MBA News - Taxes

Payroll Tax Cut Doesn’t Mean More Money for All Taxpayers

MBAHRO — Fri, 18 Feb 2011 21:07:00 GMT

Payroll Tax Cut Doesn’t Mean More Money for All Taxpayers The deadline has passed for employers to adjust their payroll systems and lower the rate on Social Security payroll taxes to 4.2 percent from 6.2 percent. Employers have until March 31 to adjust checks to give back any excess amounts to employees that have been withheld this year. However, taxpayers who make less than $20,000 a year will actually see a tax hike. For example, an employee who makes $15,000 a year will pay $100 more in taxes this year, compared to 2010. A joint tax return will mean paying $500 more. The reason is that the payroll tax cut comes at the exact same time the Making Work Pay tax credit expires. As part of the economic stimulus plan, the credit took a flat $400 off federal withholding taxes to single filers and $800 to joint filers. Since the new payroll tax cut is only based on a percentage of earnings, employees who do not make a lot of money will not see much savings. On the other hand, people wi ...

Payroll Tax Cut Proposed

MBAHRO — Fri, 18 Feb 2011 19:57:00 GMT

Payroll Tax Cut Proposed A senator from Ohio has proposed a major payroll tax cut for employers. Republican Rob Portman proposed a one-year, two-percentage-point reduction in payroll taxes that are paid by employers. The senator says he backs the payroll-tax reduction already in place for employees, but believes giving employers the same break is fair and would help create jobs (possibly 1.4 million a year in the U.S.). The cost would be $110 billion. Portman maintains the price tag on the bill would be more than offset by getting rid of the healthcare law’s mandate for people to buy insurance. He contends the bill would actually reduce the federal deficit by $85 billion. The Congressional Budget Office says the savings from repealing the mandate would result in a rise in the number of uninsured Americans (to 39 million in 2019, from the 23 million projected under the current law). Modern Business Associates is an HR company that focuses on payroll and HR outsourcing. We rou ...

Federal W 9 Form

MBAHRO — Thu, 03 Feb 2011 20:41:00 GMT

Federal W 9 Form What is the Federal W 9 Form? When you utilize contract workers, like subcontractors or freelancers, they will need to complete a Federal W 9 form and send it to you. This lets your accountant have the correct information needed to complete a 1099 for the outsource is needed. You should request a Federal W 9 Form from your:: Independent Contractors Freelancers Any outsource that works for themselves Request a W 8 form instead, for independent contractors who are not U.S. citizens. It doesn’t hurt to collect a Federal W 9 Form from all your independent outsources, but to save time, you really only need to collect them for ones you pay $600 or more over the course of the year. The form is quick to complete and basically asks for the person’s name, address and Social Security number. The contractor may substitute their company Employer Identification Number (EIN) if they have one. Note that the Federal W 9 ...

IRS Tax Form Instructions

MBAHRO — Sun, 09 Jan 2011 00:04:00 GMT

IRS Tax Form Instructions Form 1040 Basics Helpful IRS Tax Form Instruction Information Taxes! It’s a word no-one likes to hear—but something we all have to pay. IRS tax form instructions are available online and will help make the process as painless as possible when it’s that time of the year. There is some basic knowledge to keep in mind that will help you when looking for IRS tax form instructions. IRS tax forms are used by tax-exempt organizations and taxpayers to report financial information to the IRS. They are used to report income and calculate the taxes that need to be paid to the United States. Form 1040 Basics The most well-known and widely filed form is the Form 1040. This form is used for individual income taxes. It is used for personal income tax returns filed with the IRS. The first form was published for use in 1913. Any full-time United States resident can use the Form 1040 (also referred to as the “long form”). People with no ...

Important Information: Deadline for Employers to Adjust Withholdings to the IRS is Jan. 31

MBAHRO — Sat, 01 Jan 2011 20:00:00 GMT

Important Information: Deadline for Employers to Adjust Withholdings to the IRS is Jan. 31 With the New Year, businesses began adhering to a new withholding schedule for employee’s wages that replicates a cut in federal payroll taxes for 2011. In an effort to motivate spending and increase take-home pay, this law gives a two percentage point payroll tax cut for employees through 2011. This change was part of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010. As a result, millions of workers will see an increase in the money they bring home this year. The Internal Revenue Service realizes businesses did not have much time to implement the changes (which were released in December 2010), so it asks employers to adjust their payroll systems to the new Federal withholding tables by January 31. The IRS advises Social Security taxes over-withheld during the month of January to be adjusted in employee pay as soon as possible—but by no later than Mar ...

What is a payroll system?

MBAHRO — Fri, 20 Aug 2010 22:44:00 GMT

What is a payroll system? As a payroll outsourcing company, many times when we sit down with clients, they initially ask “What is a payroll system?” This is a great starting place for planning how your payroll system will, at a minimum: Gather your employee work hours Cut checks Stay in compliance with taxes and withholdings on a federal, state and local level. Companies generally handle creating their payroll system in a few popular ways: You can have employees fill out time cards and use your internal accounting staff to handle all checks. While this is a popular strategy, pay attention to some of the shortfalls of this system: It usually doesn’t scale easily as you grow your business It can be unmanageable to keep the accountant up-to-speed with state and federal withholdings and compliance issues You’re dependant on one person for your system. This makes the person very hard to replace if the need should ari ...

Figure payroll withholding taxes

MBAHRO — Wed, 11 Aug 2010 22:39:00 GMT

Figure payroll withholding taxes To figure payroll withholding taxes, just follow this guide of steps to take and links to resources. Employees’s Gross Pay Minus Required Payroll Tax deductions (including any voluntary deductions) What’s left is the net pay. Required Payroll Tax Deductions Since the payroll taxes have to be withheld from your employees’ paychecks, it’s important to understand the different kinds of mandatory withholdings: Federal Income Tax (based on the withholding tables based on the Fed’s Publication 15) Social Security tax withholding (6.2%, up to the annual maximum for that employee) Medicare Tax (1.45%) Any applicable state income tax Any applicable local tax withholdings (like state unemployment insurance, city, county, state disability) Voluntary Payroll Deductions Voluntary payroll deductions are ones where the employee has previously agreed to the deductio ...

Employer’s portion for payroll taxes

MBAHRO — Thu, 05 Aug 2010 22:37:00 GMT

Employer’s portion for payroll taxes After paychecks are sent to employees, your work is only half done. Here’s and explanation of, and how to calculate, the employer’s portion for payroll taxes. These employer taxes are above and beyond your employees’ gross pay. The employer’s portion for payroll taxes includes these elements: Social Security (6.2% up to the annual maximum per employee) Medicare Taxes (1.45% of wages) Federal unemployment taxes (FUTA) State unemployment taxes (SUTA) Note: Social Security and Medicare Taxes are commonly referred to as FICA taxes (Federal Insurance Contributions Act). These are paid for by both the employers and the employees in identical contribution amounts. In addition to covering the employer’s portion for payroll taxes, read our other article to figure payroll withholding taxes. Modern Business Associates is an HR company that focuses on payroll and HR outsourcing. As a Profe ...

Healthcare Reform Update

MBAHRO — Fri, 14 May 2010 19:58:00 GMT

Health Reform Bill HR3590 Update - Simple Cafeteria Plans

The American Society of Pension Professionals & Actuaries published an article summarizing "Simple Cafeteria Plans" that are available starting January 1, 2011, under the health reform bill (HR 3590). Please use the link below to access:

http://www.asppa.org/Document-Vault/PDFs/ASAPs/2010/10-13.aspx

Tax credits mean good news for employers!

MBAHRO — Wed, 24 Mar 2010 02:47:00 GMT

Tax credits mean good news for employers! On March 18, 2010 President Obama signed into law the Hiring Incentives to Restore Employment Act (HIRE Act). The HIRE Act carries two significant tax incentive components for employers: a Social Security tax forgiveness and a retention tax credit. The first starts immediately for employers hiring qualified employees through the remainder of 2010 and the second can be earned by employers who retain qualified employees for a minimum of 52 consecutive weeks. The following is an overview of how both incentives work. Social Security Tax Forgiveness: Employers will receive a 6.2% Employer Social Security Tax Exemption on wages paid to “qualified employees” after March 18, 2010 and before January 1, 2011, up to the Social Security maximum of $106,800. The maximum credit per qualified employee is $6,621. To be a qualified employee the new employee must: · &# ...

Payroll deductions should include state income tax and payroll insurance deductions

MBAHRO — Thu, 18 Mar 2010 02:52:00 GMT

Payroll deductions should include state income tax and payroll insurance deductions As a Professional Employee Organization, our clients ask us to handle their payroll responsibilities including two of the most talked about deductions: their state income tax and payroll insurance deductions. The state income tax is part of the statutory payroll tax deductions. As required by law, statutory Payroll Tax Deductions are payroll taxes that must be withheld from your employees paycheck. You must hand these withholdings over to the multitude of tax agencies on all levels of government. Local tax withholdings (city, county, or school district taxes, state disability or unemployment insurance). State income tax withholding Federal income tax withholding Social Security tax withholding Medicare tax withholding The payroll insurance deductions are part of the Voluntary Payroll Deductions Voluntary deductions pay for various benefits which the employee has chosen to parti ...

Employer Payroll Taxes – How to stay out of trouble

MBAHRO — Thu, 11 Mar 2010 04:03:00 GMT

Employer Payroll Taxes – How to stay out of trouble Many growing companies have questions like, “How do employer payroll taxes work?” At Modern Business Associates, many of our small clients come onboard with our payroll processing to let us handle their entire payroll processing burden, which includes payroll taxes. Our systems are set up to ensure your business does not get into trouble by missing withholdings or taking the wrong amounts. As background, you should know that employer payroll taxes are the state and federal taxes that you, as an employer, are required to withhold and/or to pay on behalf of your employees. After having each new employee complete their IRS form W-4, we’ll use this information to calculate the amount of federal income tax to withhold from the employee’s wages. Most all of the states have income tax structures that are based on the federal blueprint, so you will use the same W-4 to calculate the amount of state income tax to withhold as well. You ar ...