. Within the last four years, payroll services have been put to task to keep you in compliance with economic stimulus measures like Make Work Pay, 2009 Consolidated Omnibus Budget Reconciliation Act health insurance subsidy, The 2010 Hiring Incentives to Restore Employment Act, and recently, healthcare reform under the Patient Protection Affordable Care Act (PPACA). These do not include drastic hikes in unemployment rate changes, enforcement of wage and hour laws and a great deal of state wide changes like conforming to the Health Care Act (or not), and tax treatment for same sex couples.
Next on our list of helping clients work through the maze of compliance issues is our 2014 Healthcare Checklist. Your company should prepare now (2013) for these requirements.
- If you are an employer with 50 or more Full Time Equivalent Employees (FTE) you must calculate how many FTE’s you have by adding the monthly hours worked by part-time or seasonal employees and divide that by 120. Add this number to your count of FTE’s (working 130 hours or more in each month). You will now have your sum total of FTE’s. There will be lookback periods assigned to this calculation, meaning 2013.
- Be informed within your state, as every state must have an operational exchange by January 1, 2014. If your state refuses to set up an exchange it will default to the federal exchange.
- If your business currently has a health plan for employees, know your “essential health benefits”. Your plan must include essentials such as Emergency and ambulatory services, hospitalization, maternity and newborn care, mental health and substance use services including behavioral health treatment, rehabilitative and habilitative services, laboratory services, preventative (wellness) services, pediatric services including oral and vision care and a prescription drug plan.
- Be prepared for higher costs associated with market reforms and reporting requirements.
Tax News & Notes
As part of the American Taxpayer Relief Act signed on January 2nd by President Obama a 39.6 percent bracket for high-income earners was put into effect, along with other changes. This rate also applies to the required flat-rate withholding tax on supplemental wages an employee receives that total more than $1 million in a year. The optional flat rate for supplemental wages under $1million remains at 25%.
U.S. Citizenship and Immigration Services (USCIS) has issued the revision of Form I-9 Employment Verification Form. Pay attention to the revision date on the current forms you have on file for each employee. USCIS advises that employers should use the new version of this form immediately. After May 7, 2013 only this newest version dated March 8, 2013 is acceptable. The new form is now two pages long and has three sections. The first section must be completed on the first day of hire. Do not file this form with USCIS. Keep the form on file for each person on payroll as long as the individual works for your company. If the employee is terminated keep this form for up to three years after the date of hire or one year after the date the employment ended, whichever is later. The new I-9 form is located at http://www.uscis.gov/files/form/i-9.pdf.
Did You Know?
President Obama announced in February his plan to raise the federal minimum wage amount to $9 by the end of 2015. The current federal minimum wage has been $7.25 since 2009.
Did you know that tipped employee’s minimum wage in many states is currently $2.13 per hour? It is assumed that the tipped employee will make the difference between $2.13 and the minimum of $7.25 in tips received. Proposed legislation in Congress this year would raise the $2.13 for the first time since 1991. New Mexico and 12 other states use this hourly wage for their waitstaff’s minimum wage. This rate is known as the federal level for tipped employees which has not been increased correspondingly as the prices for everything has risen. This wage represents about 29% of the current minimum wage which has been raised four times since 1991. This is food for thought on your next dining out adventure.