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. Payce has not seen any requests for this type of payment to date.
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 Payce 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. Payce encourages all businesses to look for your letter and enroll!
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:
It’s time for vacation and summer holidays! Do you know the rules regarding vacation and holiday pay outs?