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PAYROLL TAX AND REPORTING REQUIREMENTS FOR 2019

 Federal Income Tax Withholding Changes

Due to the inflation indexing provisions and other changes contained in the Internal Revenue Code, new withholding tables must be used for wages paid after December 31, 2018.

 Social Security (FICA) Tax

For 2019, the employee tax rate for social security will remain unchanged at 6.2%, as well as the Medicare tax rate of 1.45%. The 2019 social security wage base limit increases to $132,900 from the $128,400 in 2018. There is no wage base limitation for Medicare.

 Additional Medicare Tax

For 2019, the additional Medicare Tax will remain in effect. An employer must withhold additional Medicare Tax from wages it pays to an individual in excess of $200,000 in a calendar year, regardless of the individual’s filing status or wages paid by another employer. The additional tax rate is 0.9%. If you have any questions regarding this please contact us.

Federal Unemployment Tax

The federal unemployment tax rate remains at 0.6% for 2019.

 Payroll Tax Deposits

Because of the complexity of the Federal, State and Local Tax Deposit Rules, we suggest using a professional payroll company to prepare your company’s payroll. If you have any questions regarding your specific deposit rules, please contact us.

Forms 1094 and 1095

The Affordable Care Act’s reporting requirements for healthcare plan coverage information apply to all employers with 50 or more full-time or full-time equivalent employees during the previous year. Employers of all sizes that offer employer-sponsored self-insured coverage will also need to report information to the Internal Revenue Service and to individual employees. Form 1095’s must be provided to employees by March 4, 2019 and filed with the Internal Revenue Service by

February 28, 2019. If you have any questions regarding this, please contact us.

S Corporation Shareholders

Health insurance premiums paid by an S Corporation on behalf of 2.0% shareholder employees must be included in income for Federal purposes and reported on form W-2. Please contact us if you have any questions regarding this.

 New Hire Reporting

Employers are required to submit to the Commonwealth of Pennsylvania a New Hire Report for each new employee within 20 days of the first day that the employee performs services for wages. There are several methods to report this information to the Commonwealth of Pennsylvania. Visit their website at http://www.cwds.pa.gov for more information.

 Verification of Eligibility of Employment

All employers are required to obtain and keep on file a completed Form I-9 Employment Eligibility Verification for each employee upon hiring.

 Minimum Wage

Federal and Pennsylvania minimum hourly wage rates remain at $7.25. New Jersey minimum hourly rate increases to $8.85 effective January 1, 2019. For minimum wage rates for tipped employees or any other questions, please contact us.

Pension Plan Limitations

Some pension plan limitations have increased for the year 2019. If you have any questions regarding these limitations, please contact us.

 Overtime Rules

The U.S. Department of Labor issues regulations regarding overtime provisions. If you have any questions regarding these provisions, please contact us.

 Employee’s Personal Use of Employer Provided Vehicle

An employer must include annually the value of an employee’s personal use of a business vehicle in an employee’s gross wages. Please contact us if this applies to any of your employees or if you need more information.

Form 1098

Mortgage interest of $600 or more received in the course of a trade or business from an individual must be reported to the payer on a Form 1098 by January 31, 2019. A copy must also be filed with the Internal Revenue Service by January 31, 2019.

 Forms 1099

A Form 1099 MISC must be issued to any person or non-incorporated entity to which you have paid at least $600 in rents, services and certain other income payments. Form 1099 MISC must be filed with the Internal Revenue Service on or before January 31, 2019, when you are reporting nonemployee compensation payments in Box 7. Otherwise, file by February 28, 2019. The due date for furnishing payee statements remains at January 31, 2019.

Beginning January 1, 2018, anyone that makes the following payments is required to withhold from such payments 3.07% Pennsylvania tax:

NOTE: Withholding is optional for payors or lessees paying less than $5,000 annually. However, if you are unsure of the total amount of payments that will be made during the year, the Department encourages you to withhold and remit income tax from all payments made.

Please contact us if this applies to any of your subcontractors or if you need more information.

 Household Employees

If you pay someone to perform household duties you may be subject to payroll reporting requirements. Please contact our office if you are not sure of the applicability of this.

This letter does not cover all issues and changes related to payroll, payroll taxes and other reporting and compliance matters. It is intended only to provide limited information that may be applicable to your business. These rules and regulations are not all encompassing and there may be specific situations that need to be addressed individually. Please contact us if you need more specific information on any of the topics addressed in this letter.

Pursuant to Treasury Regulations, any U.S. federal tax advice contained in this communication, unless otherwise stated, is not intended and cannot be used for the purpose of avoiding tax-related penalties.

If you have any questions regarding the above information, please contact us at (610)366-7300 or through our website at www.lencpas.com.

BEST WISHES FOR A HAPPY AND PROSPEROUS 2019!

 

December, 2018

Tax Alerts
Tax Briefing(s)

President Trump on March 27 signed the $2 trillion bipartisan Coronavirus Aid, Relief, and Economic Security (CARES) Act ( P.L. 116-136). The House approved the historically large emergency relief measure by voice vote just hours before Trump’s signature. The CARES Act cleared the Senate unanimously on March 25, by a 96-to-0 vote.


Lawmakers are continuing talks on a "phase four" economic relief package in response to the COVID-19 global pandemic. To that end, the House’s "CARES 2" package is currently in the works and could see a floor vote as early as this month.


The IRS announced on March 30 that distribution of economic impact payments in response to the coronavirus (COVID-19) pandemic would begin in the next three weeks. On April 1, the Treasury Department clarified that Social Security and Railroad Retirement benefit recipients who are not required to file a federal tax return will not have to file a return in order to receive their economic impact payment.


The Treasury Department and IRS have provided a notice with additional relief for taxpayers, postponing until July 15, 2020, a variety of tax form filings and payment obligations that are due between April 1, 2020 and July 15, 2020. Associated interest, additions to tax, and penalties for late filing or late payment will be suspended until July 15, 2020. Additional time to perform certain time-sensitive actions during this period is also provided. The notice also postpones due dates with respect to certain government acts and postpones the application date to participate in the Annual Filing Season Program. This notice expands upon the relief provided in Notice 2020-18, I.R.B. 2020-15, 590, and Notice 2020-20, I.R.B. 2020-16, 660.


synopsisThe Treasury Department and the IRS have released the "Get My Payment" tool to assist Americans in receiving their “economic impact payments” issued under the bipartisan Coronavirus Aid, Relief, and Economic Security (CARES) Act ( P.L. 116-136). The free tool went live on April 15, and is located at https://www.irs.gov/coronavirus/get-my-payment.


As a result of the retroactive assignment of a 15-year recovery period to qualified improvement property (QIP) placed in service after 2017, QIP generally qualifies for bonus depreciation, and typically at a 100 percent rate. IRS guidance requires taxpayers who previously filed two or more returns using what is now an "incorrect" depreciation period (usually 39 years) to file an accounting method change on Form 3115, Application for Change in Accounting Method, to claim bonus depreciation and/or depreciation based on the 15-year recovery period. The automatic consent procedures apply. If only one return has been filed, a taxpayer may either file Form 3115 or an amended return. No alternatives to filing Form 3115 or an amended return are provided.


The IRS has issued guidance providing administrative relief under the Coronavirus Aid, Relief and Economic Security (CARES) Act ( P.L. 116-136) for taxpayers with net operating losses (NOLs).


The IRS is allowing taxpayers to file by fax Form 1139, Corporation Application for Tentative Refund, and Form 1045, Application for Tentative Refund, for certain coronavirus relief, a senior IRS official said on April 13. On the same day, the IRS unveiled related procedures for claiming quick refunds of the credit for prior year minimum tax liability of corporations and net operating loss (NOL) deductions ( https://www.irs.gov/newsroom/temporary-procedures-to-fax-certain-forms-1139-and-1045-due-to-covid-19).


The IRS has released guidance on making the following elections for the business interest deduction limitation:


The IRS has set forth rules for BBA partnerships to file amended returns to immediately get benefits under the Coronavirus Aid, Relief, and Economic Security (CARES) Act ( P.L. 116-136). "BBA partnerships" are those subject to the centralized partnership audit regime established by the Bipartisan Budget Act of 2015 (BBA) ( P.L. 114-74). The procedure allows BBA partnerships the option to file an amended return instead of an Administrative Adjustment Request (AAR) under Code Sec. 6227.


The IRS has announced that the employment tax credits for paid qualified sick leave and family leave wages required by the Families First Coronavirus Response Act ( P.L. 116-127) will apply to wages and compensation paid for periods beginning on April 1, 2020, and ending on December 31, 2020. Additionally, days beginning on April 1, 2020, and ending on December 31, 2020, will be taken into account for the credits for paid qualified sick leave and family leave equivalents for certain self-employed individuals as provided by the Act.


The IRS has provided penalty relief for failure to deposit employment taxes under Code Sec. 6656 to employers entitled to the new refundable tax credits provided under the Families First Coronavirus Response Act (Families First Act) ( P.L. 116-127), and the Coronavirus Aid, Relief, and Economic Security (CARES) Act ( P.L. 116-136). The relief is provided the extent that the amounts not deposited are equal to or less than the amount of refundable tax credits to which the employer is entitled under the Families First Act and the CARES Act.