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Monthly Archives / January 2016

  • Jan 17 / 2016
What's New

2016 State Unemployment Insurance Taxable Wage Bases

State unemployment insurance taxes are based on a percentage of the taxable wages an employer pays. The Federal Unemployment Tax Act (FUTA) requires that each state’s taxable wage base must at least equal the FUTA wage base of $7,000 per employee, although most states’ wage bases exceed the required amount. Some states apply various formulas to determine the taxable wage base, others use a percentage of the state’s average annual wage, and many simply follow the FUTA wage base. For detail  please click on the link below:

http://www.americanpayroll.org/members/stateui/state-ui-2/

 

  • Jan 17 / 2016
What's New

IRS Extends ACA Reporting Due Dates

This notice is relevant to organizations who are considered an Applicable Large Employer (ALE) – employing 50 or more full-time U.S. employees, including full-time equivalents – as defined by the Affordable Care Act (ACA).

On December 28, 2015 the Internal Revenue Service (IRS) issued Notice 2016-4 extending the Form 1094-C and 1095-C due dates for both furnishing to individuals and filing with the IRS. The new IRS due dates are as follows:

  • March 31, 2016 (formerly February 1) for furnishing Forms 1095-C to employees and covered individuals.
  • May 31, 2016 (formerly February 29) for employers filing paper Forms 1094-C and 1095-C with the IRS
  • June 30, 2016 (Formerly March 31) for employers filing Forms 1094-C and 1095-C electronically with the IRS, including bulk filers.

Employee Tax Returns

Notice 2016-4 also includes guidance for employees who, as a result of the new March 31 due date to furnish forms, may not receive a 1095-C before they file their 2015 individual tax returns. For the most part, individual taxpayers who enroll in coverage will not be affected by this extension and should file their tax returns as they normally would.

Individuals who enrolled in coverage through the Marketplace, but did not receive a determination that the offer of employer-sponsored coverage was not affordable, could be affected by the extension if they choose to file their income tax return before they receive their Forms 1095-C.  Advise such individuals to consult with their own tax advisors for additional guidance.

  • Jan 17 / 2016
What's New

2016 Supplemental Wage Tax Rates

Employees are often paid special or irregular types of payments in addition to their regular wages, such as overtime pay, bonuses, and commissions. These payments are classified as “supplemental wages” and are often taxed at a flat rate for federal and state income tax withholding.

There is a two-tiered system for withholding federal income tax from supplemental wages at a flat rate:

  • Optional flat rate: 25% for supplemental wages up to and including $1 million. No other percentage is allowed.
  • Mandatory flat rate: 39.6% for supplemental wages over $1 million.

For more information, see IRS Notice 1036, revised December 2015, Early Release Copies of the 2016 Percentage Method Tables for Income Tax Withholding.

There are many states that allow flat rate withholding from supplemental wages that can be used. In 2016, there are changes for two states: North Carolina and Oklahoma:

  • North Carolina – Effective for wages paid on or after January 1, 2016, the flat rate increased to 5.85%, from 5.75%.
  • Oklahoma – Effective for wages paid on or after January 1, 2016, the flat rate decreased to 5%, from 5.25%. This is the highest withholding tax rate in Oklahoma.

Read PayState Update: Issue No. 24, Vol. 17 for more details on supplemental tax rates.

  • Jan 17 / 2016
What's New

2016 California Minimum Wage

Although there are some exceptions, almost all employees in California must be paid the minimum wage as required by state law. Effective January 1, 2016, the minimum wage in California is $10.00 per hour. There are some employees who are exempt from the minimum wage law, such as outside salespersons, individuals who are the parent, spouse, or child of the employer, and apprentices regularly indentured under the State Division of Apprenticeship Standards.
Minimum Wage Order (MW-2014)  For more information please visit:

http://www.dir.ca.gov/dlse/faq_minimumwage.htm

 

 

  • Jan 17 / 2016
What's New

Legislative Updates

  • Qualified Transportation Fringes for 2016 are as follows; $255 per month for “qualified parking” (up from $250 in 2015) and $130 per month for “transportation in a commuter highway vehicle and any transit pass” (unchanged from 2015).
  • Health Flexible spending arrangements for plan years beginning in 2016, the dollar limit under 125(i) on voluntary employee salary reductions for contributions is $2,550 (unchanged from 2015)
  • Foreign earned income exclusion for 2016, the maximum foreign earned income amount under IRC 911 (b)(2)(D)(i) is $101,300 ($101,800 in 2015 ). The maximum amount of the foreign housing cost exclusion is $14,182 ($14,112 in 2015)
  • Adoption Assistance in 2016, the maximum amount that can be excluded from an EE’s gross income for qualified adoption expenses under an employer’s adoption assistance program is $13,460 ($13,400 in 2015).
  • Jan 17 / 2016
What's New

Legislative Changes – CA

State Disability Insurance (SDI)

  • The 2016 SDI tax rate, which includes Disability Insurance (DI) is 0.9 percent (0.09).
  • The SDI taxable wage limit is $106,742 per employee, per year. This results in a maximum SDI tax withholding of $960.68 per employee per year.
  • The UI tax rate for experienced employers varies based on each employer’s experience and the balance in the UI Fund. The 2016 rates range between 1.5% and 6.2%. Rate notices are mailed in December.

California Personal Income Tax (PIT) Withholding

  • California PIT withholding is based on the amount of wages paid, the number of withholding allowances claimed by the employee, and the payroll period.
  • Jan 17 / 2016
What's New

Legislative Changes – CA

Unemployment Insurance (UI)

  • The UI taxable wage limit for 2016 is $7,000 per employee, per year.
  • The UI tax rate for new employers is 3.4% (.034) for up to three years.
  • The UI tax rate for experienced employers varies based on each employer’s experience and the balance in the UI Fund. The 2016 rates range between 1.5% and 6.2%. Rate notices are mailed in December.
  • The 2016 maximum UI weekly benefit award remains unchanged at $450.

Training Tax (ETT)

  • The 2016 ETT rate is 0.1% (.001) of the first $7,000 per employee, per year.
  • Jan 17 / 2016
What's New

Employer Reporting: Final 2015 Instructions and Forms Issued

Employers with at least 50 full-time employees (“FTEs”) (including full-time equivalent employees) in the prior calendar year (referred to as Applicable Large Employers (“ALEs”)) must comply with new reporting requirements under the Affordable Care Act (“ACA”) beginning with calendar year 2015.
Recently, the final Forms 1094-C and 1095-C were issued along with instructions. While the final Forms are substantially similar to the draft versions issued earlier this year, the final instructions provide some helpful clarifications. Notable changes include:

§ Reporting on HRAs (Form 1095-C Part III). The final instructions make it clear that an ALE with an insured group health plan and a self-insured HRA is not required to report the HRA coverage on Part III of Form 1095-C as long as the individual with the HRA coverage is also enrolled in the employer’s insured group health plan. The same is true with a self-insured group health plan with an HRA. However, reporting on the HRA is required in Part III if the individual with the HRA coverage is not enrolled in the employer’s group health plan (because, for example, he or she is enrolled in the group health plan of a spouse).1 Also, reporting on a retiree-only HRA that does not include other major medical coverage would be required. Employers may use either the Form 1095-C or Forms 1094-B and 1095-B to report this information.
§ Reporting COBRA offers (Form 1095-C Line 14). The instructions clarify that:
¬ An offer of COBRA made to a former employee upon termination of employment should not be reported as an offer of coverage on Line 14 of Form 1095-C. Instead, Code 1H (no offer of coverage) in Line 14 should be used for any month in which the offer of COBRA coverage applies.

An offer of COBRA made to an active employee as a result of a reduction in hours that resulted in a loss of health plan eligibility is reported using the same code in Line 14 as an offer of that type of coverage to any other active employee.

§ Determine monthly employee contribution (Form 1095-C Line 15). An employer may, but is not required to, divide the total employee share of the premium for the plan year by the number of months in the plan year to determine the monthly employee contribution for the plan year. This monthly employee contribution would then be reported for any months of that plan year that fall in the 2015 calendar year.
For example:
¬ If the plan year begins January 1, the employer may determine the amount to report for each month by taking the total annual employee contribution for all 12 months and dividing by 12.
¬ If the plan year begins April 1, the employer may determine the amount to report for January through March, 2015 by taking the total annual employee contribution for the plan year ending March 31, 2015, and dividing by 12, and may determine the amount to report for April through December, 2015 by taking the total annual employee contribution for the plan year ending March 31, 2016, and dividing by 12.

§ Plan Year Information Requested on Form 1095-C. In Part II there is a place for an employer to indicate the plan year start date by entering a two digit start month (01 through 12). For calendar year 2015 this is optional. Employers that do not offer group health plan coverage may use “00”. An employer that changes the plan year during the calendar year (i.e., runs a short plan year) will use the earliest applicable month. For CY 2016 reporting, it is anticipated that the IRS will require ALEs to complete this plan year information.

§ Multiemployer interim rule relief (Form 1095-C Line 16). If the employer qualifies for the multiemployer interim relief (Code 2E), then 2E will trump any other code, including 2C.

As a reminder, the Forms 1095-C for CY 2015 must be provided to all FTEs (if self-insured, to any covered individual) no later than February 1, 2016. Employers who file electronically have until March 31, 2016 to submit Form 1094-C and all Forms 1095-C to the IRS.2 Otherwise, the due date for paper delivery to the IRS is February 29, 2016.

For the final Forms and Instructions visit:

Form 1094-C http://www.irs.gov/pub/irs-pdf/f1094c.pdf
Form 1095-C http://www.irs.gov/pub/irs-pdf/f1095c.pdf
Instructions   http://www.irs.gov/pub/irs-pdf/i109495c.pdf

 

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