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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)

The IRS has announced a significant increase in enforcement actions for syndicated conservation easement transactions. This is a "priority compliance area" for the agency.


Treasury and the IRS are expected to release proposed rules in "early 2020" that would clarify certain limitations on the carried interest tax break, according to David Kautter, Treasury’s assistant secretary for tax policy. Kautter briefly addressed the proposed regulations’ timeline while speaking at the American Institute of CPAs (AICPA) 2019 National Tax Conference in Washington, D.C.


Hopes for a year-end tax extenders package appear to be dwindling on Capitol Hill.


Senate Finance Committee (SFC) Chair Chuck Grassley, R-Iowa, and other top Senate tax writers are calling for Senate action on the bipartisan Setting Every Community Up for Retirement Enhancement Secure bill (HR 1994) (SECURE Act). The House-approved, bipartisan retirement savings bill has remained stalled in the Senate since May.


The Senate blocked a Democratic resolution on October 23 to overturn Treasury rules preventing certain workarounds to the $10,000 state and local tax (SALT) federal deduction cap.


Treasury and the IRS on October 31 announced the release of a new, draft form implementing certain reporting requirements under the Tax Cuts and Jobs Act Opportunity Zone program.


A California-based medical marijuana dispensary corporation’s motion for summary judgment challenging the constitutionality of Code Sec. 280E was denied. The Tax Court also addressed whether Code Sec. 280E applies to marijuana businesses legally operating under state (California) law, and whether the prohibition on deductions is limited to ordinary and necessary business expenses.


The IRS has proposed regulations that define an eligible terminated S corporation (ETSC), and provide rules relating to distributions of money by an ETSC after the post-termination transition period (PTTP). The proposed regulations also extend the treatment of distributions of money during the PTTP to all shareholders of the corporation, and update and clarify the allocation of current earnings and profits to distributions of money and other property.