Professional Documents
Culture Documents
Presented By - Jim Gante, Small Business Manager, Stambaugh Ness E-mail: jgante@stambaughness.com Carson Buck, Tax Advisor, Stambaugh Ness E-mail: cbuck@stambaughness.com Phone: 717.757.6999 Fax: 717.840.5985
Contact Information: www.stambaughness.com Phone 1.800.745.8233
Table of Contents
PART A - CHARTS AND PAYROLL SAVING TIPS
A A A A A A A A A A A A A A A A A A A A A A A 1 2 4 6 11 12 13 15 16 15 22 31 39 39 39 41 41 42 43 43 44 45 47 Payroll and Other Tax Data - 2012 Payroll and Other Tax Data - 2013 Taxability of Compensation and Benefits Withholding Requirements for Specific Payments Household Employment Taxes Agricultural and Household Employees List of Helpful Government Publications Essential Payroll Web Sites Essential Phone Numbers Indexed Employee Benefit Limits Independent Contractors Exempt versus Non-Exempt Employees Payroll Saving Tips Direct Deposit of Payroll Retirement & Social Security Watch Wage-Hour Exemptions Garnishments Employ Children/Spouses/Parents Reduce the Number of Payrolls Unemployment Compensation Common Paymaster Federal Business Credits Pennsylvania Business Credits
Table of Contents
PART B - PROCESSING AND REPORTING - CONTINUED
B B B B B B B B B B B B B 22 24 28 31 33 39 39 39 40 43 46 47 49 Group Term Life Insurance Cafeteria Plans Heath Care: Patient Protection and Affordable Care Act Health Care: Reporting Requirements Personal Use of Company Provided Vehicle Medical and Move Related Mileage Rate Charitable Related Mileage Rate Sick Pay (Disability Income) Form 1099 - Miscellaneous Income Business Expense Reimbursements Moving Expense Reimbursements Military Spouse Residency Relief Act Stock Options
Table of Contents
PART D - PAYROLL REPORTING
D - 1 D - 3 D - 4 D - 5 D - 6 D - 7 D - 8 D - 9 D - 10 D - 13 D - 14 D - 15 D - 16 D - 17 Quick Links to Payroll Tax Forms PA Unemployment Compensation MD Unemployment Compensation PA Employer Withholding Tax PA Local Earned Income Tax PA Local Services Tax MD Employer Withholding Tax MD Local Withholding Reference Guide for Form W-2 MD Annual W-2 Reconciliation PA New Hire Reporting Form MD New Hire Registry Social Security Number Verification Service E-Verify
A - 11 A - 12 A - 13 A - 15 A - 16 A - 20 A - 22 A - 31 A - 39 A - 39 A - 39 A - 41 A - 41 A - 42 A - 43 A - 43 A - 44 A - 45 A - 47
FICA (Medicare)
Maximum Taxable Earnings: EE / ER Deduction: Maximum Deduction: Self-Employment Tax:
FUTA (Employer-Paid)
$7,000 .6% *1
Supplemental Wage/Bonus Rate Flat rate withholding method: Pay is over $1 Million
25% 35%
PENNSYLVANIA
Minimum Wage Tipped Employees Maximum Tip Credit
MARYLAND
$7.25 $2.83 $4.42 3.07% 3.07% 3.07% $8,000 .08% on all wages/no limit 2.437 -10.5836% 3.7030% $7.25 $3.63 $3.62 Varies based on W-4 Withholding MD resident = 5.75% plus county w/h rate MD resident = 5.75% plus county w/h rate $8,500 None 2.2 - 13.5% 2.6%
Minimum Wage
Unemployment Insurance
Maximum Taxable Earnings Employee Deduction
____________________________________________________________________
Plus the applicable surcharge see page C8 or Form 940 (Schedule A) for more information.
A-1
FICA (Medicare)
Maximum Taxable Earnings: EE / ER Deduction: Maximum Deduction: Self-Employment Tax: No Limit 1.45% 1 No Limit 2.9% 1
FUTA (Employer-Paid)
Maximum Taxable Earnings: Percent of Taxable Wages: $7,000 .6%
25% 35%
2013
56.5 per mile
The 1.45% employee rate applies to the first $200,000 of wages/self-employment earnings. Wages/selfemployment earnings beyond $200,000 are withheld at 2.35%.
A-2
MARYLAND
$7.25 $3.63 $3.62 Varies based on MW-507 MD resident = 5.75% plus county w/h rate MD resident = 5.75% plus county w/h rate
Unemployment Insurance
Maximum Taxable Earnings Employee Deduction
Employer Tax Rates Standard New Employer Rate New Construction Employer Rate
A-3
Social Security
State Unemployment
A-4
E E
E T
E T
E T
E T
E T
E T
Tips: More than $20.00 per month Less than $20.00 per month
T E
T E
T E
T T
T T
T E
T T
(1) Amounts in excess of specified government rate for per diem or standard mileage is taxable. (2) Taxable only during first six months following month employee last worked. (3) Except child care benefits.
A-5
Dividends Eating Facilities Educational Assistance - Up to $5,250 Equipment and Tool Allowances Golden Parachute Payments Group Legal Services Guaranteed Wage Payments
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Withholding Required Type of Income Holiday Gifts: Cash or equivalent Non-cash subject to de minimis rules Interest Free or Below Market Interest Rate Employer Loan more than $10,000 Jury Duty Pay Meals and Lodging for Employers Convenience Meeting Payments Military Pay (For Temporary Assignments) Moving Expenses - Qualified (See B-48) Moving Expenses - Non-qualified (See B-48) Parking Expense - Up to $240/month Probationary Pay Retiree Consulting Fees 3 No Yes Yes No Yes No Yes No Yes No No A-8 No Yes Yes No Yes No Yes No Yes No No No 4 Yes Yes No Yes No 4 Yes No Yes No No Yes Yes No Yes No Yes No Yes No No Fed I.T. F.I.C.A. PA MD
Yes No
Yes No
Yes No
Yes No Yes
Yes Yes
Yes Yes
Standby/Idle Time Pay Supper Money Supplemental Unemployment Uniform Allowances Union Payments Vacation Pay Workers Compensation Benefits
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1. Exempt from withholding up to $1,600 per employee per year for qualified plans ($400 per employee, per year under a non-qualified plan). S-Corp shareholders do not qualify for this benefit. 2. Exempt from withholding unless the winner is required to render any substantial services as a condition to receiving the prize or award. Amounts over the federal limits listed in 1 above are subject to withholding.
3. Fees in excess of $600 are required to be reported on 1099-MISC. 4. The employee must not have the choice between the benefit and cash, reduce their salary to receive the benefit, or be reimbursed for the expense. 5. Any portion which represents payment for teaching, research, or other services by the student as a condition for receiving the scholarship is considered compensation and may be subject to withholding. See publication 15 for further details. 6. Supplemental unemployment benefits are subject to specific rules to be eligible for FICA exemption. See publication 15-A for more information. See Circular E for more complete information at http://www.irs.gov/pub/irs-pdf/p15.pdf.
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By February 28, 2013 (April 1, Send Copy A of Form W-2 to the Social Security 2013 if you file Form W-2 Administration (SSA). electronically): File Schedule H (Form 1040), Household Employment Taxes, with your 2011 federal income tax return (Form 1040, 1040NR, or Form 1041). If you do not have to file a return, file Schedule H by itself.
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Exceptions. The $150 and $2,500 tests do not apply to wages that you pay to a farmworker who receives less than $150 in annual cash wages and the wages are not subject to social security and Medicare taxes, or federal income tax withholding, even if you pay $2,500 or more in that year to all of your farmworkers if the farmworker:
Is employed in agriculture as a hand-harvest laborer, Is paid piece rates in an operation that is usually paid on a piece-rate basis in the region of employment, Commutes daily from his or her permanent home to the farm, and Had been employed in agriculture less than 13 weeks in the preceding calendar year.
Amounts that you pay to these seasonal farmworkers, however, count toward the $2,500-or-more test to determine whether wages that you pay to other farmworkers are subject to social security and Medicare taxes.
Agricultural wages are subject to FUTA and SUTA if: 1) Agricultural wages of $20,000 or more are paid in any quarter in the current or preceding calendar year. 2) 10 or more individuals are employed in agricultural labor for some portion of a day for 20 weeks in the current or preceding calendar year.
Agricultural employers who pay wages for both agricultural and nonagricultural labor must keep the wages separate. Agricultural wages and taxes due are reported on Form 943; other wages and taxes due are reported on Form 941.
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Publication Number 15
Description All employers receive a copy of this publication automatically. This is an annual publication that includes the current year's tax tables, FICA rate, FUTA rate, and a general explanation of rules for depositing federal tax withheld. Supplement to Circular E. Detailed information on proper way to handle fringe benefits. Same as Circular E, except this is specifically for agricultural employers. Explanation of the rules for claiming personal exemptions on the Form W-4. Excellent guide to assist employees in completing a new Form W-4. Explains which educational expenses qualify for deduction for tax purposes. This booklet may assist the payroll practitioner in understanding the taxability of various types of educational expense reimbursements paid by the employer. Essential publication for explaining the reporting and taxation of reimbursed moving expenses, both for the employer and the employee. Essential guide to understanding the taxability of wages, salaries, fringe benefits, and other compensation received for services as an employee. A guide to the reporting, withholding, record keeping.
Employer's Supplemental Tax Guide Employer's Tax Guide to Fringe Benefits Circular A, Agricultural Employers Tax Guide Tax Withholding and Estimated Tax
970
521
Moving Expenses
525
531
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Title How Do I Adjust My Tax Form Withholdings? Table for Figuring Amount Exempt from compensation. Levy On Wages, Salary & Other Income Per Diem Rates 2012 Instructions 1099 - ALL Household Employers Tax Guide
Description Another guide to employees for completing W-4. This is a table for figuring the amount from a levy on wages, salaries, and other
1542 -926
A table of the federal per diem rates for lodging, meals and incidental expenses. Instructions to filers of Form 1099, 1098, 5498 and W-2G. A guide to who qualifies as a household employee and instructions on figuring the tax.
Compliance assistance information is available from the U.S. Department of Labor in regards to the following:
Americans with Disabilities Act of 1990 (ADA) The Davis-Bacon and Related Acts (DBRA) The Fair Labor Standards Act (FLSA) The Family and Medical Leave Act (FMLA) Federal Employee Compensation Act (FECA) And many more
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Federal Sites
EFTPS: Internal Revenue Service (homepage): Social Security Administration: U.S. Department of Labor employment law site: www.eftps.gov www.irs.gov www.ssa.gov www.dol.gov
Professional Organizations
www.americanpayroll.org
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1-800-829-4933
1-800-555-4477
Form 941 and Form 940 On-Line Filling Program / Austin Submission Center
Forms (IRS)
800-829-1040
1-800-829-4059
Tele-Tax System
800-829-4477
1-800-772-1213
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PA Dept. of Revenue
1-888-PATAXES (728-2937)
717-783-6277
717-787-1064
1-800-447-3020
717-772-9347
MD Employer Withholding
Information Line
410-260-7980 or 1-800-638-2937
410-260-7150
PA Unemployment Compensation
1-866-403-6163 or 717-787-7679
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UC Employer Tax Services York and Adams Counties Cumberland County Lancaster County Dauphin County Perry County Franklin County 717-767-7620 717-787-5939 717-299-7606 717-214-2991 717-787-5939 717-264-7192
MD Unemployment Compensation
410-949-0033 or 1-800-492-5524
Experience Rate
410-767-2413
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Type of Limitation FICA Tax for self-employed workers Social Security Tax for self-employed workers Medicare Tax for self-employed workers Health Savings Account (HSA) (Individual/family) Flexible Spending Arrangement (FSA)
Catch-up contributions
Individuals 50 years of age and over may make additional catch up contributions each year as follows: 2012 - 2013 ROTH, 401(k), 403(b), 457, SEP-408(k), SARSEP SIMPLE IRAs $ 5,500 $ 2,500 $ 1,000
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INDEPENDENT CONTRACTORS
Employee or Independent Contractor?
When a worker performs services and receives some form of remuneration, an important question is whether the remuneration is subject to employment taxes. The answer depends on whether the worker is an employee or an independent contractor. This determination of the worker's status depends on which facts define the business and the relationship of the parties, at the time the services are rendered.
An employer must generally withhold federal income taxes, withhold and pay social security and Medicare taxes, and pay unemployment tax on wages paid to an employee. An employer does not generally have to withhold or pay any taxes on payments to independent contractors.
Common-Law Rules
To determine whether an individual is an employee or an independent contractor under the common law, the relationship of the worker and the business must be examined. In any employee-independent contractor determination, all information that provides evidence of the degree of control and the degree of independence must be considered. Facts that provide evidence of the degree of control and independence fall into three categories: behavioral control, financial control, and the type of relationship of the parties.
Behavioral control Facts that show whether the business has a right to direct or control how the worker does the task for which the worker is hired include the type and degree of: Instructions that the business gives to the worker An employee is generally subject to the business' instructions about when, where, and how to work. All of the following are examples of types of instructions about how to do work.
When and where to do the work. What tools or equipment to use. What workers to hire or to assist with the work. Where to purchase supplies and services. What work must be performed by a specified individual. What order or sequence to follow.
The amount of instruction needed varies among different jobs. Even if no instructions are given, sufficient behavioral control may exist if the employer has the right to control how the work results are achieved. A business may lack the knowledge to instruct some highly specialized professionals; in other cases, the task may require little or no instruction. The key consideration is whether the business has retained the right to control the details of a worker's performance or instead has given up that right.
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Financial control
Facts that show whether the business has a right to control the business aspects of the worker's job include:
The extent to which the worker has unreimbursed business expenses Independent contractors are more likely to have unreimbursed expenses than are employees. Fixed ongoing costs that are incurred regardless of whether work is currently being performed are especially important. However, employees may also incur unreimbursed expenses in connection with the services that they perform for their business.
The extent of the worker's investment An independent contractor often has a significant investment in the facilities or equipment he or she uses in performing services for someone else. However, a significant investment is not necessary for independent contractor status. The extent to which the worker makes his or her services available to the relevant market An independent contractor is generally free to seek out business opportunities. Independent contractors often advertise, maintain a visible business location, and are available to work in the relevant market. How the business pays the worker An employee is generally guaranteed a regular wage amount for an hourly, weekly, or other period of time. This usually indicates that a worker is an employee, even when the wage or salary is supplemented by a commission. An independent contractor is usually paid by a flat fee for the job. However, it is common in some professions, such as law, to pay independent contractors hourly. The extent to which the worker can realize a profit or loss. An independent contractor can make a profit or loss.
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Written contracts describing the relationship the parties intended to create. Whether or not the business provides the worker with employee-type benefits, such as insurance, a pension plan, vacation pay, or sick pay. The permanency of the relationship. If you engage a worker with the expectation that the relationship
will continue indefinitely, rather than for a specific project or period, this is generally considered evidence that your intent was to create an employer-employee relationship.
The extent to which services performed by the worker are a key aspect of the regular business of the company. If a worker provides services that are a key aspect of your regular business activity, it is more likely that you will have the right to direct and control his or her activities. For example, if a law firm hires an attorney, it is likely that it will present the attorney's work as its own and would have the right to control or direct that work. This would indicate an employer-employee relationship.
IRS help. If you want the IRS to determine whether or not a worker is an employee, file Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding, with the IRS.
Category of Employees
Before you can know how to treat payments that you make to workers for services, you must first know the business relationship that exists between you and the person performing the services. The person performing the services may be:
Independent Contractors
People such as lawyers, contractors, subcontractors, and auctioneers who follow an independent trade, business, or profession in which they offer their services to the public, are generally not employees. However, whether such people are employees or independent contractors depends on the facts in each case. The general rule is that an individual is an independent contractor if you, the person for whom the services are performed, have the right to control or direct only the result of the work and not the means and methods of accomplishing the result.
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substance of the relationship, not the label, governs the worker's status. It does not matter whether the individual is employed full time or part time. For employment tax purposes, no distinction is made between classes of employees. Superintendents, managers, and other supervisory personnel are all employees. An officer of a corporation is generally an employee; however, an officer who performs no services or only minor services, and neither receives nor is entitled to receive any pay, is not considered an employee. A director of a corporation is not an employee with respect to services performed as a director. You generally have to withhold and pay income, social security, and Medicare taxes on wages that you pay to common-law employees.
Leased employees. Under certain circumstances, a firm furnishing workers to other firms is the employer of those workers for employment tax purposes. For example, a temporary staffing service may provide the services of secretaries, nurses, and other similarly trained workers to its clients on a temporary basis.
The staffing service enters into contracts with the clients under which the clients specify the services to be provided and a fee is paid to the staffing service for each individual furnished. The staffing service has the right to control and direct the worker's services for the client, including the right to discharge or reassign the worker. The staffing service hires the workers, controls the payment of their wages, provides them with unemployment insurance and other benefits, and is the employer for employment tax purposes.
Statutory Employees
If workers are independent contractors under the common law rules, such workers may nevertheless be treated as employees by statute, statutory employees, for certain employment tax purposes. This would happen if they fall within any one of the following four categories and meet the three conditions described under Social security and Medicare taxes below. 1. A driver who distributes beverages (other than milk) or meat, vegetable, fruit, or bakery products; or who picks up and delivers laundry or dry cleaning, if the driver is your agent or is paid on commission. 2. A full-time life insurance sales agent whose principal business activity is selling life insurance or annuity contracts, or both, primarily for one life insurance company.
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The service contract states or implies that substantially all the services are to be performed personally by them. They do not have a substantial investment in the equipment and property used to perform the services (other than an investment in transportation facilities). The services are performed on a continuing basis for the same payer.
Income tax. Do not withhold federal income tax from the wages of statutory employees.
Reporting payments to statutory employees. Furnish Form W-2 to a statutory employee, and check Statutory employee in box 13. Show your payments to the employee as other compensation in box 1. Also, show social security wages in box 3, social security tax withheld in box 4, Medicare wages in box 5, and Medicare tax withheld in box 6. The statutory employee can deduct his or her trade or business expenses from the payments shown on Form W-2. He or she reports earnings as a statutory employee on line 1 of Schedule C (Form 1040), Profit or Loss from Business, or Schedule C-EZ (Form 1040), Net Profit from Business. A statutory employee's business expenses are deductible on Schedule C (Form 1040) or C-EZ (Form 1040) and are not subject to the reduction by 2% of his or her adjusted gross income that applies to common-law employees.
Statutory Nonemployees
There are three categories of statutory nonemployees: direct sellers, licensed real estate agents, and certain companion sitters. Direct sellers and licensed real estate agents are treated as self-employed for all federal tax purposes, including income and employment taxes, if:
Substantially all payments for their services as direct sellers or real estate agents are directly related to sales or other output, rather than to the number of hours worked and Their services are performed under a written contract providing that they will not be treated as employees for federal tax purposes.
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1. Persons engaged in selling (or soliciting the sale of) consumer products in the home or place of business other than in a permanent retail establishment. 2. Persons engaged in selling (or soliciting the sale of) consumer products to any buyer on a buy-sell basis, a deposit-commission basis, or any similar basis prescribed by regulations, for resale in the home or at a place of business other than in a permanent retail establishment. 3. Persons engaged in the trade or business of delivering or distributing newspapers or shopping news (including any services directly related to such delivery or distribution).
Direct selling includes activities of individuals who attempt to increase direct sales activities of their direct sellers and who earn income based on the productivity of their direct sellers. Such activities include providing motivation and encouragement; imparting skills, knowledge, or experience; and recruiting.
Licensed real estate agents This category includes individuals engaged in appraisal activities for real estate sales if they earn income based on sales or other output.
Companion sitters Companion sitters are individuals who furnish personal attendance, companionship, or household care services to children or to individuals who are elderly or disabled. A person engaged in the trade or business of putting the sitters in touch with individuals who wish to employ them (that is, a companion sitting placement service) will not be treated as the employer of the sitters if that person does not receive or pay the salary or wages of the sitters and is compensated by the sitters or the persons who employ them on a fee basis. Companion sitters who are not employees of a companion sitting placement service are generally treated as self-employed for all federal tax purposes.
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Examples
Example 1 - Building and Construction Industry Milton Manning, an experienced tile setter, orally agreed with a corporation to perform full-time services at construction sites. He uses his own tools and performs services in the order designated by the corporation and according to its specifications. The corporation supplies all materials, makes frequent inspections of his work, pays him on a piecework basis, and carries workers' compensation insurance on him. He does not have a place of business or hold himself out to perform similar services for others. Either party can end the services at any time. Milton Manning is an employee of the corporation.
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Example 2 - Building and Construction Industry Bill Plum contracted with Elm Corporation to complete the roofing on a housing complex. A signed contract established a flat amount for the services rendered by Bill Plum. Bill is a licensed roofer and carries workers' compensation and liability insurance under the business name, Plum Roofing. He hires his own roofers who are treated as employees for federal employment tax purposes. If there is a problem with the roofing work, Plum Roofing is responsible for paying for any repairs. Bill Plum, doing business as Plum Roofing, is an independent contractor. Example 3 - Building and Construction Industry Vera Elm, an electrician, submitted a job estimate to a housing complex for electrical work at $16 per hour for 400 hours. She is to receive $1,280 every 2 weeks for the next 10 weeks. This is not considered payment by the hour. Even if she works more or less than 400 hours to complete the work, Vera Elm will receive $6,400. She also performs additional electrical installations under contracts with other companies that she obtained through advertisements. Vera is an independent contractor. Example 4 - Trucking Industry Rose Trucking contracts to deliver material for Forest, Inc., at $140 per ton. Rose Trucking is not paid for any articles that are not delivered. At times, Jan Rose, who operates as Rose Trucking, may also lease another truck and engage a driver to complete the contract. All operating expenses, including insurance coverage, are paid by Jan Rose. All equipment is owned or rented by Jan and she is responsible for all maintenance. None of the drivers are provided by Forest, Inc. Jan Rose, operating as Rose Trucking, is an independent contractor. Example 5 - Computer Industry Steve Smith, a computer programmer, is laid off when Megabyte, Inc. downsizes. Megabyte agrees to pay Steve a flat amount to complete a one-time project to create a certain product. It is not clear how long that it will take to complete the project, and Steve is not guaranteed any minimum payment for the hours spent on the program. Megabyte provides Steve with no instructions beyond the specifications for the product itself. Steve and Megabyte have a written contract, which provides that Steve is considered to be an independent contractor, is required to pay federal and state taxes, and receives no benefits from Megabyte. Megabyte will file Form 1099-MISC, Miscellaneous Income, to report the amount paid to Steve. Steve works at home and is not expected or allowed to attend meetings of the software development group. Steve is an independent contractor.
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INDEPENDENT CONTRACTORS - PA
Pennsylvania-Construction Workplace Misclassification Act. The Commonwealth of Pennsylvania has enacted legislation providing for the criteria independent contractors in the construction industry need to follow and imposing penalties for those employers that fail to do so. Independent contractors. For purposes of unemployment compensation, workers' compensation and improper classification of employees, an individual who performs services in the construction industry for remuneration is an independent contractor only if: (1) The individual has a written contract to perform the services; (2) The individual is free from control or direction over the performance of the services both under the contract of service and in fact; and (3) As to such services, the individual is customarily engaged in an independently established trade, occupation, profession or business. Violation. An employer, or an officer or agent of an employer, will be in violation of the act and subject to its penalties, remedies and actions if the employer, officer or agent: (1) fails to properly classify an individual as an employee for purposes of the Unemployment Compensation Law and fails to pay contributions, reimbursements or other amounts required to be paid under that law; or (2) fails to properly classify an individual as an employee for purposes of the Workers' Compensation Act and fails to provide the coverage required under that act. Separate offenses. Each individual who is not properly classified as an employee will be the basis of a separate violation. In addition, note that both civil and criminal penalties may be imposed for violations of the act.
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Supervision means what it implies. The supervision must be a regular part of the employee's job, and must be of other employees. Supervision of non-employees does not meet the standard. The "two employees" requirement may be met by supervising two full-time employees or the equivalent number of part-time employees. (Two half-time employees equal one full-time employee.)
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interviewing, selecting, and training employees; setting rates of pay and hours of work; maintaining production or sales records (beyond the merely clerical); appraising productivity; handling employee grievances or complaints, or disciplining employees; determining work techniques; planning the work; apportioning work among employees; determining the types of equipment to be used in performing work, or materials needed; planning budgets for work; monitoring work for legal or regulatory compliance; providing for safety and security of the workplace.
Determining whether an employee has management as the primary duty of the position requires case-bycase evaluation. A "rule of thumb" is to determine if the employee is "in charge" of a department or subdivision of the enterprise (such as a shift). One handy clue might be to ask who a telephone inquiry would be directed to if the called asked for "the boss." Typically, only one employee is "in charge" at any particular time. Thus, for example, if a "sergeant" and a "lieutenant" are each at work at the same time (in the same unit or subunit of the organization), only the lieutenant is "in charge" during that time. An employee may qualify as performing executive job duties even if s/he performs a variety of "regular" job duties as well. For example, the night manager at a fast food restaurant may in reality spend most of the shift preparing food and serving customers. S/he is, however, still "the boss" even when not actually engaged in "active" bossing duties. In the event that some "executive" decisions are required, s/he is there to make them, and this is sufficient. The final requirement for the executive exemption is that the employee has genuine input into personnel matters. This does not require that the employee be the final decision maker on such matters, but rather that the employee's input is given "particular weight." Usually, it will mean that making personnel recommendations is part of the employee's normal job duties, that the employee makes these kinds of recommendations frequently enough to be a "real" part of the job, and that higher management takes the employee's personnel suggestions or recommendations seriously.
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Keep in mind in this regard that direct tax savings will generally result only in relation to the "social security" type employment taxes--that is, the taxes imposed under the Federal Insurance Contributions Act (FICA), the Federal Unemployment Tax Act (FUTA), and the various state unemployment and disability insurance laws. This is because these are the laws that impose a tax directly on an employer, and actual tax dollars can be saved by knowing that a particular type of payment or employee is exempt from a particular tax. This is not to say that the subject of taxable wages and exempt employees is unimportant where federal and state income taxes are involved. Even though employers have no general out-of-pocket tax liability where such taxes are concerned, knowing what types of payments and employees are subject to withholding can save needless bookkeeping time and the expenses of correcting situations where tax is withheld when it should not have been, to say nothing of avoiding the penalties that may be imposed where an uninformed payroll manager fails to withhold from a payment or employee from whom tax should have been withheld.
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Workers who have reached full retirement age (age 66 in 2012 and 2013) may work without their benefits being reduced because of the amount of their annual earnings. Annual earnings affect the amount of Social Security benefits only until full retirement age. After that, you can receive full benefits no matter how much you earn. Full retirement age will gradually increase to age 67, as shown below.
The Social Security Administration has developed a unique educational tool to help Americans understand their social security benefits so they can undertake adequate financial planning for their future. This SSA tool is a Social Security Statement that gives workers of all ages their own personal historical data and future benefit estimates. These Statements are mailed to workers age 25 and older. The 4-page Social Security Statement provides information for retirement, disability, and survivors benefits that they could be eligible for now and in the future.
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The earliest a person can start receiving Social Security retirement benefits remains age 62.
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Many states also have minimum wage laws. Where an employee is subject to both the state and federal minimum wage laws, the employee is entitled to the higher of the two minimum wages. Please see page A-1 for the minimum wage amounts for Maryland and Pennsylvania. Various minimum wage exceptions apply under specific circumstances to workers with disabilities, full-time students, youth under age 20 in their first 90 consecutive calendar days of employment, tipped employees and student-learners. For a complete listing of state minimum wage laws, please visit the US Department of Labor website at http://www.dol.gov/whd/minwage/america.htm.
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Social Security
PA Unemployment
MD Unemployment
Spouse
Child under 18
Child 18 - 20
T*
T*
Parents
T*
T*
* Payments for domestic services, outside of a trade or business, are generally not subject to withholding. See Publication 15 for further information.
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UNEMPLOYMENT COMPENSATION
Check the computation of your unemployment compensation "experience rating." Experience ratings are mailed at the beginning of the calendar year and are calculated based on prior years unemployment benefits paid. Better experience ratings result in smaller employer contributions. Inaccurate information reported on your experience rating calculation can adversely affect your employers rate. If inaccurate information is reported, employers can appeal their assigned rate. Review and respond to any charges against your unemployment account. Charges are benefits paid to employees or former employees.
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COMMON PAYMASTER
A company organized as a corporation can take advantage of the common paymaster rule to avoid paying extra taxes. Under this concept, a parent company can calculate payroll taxes for employees being paid by multiple subsidiaries as though they were being paid by a single organization for the entire year. This means that the parent company designates a single entity within the group of controlled companies to pay those employees who are employed by more than one subsidiary. This "common paymaster" is also responsible for maintaining the payroll records for those employees. The common paymaster can pay concurrently employed individuals with one paycheck, or with separate paychecks. The common paymaster also has primary responsibility for remitting payroll taxes to the government, which the common paymaster computes as though it were the sole employer of those individuals who are concurrently employed. Also, all other subsidiaries using the common paymaster are jointly and severally liable for their shares of payroll taxes to be remitted. The following conditions must be met for the Common Paymaster rule to apply:
The paying parties must be related, where either (1) a single company owns at least the stock of the other related companies, (2) at least 30% of the employees of one corporation must be concurrently employed by the other corporation, or (3) at least half of the officers of one corporation must be officers of the other corporation. If a company is a non-stock corporation, at least the board of directors of one corporation must also serve on the board of the other corporation. All payments made to employees must be through a single legal entity; thus, the employee cannot be paid separately by multiple payroll departments within the same company.
The last condition is key all payments must be made from a single entity, which calls for the consolidation of payroll departments in order to achieve the available savings under this best practice.
Each corporation must pay its own part of the employment taxes and may deduct only its own part of the wages. The deductions will not be allowed unless the corporation reimburses the common paymaster for the wage and tax payments. See Regulations section 31.3121(s)-1 for more information. The common paymaster is responsible for filing information and tax returns and issuing Forms W-2 with respect to wages it is considered to have paid as a common paymaster. States treat common paymasters differently with respect to the unemployment laws.
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Wages qualifying for the credit generally have the same meaning as wages subject to the Federal Unemployment Tax Act (FUTA).
Form 8850, Pre-Screening Notice and Certification Request for Work Opportunity Tax Credit, is used by employers to both pre-screen prospective employees and to request certification from the States Employment Security Agency. This form is not filed with the IRS.
2. Credit For Employer-Provided Child Care Facilities - Employers can claim a tax credit for 25% of qualified expenses for employee child care. Qualified expenses include costs to acquire, construct, rehabilitate, or expand a facility for child care, operational costs for the facility, and amounts incurred under a contract with a child care facility to provide service to employees. A 10% credit can also be claimed for the costs incurred under a contract to provide child care resource and referral services to employees. The maximum credit in any year is $150,000. This credit is scheduled to expire for tax years beginning after December 31, 2012. 3. Small Business Credit For New Retirement Plan Expenses - A nonrefundable credit is available for expenses associated with establishing a new qualified retirement plan. The credit is equal to 50% of the first $1,000 in administrative and retirement-education expenses for the plan for each of the first three years of the plan. A small business is defined as one with no more than 100 employees having compensation in excess of $5,000 in the preceding year, and with at least one non-highly compensated employee. 4. Health Care Reform Act Credit - The Small Business Health Care Tax Credit helps small businesses and small tax- exempt organizations afford the cost of covering their employees. Eligibility Rules - A qualifying employer must cover at least 50 percent of the cost of health care coverage for some of its workers based on the single rate. Additionally, the qualifying employer must have less than the equivalent of 25 full-time workers (for example, an employer with fewer than 50 half-time workers may be eligible). Lastly, the qualifying employer must pay average annual wages below $50,000. Both taxable (for profit) and tax-exempt firms qualify. Amount of Credit - The credit is worth up to 35 percent of a small business' premium costs in 2011 through 2013. On Jan. 1, 2014, this rate increases to 50 percent (35 percent for tax-exempt employers). The credit phases out gradually for employers with average wages between $25,000 and $50,000 and for firms with the equivalent of between 10 and 25 full-time workers.
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If the company fails to comply with the terms and conditions of the agreement with the department, the company will be required to repay an amount equal to the aggregate withholding taxes retained by the company. The total amount of the benefits retained cannot exceed $5,000,000, and no agreements can be entered into after January 1, 2018.
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An employer is either a monthly depositor or a semiweekly depositor. This determination is made based on the aggregate amount of employment taxes reported during a "lookback" period. The regulations define a look back period as the twelve-month period ending on the preceding June 30th and this determination is made by the IRS prior to the beginning of each calendar year.
1 Ordinary Medicare taxes withheld do not include the 0.9% Additional Medicare Withholding on individuals with earnings greater than $200,000.
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Monthly deposit ($50,000 or less) An employer is a monthly depositor if the total taxes you reported in the lookback period were $50,000 or less. A monthly depositor must deposit employment taxes for payments made during a calendar month via EFTPS by the 15th day of the following month. If the 15th day of the following month is not a banking day, taxes will be treated as timely deposited on the next following banking day. Semiweekly deposit (greater than $50,000) An employer is a semi-weekly depositor if the total amount of employment taxes reported for the look back period is more than $50,000. Under the semi-weekly deposit rule a monthly depositor must deposit employment taxes one day before they are due via EFTPS by: If the payday falls on a.. Wednesday, Thursday or Friday Saturday, Sunday, Monday, or Tuesday Then deposit taxes by the following Wednesday Friday
If any of the three weekdays following the close of a semiweekly period is a bank holiday, employers will be given an additional banking day to make the deposit. $100,000 Next-day deposit rule The semiweekly or monthly deposit rules will not apply if an employer has accumulated $100,000 or more of employment taxes. These taxes must be deposited via EFTPS. To determine whether the $100,000 threshold is met, (1) a monthly depositor takes into account only those employment taxes accumulated in the calendar month in which the day occurs; and (2) a semiweekly depositor takes into account only those employment taxes accumulated in the Wednesday - Friday or Saturday - Tuesday semiweekly period in which the day occurs. Note: Regardless of whether you are a monthly depositor or a semiweekly schedule depositor, if you accumulate taxes of $100,000 or more on any day during a deposit period, you must deposit them on the next banking day. If this happens, you become a semiweekly depositor for the remainder of the calendar year and for the following calendar year.
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Forms of Deposit
ELECTRONIC FEDERAL TAX PAYMENT SYSTEMS (EFTPS)
EFTPS Online - EFTPS is a service offered free by the U.S. Department of the Treasury for people to pay federal taxes electronically. https://www.eftps.gov/eftps/ EFTPS Phone - You may make your tax deposit payments by calling the EFTPS Voice Response System at 1-800-555-3453. EFTPS is available 24 hours a day, seven days a week. Payment must be initiated by 8:00 p.m. one business day prior to date due.
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2% - Deposits made 1 to 5 days late. 5% - Deposits made 6 to 15 days late. 10% - Deposits made 16 or more days late. Also applies to amounts paid within 10 days of the date of the first notice the IRS sent asking for the tax due. 10% - Amounts subject to electronic deposit requirements but not deposited using EFTPS.
15% - Amounts still unpaid more than 10 days after the date of the first notice the IRS sent asking for the tax due or the day on which you receive notice and demand for immediate payment, whichever is earlier.
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IMPORTANT **
1. W-2s are required to be furnished to employees no later than 1/31. Even if you have no wages for the quarter, you still must file reporting zero compensation for the quarter.
2.
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Penalties
Failure to file a quarterly return may result in the imposition of additional tax of five (5) percent per month of the underpayment for each month or fraction thereof (maximum penalty of 25 percent). Failure to pay withheld tax to the PA Department of Revenue on or before the due date for filing the quarterly reconciliation return will result in an additional tax of five (5) percent per month of the underpayment for each month or fraction thereof (maximum penalty of 50 percent). If any part of any underpayment of tax that is later proved to be the result of fraud, an amount equal to 50 percent of the underpayment will be added to the tax.
Public Utility Realty Motor Carrier Road Utility Gross Receipts Bank Loans Liquid Fuels and Fuels Malt Beverage Corporate Loans Cigarette Stamp Agents Marine Insurance Premiums Pari-Mutuel
Payment Methods
The EFT program offers four payment methods to satisfy the $10,000 approved EFT method: 1. Automated Clearing House Debit (ACH Debit) Transaction in which the Commonwealth, through its designated depository bank originates an ACH transaction debiting the taxpayer's bank account and crediting the Department's bank account for the amount of the payment due. Automated Clearing House Credit (ACH Credit) Before selecting this method verify that your financial institution can properly handle this type of transaction and the approximate costs. Transaction in which the taxpayer, through its own bank, originates an entry crediting the Commonwealth's bank account and debiting its own bank account for the amount of the payment due. You are required to perform a pre-notification test through your financial institution against the Commonwealth's bank account established for EFT payment deposits. The Department's bank account number and transit routing number, to perform this test, will be provided upon receipt of your EFT Authorization Agreement. Please keep in mind that for ACH debit and credit transfers, there is a 1-day lag between the date on which payment is authorized and the date on which the transfer is executed. So, all ACH transactions must be initiated at least one business day before the applicable due date. 3. Credit/Debit Cards A taxpayer can use their American Express, Discover/NOVUS, Mastercard, or Visa credit card to pay PA Taxes. You may also use a Mastercard or Visa debit card to make payments. A taxpayer can pay Sales & Use Tax, Employer Withholding Tax, Liquid Fuels and Fuels Tax, and Corporation and Specialty Tax using a credit/debit card. The taxes can be paid via phone or over the Internet by using the service provider listed below: Official Payments Corp. Phone: 1-800-2PAYTAX (1-800-272-9829) Internet: www.officialpayments.com Official Payments Corp. charges a 2.49% convenience fee ($1 minimum charge) for processing the credit card transaction. Debit card convenience fees start at $3.95 per transaction. If you want to confirm your transaction, or if you have any questions, please call: Official Payments Corp. - Customer Service: 1-800-487-4567
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PA e-TIDES
e-TIDES is an Internet-based filing system available free of charge from the PA Department of Revenue at www.etides.state.pa.us . e-TIDES currently allows for the filing of returns and payments for Sales, Use, and Hotel Occupancy Tax, Employer Withholding Tax.
** e-TIDES will no longer accept Unemployment Compensation tax reports and payments. New registrants must use the paper Form UC-2A to file until the new Unemployment Compensation Management System (UCMS) is available. e-TIDES users who were able to file unemployment returns will be receiving information regarding the UCMS before the end of the year. The fourth quarter of 2012 will be filed using the new system.
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.
The site and your data are secured. Register online to activate your e-TIDES account. Simultaneously file your return and payment. Pay electronically using either ACH Debit, ACH Credit, or by Credit Card. If you will be using e-TIDES to transmit your tax returns and payments together electronically, the system will create your payment. You can opt to have returns and payments filed separately. Allow multiple filers within your business or outside your business (i.e. accountant, etc.) to file returns and/or payments for your business. The Multi-Import feature allows you to submit multiple returns or payments by uploading a single file. You control the level of access of your filers. You can dictate if a filer can file a return, make payments, and/or view your Internet filing history. View your Internet filing history online. The system will keep a record of your returns and any payments made electronically by ACH Debit. Your return and payment will be assigned an ID number for future reference. Links to Labor & Industry, PA Open for Business, Revenue Homepage & Commonwealth Homepage.
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PA e-TIDES continued
Filer Registration Instructions
In order to use e-TIDES, you must complete two types of registrations: Filer Registration and Enterprise Registration. NOTE: In order to use e-TIDES electronic filing options you must first be registered with the Department of Revenue to collect Sales, Use, Hotel Occupancy Tax, and Employer Withholding Tax. If you are a new business and need to obtain a tax account number(s), use the PA100 Pennsylvania Enterprise Registration form or register using the Online PA100 at www.pa100.state.pa.us. Log into www.etides.state.pa.us To obtain a complete overview of the e-TIDES registration requirement, click on Registration Requirements. Step 1. Click on Enter e-TIDES. Step 2. Register Options in e-TIDES - The PA Department of Revenue announced the following options: W-2 Transmittal/W-2 Wage Statements/1099-R - The ability to file the W-2 Transmittal/1099R/Rev.-1667. Click on W-2 Transmittal/W-2 Wage Statement/1099R for more information. Amended Returns - You may file amended returns for Sales Tax and Employer Withholding Tax. You can access this in two ways. Click on Amended Return for more information. Enterprise Maintenance - The ability to change/update Sales and Employer Withholding Taxes electronically. Click on Enterprise Maintenance for more information.
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For employees who are residents of Maryland, use the rate corresponding to the area where the employee lives. Since each county sets their local income tax rate, there is the possibility of having 24 different local income tax rates. To reduce the number of local income tax rates, Maryland has established 14 local income tax rates. Use the rate that equals or slightly exceeds the actual local income tax rate to ensure that sufficient tax is withheld. For employees who are not residents of Maryland use the Nonresident rate, which includes no local tax; but does include the Special 1.25% Nonresident rate. Withholding is a combination of the state income tax rate and local taxes. When using the percentage method of withholding, the employer must follow these four steps: 1. Subtract an allowance for Standard Deduction (15 percent of wages for the payroll period with a minimum and maximum as set forth for the particular payroll) from the employees wages. 2. Multiply the amount of one withholding exemption for the payroll period by the number of exemptions claimed on the employees Form MW507. 3. Subtract the amount determined in Step 2 from the employees wages. 4. Apply the appropriate percentage rate table to the resulting figure to determine the amount of withholding, based on the employees county of residence. If the employee is a resident of a nonreciprocal state, use the special nonresident tax rate. How to File For filing purposes employers will fall into one of five types of filing categories: Accelerated those employers who were required to withhold $15,000 or more for the preceding calendar year and who have $700 or more of accumulated withholding are required to remit the withholding payment within three business days following that payroll (pay date). You may request a waiver allowing monthly returns. A renewal of the waiver is also available if eligibility to file federal withholding tax returns on a monthly basis is unchanged. Pay date is defined as the date the paychecks are made available to employees. Quarterly those employers with less than $700 of withholding per quarter who are required to remit the tax withheld on a quarterly basis. Monthly those employers with more than $700 of withholding in any one quarter who are required to remit the tax withheld on a monthly basis.
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bFile is an online service used to file and pay Employers Return of Income Tax Withheld (MW506). A valid FEIN or Social Security number (SSN) and Maryland CRN (this is your eight-digit Maryland tax account number) are required. If you have not registered to file Maryland business taxes or do not have a CRN, you may register on bFiles Web site. When to File The due date for monthly employers is the 15th of the following month (e.g. Januarys return is due before February 15th). The due date for quarterly returns is the last day of the following month (e.g. 1st quarter return is due on April 30th). The due date for the annual return is January 31st. If a due date falls on a Saturday, Sunday or holiday, the return is due on the next business day.
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Federal Posting Requirements: All Employers Fair Labor Standards Act (FLSA; minimum wage) Equal Employment Opportunity is the Law (Office of Federal Contract Compliance Programs) Uniformed Services Employment and Reemployment Rights Act Job Safety & Health Protection (OSHA) Employee Polygraph Protection Act Your Rights Under the Family and Medical Leave Act Employee Right for Workers with Disabilities
Federal Posting Requirements: Contractors Notice to All Employees Working on Federal or Federally Financed Construction Projects Notice to Employees Working on Government Contracts Notification of Employee Rights Under Federal Labor Laws
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Maryland Occupation Safety and Health Act Safety and Health Protection on the Job Wage and Hour Fact Sheet Health Insurance Coverage Equal Pay For Equal Work Employee Rights Under Marylands Unemployment Insurance Law Workers' Compensation Notice & Instruction Employment of Minors Employment Discrimination is Illegal
Abstract of Pennsylvania Child Labor Law Hours of Work for Minors Under Eighteen Minimum Wage Law Poster and Fact Sheet Unemployment Compensation Unemployment Compensation for State Employees (Public Employers) Equal Opportunity & Fair Practices Notices Workers' Compensation Insurance Posting Abstract of Equal Pay Law Pennsylvania Clear Indoor Air Act Signage for No Smoking Pennsylvania Right to Know Law (Public Employers)
MULTI-STATE REPORTING
Multi-State Income Tax Withholding
Rule of Thumb Withhold income tax for the state in which services are performed. This is the default rule for employees who live and work in the same state. When thats not the case, you must consider three other factors: residency, reciprocity, and resident/ nonresident taxation policies. New Hire Reporting Employers who have employees in more than ones state can elect to transmit all new hires magnetically or electronically with only one state. The employer must notify the U.S. Health and Human Services Department which state will be receiving the reports.
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Other payments subject to the supplemental wage rules include taxable fringe benefits and expense allowances paid under a non-accountable plan. How you withhold on supplemental wages depends on whether the supplemental payment is identified as a separate payment from regular wages. SPECIAL OPTIONS FOR TIPS AND OVERTIME PAY: Even though tips reported by employees and overtime pay meet the definition of supplemental wages, the regulations give employers the option of treating such payments as regular wages. The employer does not have to treat them the same for each employee. Withholding on supplemental wage payments to an employee who does not receive $1,000,000 of supplemental wages during the calendar year. If the supplemental wages paid to the employee during the calendar year are less than or equal to $1,000,000, the following rules apply in determining the amount of income tax to be withheld. A. Supplemental wages combined with regular wages If you pay supplemental wages with regular wages but do not specify the amount of each, withhold federal income tax as if the total were a single payment for a regular payroll period. B. Supplemental wages identified separately from regular wages If you pay supplemental wages separately (or combine them in a single payment and specify the amount of each), the federal income tax withholding method depends partly on whether you withhold income tax from your employee's regular wages. 1. If you withheld income tax from an employee's regular wages in the current or immediately preceding calendar year, you can use one of the following methods for the supplemental wages. a. Withhold a flat 25% (no other percentage allowed).
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3. Divide the net amount by the answer in Step 2 to arrive at the gross amount of wages: 4. Gross amount (25.00%) Federal w/h ( 7.65%) FICA/MC w/h ( 3.07%) PA w/h ( 1.00%) Local w/h ( 0.08%) PA UC tax w/h
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The value in excess of $50,000 is not taxable for FUTA, PA income tax, local wage tax or state unemployment purposes. If the employee pays for additional coverage with cafeteria plan salary-reduction dollars, the entire amount of salary reduction premium is excluded from the employee's taxable wages. Table I must be used to calculate the taxable coverage of life insurance over $50,000, and is taxed as other compensation as stated above. If an employer-provided GTL policy provides coverage in excess of $50,000, the value of the insurance benefit to be included in the employee's income is calculated by use of the IRS "Uniform Premium Table I."
The employee's age on the last day of the calendar year needs to be determined before the following formula can be used to calculate the value of GTL in excess of $50,000:
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$170.04
The following are three exceptions where the excess GTL coverage would not be taxable to the employee: 1. The beneficiary of the policy is the company. 2. The beneficiary of the policy is a charitable organization. 3. The employee terminates during the year due to permanent disability.
CAFETERIA PLANS
A cafeteria plan, including a flexible spending arrangement, is a written plan that allows your employees to choose between receiving cash or taxable benefits instead of certain qualified benefits for which the law provides an exclusion from wages. If an employee chooses to receive a qualified benefit under the plan, the fact that the employee could have received cash or a taxable benefit instead will not make the qualified benefit taxable. Generally, a cafeteria plan does not include any plan that offers a benefit that defers pay. However, a cafeteria plan can include a qualified 401(k) plan as a benefit. Also, certain life insurance plans maintained by educational institutions can be offered as a benefit even though they defer pay. Qualified benefits. A cafeteria plan can include the following benefits discussed in section 2.
Accident and health benefits (but not Archer medical savings accounts (Archer MSAs) or long-term care insurance). Adoption assistance. Dependent care assistance. Group-term life insurance coverage (including costs that cannot be excluded from wages). Health savings accounts (HSAs). Distributions from an HSA may be used to pay eligible long-term care insurance premiums or qualified long-term care services. Flexible spending arrangements (FSAs). The maximum contribution is set at $2,500.
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Archer MSAs Athletic facilities. De minimis (minimal) benefits. Educational assistance Employee discounts Employer-provided cell phones Lodging on your business premises Meals Moving expense reimbursements No-additional-cost services Transportation (commuting) benefits Tuition reduction Working condition benefits
It also cannot include scholarships or fellowships (discussed in Publication 970, Tax Benefits for Education). Employee. For these plans, treat the following individuals as employees. A current common-law employee (see section 2 in Publication 15 (Circular E) for more information). A full-time life insurance agent who is a current statutory employee. A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. Exception for S corporation shareholders Do not treat a 2% shareholder of an S corporation as an employee of the corporation for this purpose. A 2% shareholder for this purpose is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, but do not treat the benefit as a reduction in distributions to the 2% shareholder. Plans that favor highly compensated employees If your plan favors highly compensated employees as to eligibility to participate, contributions, or benefits, you must include in their wages the value of taxable benefits they could have selected. A plan you maintain under a collective bargaining agreement does not favor highly compensated employees. A highly compensated employee for this purpose is any of the following employees. 1. An officer. 2. A shareholder who owns more than 5% of the voting power or value of all classes of the employer's stock. 3. An employee who is highly compensated based on the facts and circumstances. 4. A spouse or dependent of a person described in (1), (2), or (3).
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January 1, 2018 A 40% excise tax will be imposed on high-cost health plans (exceeding $10,200 per year for individual; $27,500 for family coverage)
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X X
X X X X
Optional if employer does not charge a COBRA premium Optional if employer does not charge a COBRA premium Optional if employer does not charge a COBRA premium
X X
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An employer must adopt a valuation rule by the first day on which the vehicle is made available to the employee. The employer must continue to use the same valuation method for an employee until the vehicle is no longer used by the employee unless the employee and employer can change to the commuting method.
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Calculation:
Annual lease value Personal use percentage (4,500/15,500) Personal use value included in John's W-2 $5,600.00 29.03% $1,625.68
If fuel is provided, the employer must include an additional 5.5 cents per mile for personal miles. In this example, John would have an additional $247.50 (4,500 X .055) in taxable wages.
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PERSONAL USE OF COMPANY PROVIDED VEHICLE continued Fair Market Valuation Method (Annual Lease Value) - continued
Automobile Fair Market Value $ 0 - 999 1,000 - 1,999 2,000 - 2,999 3,000 - 3,999 4,000 - 4,999 5,000 - 5,999 6,000 - 6,999 7,000 - 7,999 8,000 - 8,999 9,000 - 9,999 10,000 - 10,999 11,000 - 11,999 12,000 - 12,999 13,000 - 13,999 14,000 - 14,999 15,000 - 15,999 16,000 - 16,999 17,000 - 17,999 18,000 - 18,999 19,000 - 19,999 20,000 - 20,999 21,000 - 21,999 22,000 - 22,999 23,000 - 23,999 24,000 - 24,999 25,000 - 25,999 26,000 - 27,999 28,000 - 29,999 30,000 - 31,999 32,000 - 33,999 34,000 - 35,999 36,000 - 37,999 38,000 - 39,999 40,000 - 41,999 42,000 - 43,999 44,000 - 45,999 46,000 - 47,999 48,000 - 49,999 50,000 - 51,999 52,000 - 53,999 54,000 - 55,999 56,000 - 57,999 58,000 - 60,000 Annual Lease Value (ALV) .................................................................................................... $ .................................................................................................... .................................................................................................... .................................................................................................... .................................................................................................... .................................................................................................... .................................................................................................... .................................................................................................... .................................................................................................... .................................................................................................... .................................................................................................... .................................................................................................... .................................................................................................... .................................................................................................... .................................................................................................... .................................................................................................... .................................................................................................... .................................................................................................... .................................................................................................... .................................................................................................... .................................................................................................... .................................................................................................... .................................................................................................... .................................................................................................... .................................................................................................... .................................................................................................... .................................................................................................... .................................................................................................... .................................................................................................... .................................................................................................... .................................................................................................... .................................................................................................... .................................................................................................... .................................................................................................... .................................................................................................... .................................................................................................... .................................................................................................... .................................................................................................... .................................................................................................... .................................................................................................... .................................................................................................... .................................................................................................... .................................................................................................... 600 850 1,100 1,350 1,600 1,850 2,100 2,350 2,600 2,850 3,100 3,350 3,600 3,850 4,100 4,350 4,600 4,850 5,100 5,350 5,600 5,850 6,100 6,350 6,600 6,850 7,250 7,750 8,250 8,750 9,250 9,750 10,250 10,750 11,250 11,750 12,250 12,750 13,250 13,750 14,250 14,750 15,250
For vehicles having a fair market value in excess of $60,000, the ALV is equal to: (.25 x automobile fair market value) + $500. The ALV is decreased for any periods during which the car was unavailable and increased to cover other services provided for the car. The final amount is then multiplied by the percentage that represents personal use.
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9.
10. Gross oil and gas payments for a working interest. 11. Payments to an insurance salesperson who is not your common law or statutory employee. Please see Pub. 15-A for the definition of employee. 12. Directors fees. Forms 1099-MISC are due to the recipient by January 31 and to the IRS by February 28 (April 1 if they are electronically filed). When Forms 1099 are transmitted to the IRS, they must be summarized on Form 1096, Annual Summary and Transmittal of U. S. Information Returns. A separate Form 1096 should be used for each type of information return submitted to the IRS. Boxes are provided on the form to indicate the types of information return being submitted. Backup Withholding: Payments of interest, dividends, rents, royalties, commissions, and nonemployee compensation may be subject to backup withholding at a 28% rate. Backup withholding applies if: 1. The payee fails to furnish their taxpayer identification number (TIN) to you (Form W-9) or 2. The IRS notifies you to impose backup withholding because the payee furnished an incorrect TIN. Electronic Submission: If an employer has 250 or more Form 1099-MISCs, they are requirement to file the returns electronically.
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2. Substantiation: The employee must substantiate the expenses to you with a detailed record of the expense including the time, business purpose, place, and amount of the expense within a reasonable time period. Please see below for a discussion of a reasonable time period. 3. Return of Unsubstantiated Amounts: The employee must return, within a reasonable time, any advances that exceed their substantiated expenses. If the employee does not return or substantiate the expenses, income and employment taxes must be withheld on the first pay period ending after the expiration of the reasonable time. The IRS has provided two safe-harbor methods for meeting the "reasonable time" requirements: Fixed Date Method Advance payments made no more than 30 days before an employee incurs business expenses Expenses that are substantiated within 60 days after they are incurred or paid Excess payments returned to employer within 120 days after being incurred/paid Periodic Statement Method Employer issues periodic statements to employees, at least quarterly, identifying unsubstantiated expenses or unreturned excess payments. Employees substantiate the expenses and refund any excess within 120 days after receiving the statement.
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3. 4.
Non-accountable Plan
Any business expense reimbursement or advance which does not meet the three qualifications of an accountable plan is considered a non-accountable plan. These reimbursements are to be treated as supplemental wages and are subject to federal income, social security, Medicare, and unemployment taxes. Payment is defined as when the employee fails to meet any of the three requirements required for an accountable plan. They must also be reported on the employee's Form W-2. Reimbursing an employee at a higher amount than the standard IRS mileage rate, would result in the amount of the excess being classified as a non-accountable plan.
MOVING EXPENSES
Qualified moving expenses are limited to reimbursements for moving your household goods and traveling to a new residence, including lodging. They are non-taxable fringe benefits (provided the move qualifies as deductible, i.e. a 50 mile increase in distance from work, etc.). These excludable reimbursements should be shown in Box 12 of Form W-2, identified by using Code P, and are not included in Box 1. Non-qualified moving expenses are meals, pre-move house hunting trips, temporary lodging and costs associated with selling the old residence and buying the new. These expenses are not deductible as moving expenses, and therefore, are taxable fringe benefits. Reimbursements for these expenses must be included in boxes 1, 3, and 5 of Form W-2.
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In General
The Military Spouses Residency Relief Act is intended to lessen the state income-tax filing burden on military families. Currently military service members can keep their state of legal residence for tax, voting, car registration and other purposes, regardless where they are stationed. For decades, however, non-military spouses who accompany service members on military assignment have been required to file their state taxes in the states where the service members were stationed. That forced many non-military spouses to file tax returns in a state different from their service-member spouses. The new law says the non-military spouse can now retain the same home state of record/state of residence as the military spouse, as long as the non-military spouses sole reason for leaving that state was due to a permanent change of station (PCS) for the military spouse. The law applies starting in tax year 2009, meaning that spouses of service members who change their residency to the same state of residency as their service-member spouses can recover withholding taxes paid in 2009 to their states of military assignment. For guidance about recovering your withholding from a state that is no longer your state of residency/legal residence, see that states individual website.
Requirements
The spouse of a service member is exempt from income taxation by a state when all three of these qualifications are met. The spouse: 1. Currently resides in a state different than the state of his or her domicile; 2. Resides in the state solely in order to live with the service member; and, 3. The service member is present in the state in compliance with military orders. NOTE: Some states also require a fourth qualification: The spouse and the service member both are able to claim the same domicile.
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Voter registration Auto registration In-state college savings plans and in-state college tuition savings Car, home or other insurance Wills and estate plans Powers of attorney Spouse's business/professional licenses
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Stock Options
If you receive an option to buy or sell stock or other property as payment for your services, you may have income when you receive the option (the grant), when you exercise the option (use it to buy or sell the stock or other property), or when you sell or otherwise dispose of the option or property acquired through exercise of the option. The timing, type, and amount of income inclusion depend on whether you receive a nonstatutory stock option or a statutory stock option. Your employer can tell you which kind of option you hold.
You can transfer the option. You can exercise the option immediately in full. The option or the property subject to the option is not subject to any condition or restriction (other than a condition to secure payment of the purchase price) that has a significant effect on the fair market value of the option. The fair market value of the option privilege can be readily determined.
The option privilege for an option to buy is the opportunity to benefit during the option's exercise period from any increase in the value of property subject to the option without risking any capital. For example, if during the exercise period the fair market value of stock subject to an option is greater than the option's exercise price, a profit may be realized by exercising the option and immediately selling the stock at its higher value. The option privilege for an option to sell is the opportunity to benefit during the exercise period from a decrease in the value of the property subject to the option. Option with readily determinable value. If you receive a nonstatutory stock option that has a readily determinable fair market value at the time it is granted to you, the option is treated like other property received as compensation. Option without readily determinable value. If the fair market value of the option is not readily determinable at the time it is granted to you (even if it is determined later), you do not have income until you exercise or transfer the option. Exercise or transfer of option. When you exercise a nonstatutory stock option, the amount to include in your income depends on whether the option had a readily determinable value.
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Incentive stock options (ISOs), and Options granted under employee stock purchase plans.
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Selling price ($15 100 shares) Purchase price ($10 100 shares) Gain Amount reported as wages [($12 100 shares) $1,000 Amount reported as capital gain
Employee stock purchase plan. If you sold stock acquired by exercising an option granted under an employee stock purchase plan, you need to determine if you satisfied the holding period requirement. Holding period requirement satisfied. If you sold stock acquired by exercising an option granted under an employee stock purchase plan, and you satisfy the holding period requirement, determine your ordinary income as follows. Your basis is equal to the option price at the time you exercised your option and acquired the stock. The timing and amount of pay period deductions do not affect your basis. Your holding period for the property you acquire when you exercise an option begins on the day after you exercise the option. Example 2 XYZ Company has an employee stock purchase plan. The option price is the lower of the stock price at the time the option is granted or at the time the option is exercised. The value of the stock when the option was granted was $25. XYZ deducts $5 from A's pay every week for 48 weeks (total = $240 ($5 48)). The value of the stock when the option is exercised is $20. A receives 12 shares of XYZ stock ($240 $20). A's holding period for all 12 shares begins the day after the option is exercised, even though the money used to purchase the shares was deducted from A's pay on 48 separate days. A's basis in each share is $20.
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The excess of the fair market value of the share at the time the option was granted over the option price, or The excess of the fair market value of the share at the time of the disposition or death over the amount paid for the share under the option.
For this purpose, if the option price was not fixed or determinable at the time the option was granted, the option price is figured as if the option had been exercised at the time it was granted. Any excess gain is capital gain. If you have a loss from the sale, it is a capital loss, and you do not have any ordinary income. Example 3 Your employer, Y Corporation, granted you an option under its employee stock purchase plan to buy 100 shares of stock of Y Corporation for $20 a share at a time when the stock had a value of $22 a share. Eighteen months later, when the value of the stock was $23 a share, you exercised the option, and 14 months after that you sold your stock for $30 a share. In the year of sale, you must report as wages the difference between the option price ($20) and the value at the time the option was granted ($22). The rest of your gain ($8 per share) is capital gain, figured as follows: Selling price ($30 100 shares) Purchase price (option price) ($20 100 shares) Gain Amount reported as wages ($22 100 shares) $2,000; Amount reported as capital gain $ 3,000 2,000 $ 1,000 200 $ 800
Holding period requirement not satisfied. If you do not satisfy the holding period requirement, your ordinary income is the amount by which the stock's fair market value when you exercised the option exceeded the option price. This ordinary income is not limited to your gain from the sale of the stock. Increase your basis in the stock by the amount of this ordinary income. The difference between your increased basis and the selling price of the stock is a capital gain or loss.
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PART C
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EMPLOYER RESPONSIBILITIES
Employer Responsibilities: The following list provides a brief summary of basic responsibilities: New Employees: 1. Verify work eligibility - Form I-9 a. If applicable, use e-Verify 2. Record employees names and SSNs from social security cards 3. Ask employees for Form W-4 Each Payday: 1. Withhold federal income tax based on each employees Form W-4 2. Withhold employees share of social security and Medicare taxes 3. Withhold state and local income taxes (if applicable) 4. Make applicable state deposits electronically NOTE: The due date of federal and state deposits depend on your deposit schedule Quarterly (Due by 4/30, 7/31, 10/31 & 1/31): 1. Calculate the amount of Federal unemployment (FUTA) tax for each employee a. Deposit FUTA tax via EFTPS if undeposited accumulated amount is over $500 5. Make applicable federal deposit via EFTPS: a. Withheld income tax, plus b. Withheld and employer social security taxes, plus c. Withheld and employer Medicare taxes, less 4. File New Hire Reporting Form 5. Ask employees for PA Residency Certification Form (if applicable) 6. Ask employees for MD Form MW507 (if applicable)
2. File Form 941 (pay tax with return if not required to deposit via EFTPS) 3. File applicable state and local withholding tax reconciliations. 4. File state unemployment reconciliation 5. File local services tax if required in your locality 6. Furnish each recipient a Form 1099 (e.g., Forms 1099-R and 1099-MISC) 7. File Forms 1099 and the transmittal Form 1096 8. File Form 940 or 940-EZ 9. File Form 945 for any non-payroll income tax withholding 10. File Form 944 (Employers Annual Federal Tax Return) only if yearly total employer liability is under $1,000 in lieu of Form 941 quarterly
Annually: 1. Remind employees to submit a new Form W4 if they need to change their withholding 2. Reconcile Forms 941 with Forms W-2 and W-3 3. Furnish each employee a Form W-2 4. File copy A of Forms W-2 and the transmittal Form W-3 with the SSA & file copy B & C with the appropriate transmittal form with state and local
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2.
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Definition of Employer: Generally, an employer is a person or organization, subject to the jurisdiction of Maryland, for whom an individual performs a service as an employee. An employer who is not required by law to withhold Maryland income tax may withhold Maryland income tax through a voluntary arrangement with the employees or payees, provided that the employer registers with the Revenue Administration Division. This arrangement must conform to the Maryland withholding and payment requirements.
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Rate .0125 .0225 .0249 .0262 .0263 .0265 .0280 .0283 .0285 .0290 .0296 .0300 .0305 .0306 .0310 .0315 .0320
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Nonresidents from states that have no income tax law or have no written reciprocal income tax agreement with this state are subject to Maryland tax and withholding must be made from salaries and wages for services performed in Maryland. The nonresident rate does not include a local tax, but does include the Special 1.25% Nonresident rate. Use the 1.25% Local Income Tax table to calculate withholding for nonresidents. Reciprocity: Maryland has reciprocal agreements with District of Columbia, Pennsylvania, Virginia, and West Virginia. 1. 2. Employers in these states may withhold Maryland income tax from their employees who are Maryland residents. Maryland employers are not required to withhold Maryland income tax from certain employees who are residents of these states; instead, these employers withhold the appropriate tax of the employee's resident state. To qualify for exemption from Maryland income tax withholding, an employee who is a resident of one of the states with which Maryland has a reciprocal agreement must file Form MW507 (Employee's Maryland Withholding Exemption Certificate) with his or her employer. If a Form MW507 is not filed, the employer should withhold Maryland income tax as for a resident.
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PA UNEMPLOYMENT COMPENSATION
The new Unemployment Compensation Management System, or UCMS, will be available for employers who previously submitted reports on eTides starting the 4th quarter of 2012. All other employers will have access to the UCMS starting the 1st quarter of 2013. For more information on the new UC tax system, please visit the UCMS Web page, or call the UC Employer Contact Center toll-free at (866) 403-6163 or within the Harrisburg area (717) 787-7679. Employer questions regarding the new UC tax system should be submitted in an e-mail to uc-news@pa.gov. The framework for an Unemployment Compensation Amnesty Program was established with recent legislature. The program will exist for a period of three consecutive months and will apply to the following: Unpaid employer contributions through the first quarter of 2012. Unpaid reimbursements due on or before April 30, 2012. Unpaid interest due on contributions through the first quarter of 2012 or on reimbursements due on or before April 30, 2012. Unpaid penalties for reports filed late though the first quarter of 2012. The amnesty program is not yet available, but please stayed tuned for additional information! The taxable wage base for employer contributions will increase from $8,000 to $10,000 over a period of six years in the following manner: 2013: 2014: 2015: 2016: 2017: 2018: $8,500 $8,750 $9,000 $9,500 $9,750 $10,000
Starting the 4th quarter of 2011, the credit week reporting has changed. Under previous law, an employee is considered to be working one credit week if they earn at least $50 during the week. Under current legislation, an employee is considered to be working one credit week if they earn at least $100 during the week. Effective January 1, 2013, public works contractors and subcontractors are required to use the E-Verify Program (operated by the Department of Homeland Security) to verify employment eligibility of each new employee.
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Based on various factors, an employers experience rating may be increased or decreased each year. State unemployment tax is paid each quarter up to maximum amount of wages per year per employee. The new employer rate will apply to an employer for the first 2 or 3 calendar years that the employer pays wages. After that time, the employer may have sufficient experience to receive a computed rate, or will receive a standard rate which will be received from the state. The PA UC Tax to be withheld is .08% (.0008) on all wages earned during 2012 and .07% for 2013. A surcharge on employer contributions has been factored into the employers contribution rate. Due to higher unemployment, this surcharge and employee tax went into effect to protect the PA Unemployment Compensation Trust Fund balance.
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MD UNEMPLOYMENT COMPENSATION
Maryland employers are required to report the amount of total "gross wages" paid each quarter. Employers should file online using the WebTax application or on the "Contribution Return" (DLLR/DUI 15) and on the "Employment Report" (DLLR/DUI 16) supplied by Department of Labor, Licensing, and Regulation (DLLR). Gross wages include all remuneration for personal services, including commissions and bonuses and the cash value of all compensation in any medium other than cash. Employers must also calculate and report the amount of total "taxable wages." For Maryland unemployment insurance purposes, "taxable wages" are defined as the first $8,500 earned by each employee in a calendar year. Maryland employers are assigned one of three different types of rates: the new account rate, the standard rate, or the experienced (earned) rate. New account rates are assigned when the employer units is not eligible for an experienced rate. The tax rate for a new employer will be the average of the rates for all employers in the State during the last five years. Construction companies headquartered in another state will be assigned a tax rate that is the average of the rates for all construction employers in Maryland during the year for which the rate is assigned. If an employer is eligible for an earned rate, but has no taxable wages in a fiscal year (July 1 to June 30) because the employer failed to file its quarterly tax and wage reports, the employer is assigned the standard rate. The standard rate is the highest rate that is in effect for the year. After an employer has paid wages to employees in two rating years (July 1 to June 30) prior to the computation date (July 1st prior to the rated year), he/she is entitled to be assigned a tax rate reflecting his/her own experience with layoffs. The employers new rate is proportional to the number and amount of benefit charges its employees obtain. As a result of the solvency calculation, the MD Division of Unemployment Insurance has determined that the range of rates for calendar year 2013 is 1.0% to 10.5%. An exception is that the rate for new construction employers headquartered in another state was 10.5%. Effective for the 3rd quarter of 2012, the MD Division on Unemployment Insurance will no longer mail paper Quarterly Contribution Reports to employees who historically file their report electronically or use a payroll service. The taxable wage base for 2013 will remain at $8,500. Your tax rate may be appealed within 15 days from the Date of Notice as shown on the rate notice. An appeal of your rate should be submitted in writing to the address shown on the rate notice. However, if you simply have a question concerning your rate, please contact the Experience Rate Unit at the telephone number (410-767-2413 in the Baltimore calling area or toll free at 1-800-492-5524), fax number (410-767-2848), or e-mail address. In this economic time, the Division of Unemployment Insurance has implemented an initiative to assist employers that may find themselves in a position of financial hardship. The Division seeks to assist employers in paying quarterly unemployment insurance taxes for calendar year 2012. Listed below are the Payment Plan options that are available for all four quarterly unemployment insurance returns. Requests for Payment Plans should be made by the quarterly due dates of April 30, 2012, July 31, 2012, October 31, 2012 and January 31, 2013.
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In order to establish a payment plan, please contact the Skip Trace and Investigations Unit at 410-7672525 or send an e-mail to the unit at: uitaxskip@dllr.state.md.us. At the end of the payment installments, interest will be waived as long as all payments were made according to the payment plan. Plan #1: 1) Quarterly Tax Return and Wage Report filed timely; 2) 50% of Tax paid when the Quarterly return is filed; 3) Remaining tax due is spread over three equal monthly installments, due on the last day of the next three months; 4) Note that the last installment of this plan coincides with the due date of the next quarter, and unless another payment plan is in place, the reports and tax must be filed by the due date; Plan #2: 1) Quarterly Tax Return and Wage Report filed timely; 2) Tax due is spread over 6 equal monthly installments, with the first installment due on the Quarterly due date; 3) Note that this plan overlaps the due date of the next quarter, and unless another payment plan is in place, the reports and tax for the overlapped quarter must be filed and paid by the due date; Plan #3: 1) Quarterly Tax Return and Wage Report filed timely; 2) Tax due is spread over 9 equal monthly installments, with the first installment due on the Quarterly due date; 3) Note that this plan overlaps the due date of the next two quarters, and unless another payment plan is in place, the reports and tax for the overlapped quarters must be filed and paid by the due date; Plan #4 1) An individual plan as established with the Division of Unemployment Insurance.
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IF A MULTI-STATE EMPLOYER: May choose to report all new hires to only one state. May choose to report new hires to each state involved. Must report your reporting methodology to the US Department of Health & Human Services (in writing or online).
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2.
3.
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Quarterly - Within 30 days (which may not necessarily be at the end of the month) after the end of each quarter, the employer must remit withheld taxes and employee information to the tax collector/officer of each worksite-location. Monthly - Within 30 days (which may not necessarily be at the end of the month) after the end of each month, the employer must electronically remit withheld taxes and employee information to a single tax collector/officer where the PA corporate headquarters are located. However if the corporate headquarters are located outside the state, the company may remit withheld taxes from all employees statewide to a tax collection district of their choice upon agreement with that tax collector/officer. The electronic format for transfer of funds and information must be obtained from the applicable single tax collector/officer.
5.
Within 30 days of the close of each calendar year, employers complete and submit the Annual Withholding Reconciliation Form to the appropriate tax collector(s)/officer(s).
Should you require assistance or have questions regarding this information, contact your local tax bureau listed on the next page.
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e. f.
The information in a. through e., above, need only be provided once - before the initial payroll is processed. Thereafter, the information should be provided only as employees are added or as changes in the information about existing employees occur. Generally, the information in a. through e. can be obtained by reviewing employee files containing employment contracts or letters, completed Form W-4s, benefit enrollment forms, etc. To facilitate payroll processing, however, the information should be summarized in one place.
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IMPORTANT UNEMPLOYMENT COMPENSATION WAGE AND TAX FILING INFORMATION The new Unemployment Compensation Management System (UCMS) is not yet available. Employers and employer representatives currently registered with e-TIDES should continue to file quarterly reports using e-TIDES (UC-2/2A) or magnetic media (UC-2A) until further notice. New e-TIDES registrations for Unemployment Compensation are no longer being accepted by the Department of Labor & Industry, however the Department of Labor & Industry is still accepting paper UC2/2A forms and magnetic media for UC-2A wage information. For more information, please visit the UCMS website, or call, toll-free, 866-403-6163, or 717-787-7679 within the Harrisburg area.
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STATE OF MARYLAND DEPARTMENT OF LABOR, LICENSING AND REGULATION DIVISION OF UNEMPLOYMENT INSURANCE DUI 15, DUI 16
1. File electronically via webtax https://secure-2.dllr.state.md.us/webtax/welcome.aspx 2. E-Wage Reporting via email - The e-mail address for sending quarterly wage information is ewage@dllr.state.md.us 3. Paper Copies Acceptable contact MD DLLR
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An Internet filing system that allows electronic filing of returns, payments and extension requests.
Businesses without Internet access may file sales and employer withholding taxes electronically by phone.
Alternatives to eTIDES and Telefile to electronically files sales tax, employer withholding tax and corporate tax returns.
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HTTP://WWW.PALITE.ORG/
PALite Portal
The Pennsylvania Local Income Tax Exchange (PALite) Online system allows Pennsylvania employers and residents in participating localities to quickly prepare tax returns to be sent to their local tax collector. This Act 32 compliant web site was made possible with funding from the Pennsylvania Department of Community and Economic Development (DCED).
Participating Localities
Use the Tax Filing Links at left to begin filing your local taxes with the collectors listed below.
Visit http://www.newpa.com/local-government/municipal-statistics for links to other tax collectors and to look up PSD codes and rates.
Blair County Tax Collection Bureau Danville Area Earned Income Tax Office Forest County Tax Office Municipal & School Earned Income Tax Office (Williamsport/Lycoming County)
Berks County (access through Berks) Blair County Tax Collection Bureau Cumberland County Tax Bureau Danville Area Earned Income Tax Office Forest County Tax Office Municipal & School Earned Income Tax York Adams Tax Bureau
The system only permits online filing for residents who have resided in Pennsylvania for the entire tax year. The following tax collectors have switched from PA Lite to their own reporting systems. Click on the link to access their website. Cumberland County Tax Bureau for employer filing Capital Tax Collection Bureau
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Withholding tables can be downloaded from the Comptrollers Web site at www.marylandtaxes.com. If you do not have Internet access, you may call 410-260-7951 from Central Maryland or 1-800-MD TAXES from elsewhere. ADDITIONAL MD WITHHOLDING INFORMATION Accelerated taxpayers may request a waiver allowing monthly returns for the remainder of the calendar year. A renewal of the waiver is also available if eligibility to file federal withholding tax returns on a monthly basis is unchanged. Payers of distributions that are Eligible Rollover Distributions (ERDs) under IRC Section 3405(c), subject to mandatory federal income tax withholding, are required to withhold Maryland income tax from these distributions paid to Maryland residents at the rate of 7.75%. Designated distributions are only subject to Maryland income tax withholding if the payee elects to have withholding made by the payer. The amount required to be withheld is the amount that the payee requests using Form MW507P. A spouse whose wages are exempt from Maryland income tax under the Military Spouses Residency Relief Act may claim an exemption from Maryland withholding tax by filing Form MW507 with their employer.
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Statutory employee. Check this box for statutory employees whose earnings are subject to social security and Medicare taxes but not subject to federal income tax withholding. Do not check this box for common-law employees. There are workers who are independent contractors under the common-law rules but are treated by statute as employees. They are called statutory employees. 1. A driver who distributes beverages (other than milk), or meat, vegetable, fruit, or bakery products; or who picks up and delivers laundry or dry cleaning if the driver is your agent or is paid on commission. 2. A full-time life insurance sales agent whose principal business activity is selling life insurance or annuity contracts, or both, primarily for one life insurance company. 3. An individual who works at home on materials or goods that you supply and that must be returned to you or to a person you name if you also furnish specifications for the work to be done.
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Retirement plan. Check this box if the employee was an active participant (for any part of the year) in any of the following. 1. A qualified pension, profit-sharing, or stock-bonus plan described in section 401(a) (including a 401(k) plan). 2. An annuity plan described in section 403(a). 3. An annuity contract or custodial account described in section 403(b). 4. A simplified employee pension (SEP) plan described in section 408(k). 5. A SIMPLE retirement account described in section 408(p). 6. A trust described in section 501(c)(18). 7. A plan for federal, state, or local government employees or by an agency or instrumentality thereof (other than a section 457(b) plan). Generally, an employee is an active participant if covered by (a) a defined benefit plan for any tax year that he or she is eligible to participate in or (b) a defined contribution plan (for example, a section 401(k) plan) for any tax year that employer or employee contributions (or forfeitures) are added to his or her account. For additional information on employees who are eligible to participate in a plan, contact your plan administrator. For details on the active participant rules, see Notice 87-16, 1987-1 C.B. 446; Notice 98-49, 1998-2 C.B. 365; section 219(g)(5); and Pub. 590, Individual Retirement Arrangements (IRAs). You can find Notice 98-49 on page 5 of Internal Revenue Bulletin 1998-38 at www.irs.gov/pub/irs-irbs/irb98-38.pdf. Also see Notice 2000-30, which is on page 1266 of Internal Revenue Bulletin 2000-25 at www.irs.gov/pub/irs-irbs/irb0025.pdf. Do not check this box for contributions made to a nonqualified or section 457(b) plan.
Third-party sick pay. Check this box only if you are a third-party sick pay payer filing a Form W-2 for an insured's employee or are an employer reporting sick pay payments made by a third party. See Sick Pay Reporting in section 6 of Pub. 15-A.
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Unless noted as optional, all required information must be included on the form. Please type or print legibly in black or blue ink. This form may be duplicated.
Mailing Address: Commonwealth of Pennsylvania New Hire Reporting Program P.O. Box 69400 Harrisburg, PA 17106-9400 FAX Number: 1-866-748-4473 717-657-HIRE(717-657-4473) Customer Service: 1-888-PAHIRES(1-888-724-4737) Electronic Reporting Details https://www.cwds.state.pa.us/cwdsonline/NewHire/NewHireProgramInformation/ElectronicReporting.aspx Reporting newly-hired employees electronically is the easiest way to report. The benefits of reporting electronically include:
Reduces errors; saves on paper, processing time, and postage; Reduces rejected records because of missing or unreadable data; Enables Multi State Employers to easily fulfill the reporting requirements specific to their status as a "Multi State" employer Enables employers with many locations to consolidate their new hire reporting.
Using the PA New Hire Reporting Program Web Site is an easy, no-hassle way of reporting new hires. Employers will receive a printable confirmation of reports received and the web site is available 24 hours a day, 7 days a week.
Online Reporting: Employers may use our web site to report their new hires online. Confirmation reports of new hires submitted via the online form are provided each time an employer reports using this feature. Register for online reporting.
Electronic Reporting: Employers may export their new hire data directly from their payroll or human resources software into a file that meets our layout specifications. Many software vendors provide technical support, and several software vendors have recently added electronic new hire reporting options to their latest upgrades.
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Employee's name and Social Security Number Employee's home address Employee's first physical day of work on the job Employer's name and address Maryland State Unemployment Insurance Ten Digit Account Number Federal Employer Identification Number Whether health insurance is available Several additional data elements may be reported on a voluntary basis. For more information contact the Maryland New Hire Registry Help Desk at (410) 281-6000 or 1-888-MDHIRES, Fax # (410) 281-6004, Toll Free Number 1-888-657-3534. Maryland Report of Hire website The New Hire Registry is a tool that the State of Maryland/DLLR utilizes to protect against unemployment insurance overpayments and fraud. Employer participation in this program is mandatory and helps protect the Maryland UI Trust Fund from individuals who continue to file after finding gainful employment. Where do I report new hires? Electronic Reports - Using our web site's online reporting feature is a very popular choice for employers. This feature provides a printable confirmation of reports received and is available 24 hours a day, 7 days a week. Employers can send new hire data files in a variety of ways, including transferring files through this Web site, electronic transfer via modem (EFT), or mail reports to the Maryland New Hire Registry on diskette. http://newhire-reporting.com/MD-Newhire/electronic.aspx. Non-Electronic Reports - Paper new hire reports may either be faxed or mailed to the Registry. Mail reports to: Maryland New Hire Registry P.O. Box 1316 Baltimore, MD 21203-1316 D - 15 Fax reports to: (410) 281-6004 Toll-free: (888) 657-3534
Information and Instructions to Verify Social Security Numbers Online Overview There are two Internet verification options you can use to verify that your employee names and Social Security numbers match Social Security's records. You can:
Verify up to 10 names and SSNs (per screen) online and receive immediate results. This option is ideal to verify new hires. Upload overnight files of up to 250,000 names and SSNs and usually receive results the next government business day. This option is ideal if you want to verify an entire payroll database or if you hire a large number of workers at a time.
While the service is available to all employers and third-party submitters, it can only be used to verify current or former employees and only for wage reporting (Form W-2) purposes. Why Should I Verify Names and SSNs Online
Correct names and SSNs on W-2 wage reports are the keys to the successful processing of your annual wage report submission. It's faster and easier to use than submitting your requests paper listings or using Social Security's telephone verification option. Results in more accurate wage reports. Saves you processing costs and reduces the number of W-2cs. Allows Social Security to properly credit your employees' earnings record, which will be important information in determining their Social Security benefits in the future. Steps to Register for SSNVS
1. Register to Use SSNVS - Registration is required through www.ssa.gov/bso/bsowelcome.htm. Thirdparty preparers need only register once in their own firm's name. Complete the registration form and select your own password. Social Security will verify your identity against our records and display a User ID. Make note of your the User ID, password and expiration date. Social Security Number Verification Service Handbook 2. Request Access and Activation Code - Return to www.ssa.gov/bso/bsowelcome.htm and login in with your User ID and password. Select "Request Access and Activation Code." 3. Activation Code is mailed to Your Employer - Your employer should give you the activation code which allows you access to SSNVS. 4. Login to Use the Service - Go to www.ssa.gov/bso/bsowelcome.htm, select Login, input your User ID, password and activation code and you will be able to use the service. NOTE: For more detailed instructions on registering and/or using SSNVS, get a copy of the handbook at http://www.ssa.gov/employer/ssnvs_handbk.htm
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