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PAYROLL TAX AND REPORTING REQUIREMENTS FOR 2017

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, 2016.

Social Security (FICA) Tax

For 2017, the employee tax rate for social security will remain unchanged at 6.2%, as well as the Medicare tax rate of 1.45%. The 2017 social security wage base limit increases to $127,200 from the $118,500 in 2016. There is no wage base limitation for Medicare.

Additional Medicare Tax

For 2017, 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 .9%. If you have any questions regarding this please contact us.

Federal Unemployment Tax

The federal unemployment tax rate remains at .6% for 2017.

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 2, 2017 and filed with the Internal Revenue Service by February 28, 2017. 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% 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.

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, 2017. A copy must also be filed with the Internal Revenue Service by February 28, 2017.

Minimum Wage

Federal and Pennsylvania minimum hourly wage rates remain at $7.25. New Jersey minimum hourly rate increases to $8.44. 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 2017. 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.

Forms 1099

A Form 1099 MISC must be issued to any person or nonincorporated entity to which you have paid at least $600 in rents, services and certain other income payments. New Filing Date - Form 1099 MISC must be filed with the Internal Revenue Service on or before January 31, 2017, when you are reporting nonemployee compensation payments in Box 7. Otherwise, file by February 28, 2017. The due date for furnishing payee statements remains at January 31, 2017.

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 2017!

December, 2016

Tax Alerts
Tax Briefing(s)

Lawmakers from both parties spent much of June debating and discussing tax reform, but without giving many details of what a comprehensive tax reform package could look like before year-end. At the same time, several bipartisan tax bills have been introduced in Congress, which could see their way to passage.


The much-anticipated regulations (REG-136118-15) implementing the new centralized partnership audit regime under the Bipartisan Budget Act of 2015 (BBA) have finally been released. The BBA regime replaces the current TEFRA (Tax Equity and Fiscal Responsibility Act of 1982) procedures beginning for 2018 tax year audits, with an earlier "opt-in" for electing partnerships. Originally issued on January 19, 2017 but delayed by a January 20, 2017 White House regulatory freeze, these re-proposed regulations carry with them much of the same criticism leveled against them back in January, as well as several modifications. Most importantly, their reach will impact virtually all partnerships.


With the release of regulations on centralized partnership audits, many taxpayers hope that it will signal the re-start of a regular flow of much-needed guidance from the Treasury Department and the IRS that has been virtually stopped dead in its tracks since January 20. Others caution that the floodgates have not been opened and that the impact of several Executive Orders in discouraging guidance will be felt well into next year. Also bearing upon the recent lack of guidance are the critical vacancies within Treasury’s Office of Tax Policy that have been taking longer than usual to fill.


No. The IRS continues to treat virtual currency as property for U.S. federal tax purposes. However, last year, a government watchdog, and this year, a group of lawmakers, urged the IRS to clarify its virtual currency guidance.


Every year, millions of post-secondary students access the IRS Data Retrieval Tool (DRT) to complete the Free Application for Federal Student Aid (FAFSA). This year, the DRT is unavailable for FAFSA filers because of cybersecurity concerns. The information needed to complete the FAFSA can be found on a previously filed federal income tax return.


As an individual or business, it is your responsibility to be aware of and to meet your tax filing/reporting deadlines. This calendar summarizes important federal tax reporting and filing data for individuals, businesses and other taxpayers for the month of July 2017.