1 THE PAYROLL FACTORY

2 New Hire Forms Required – W 4 – I 9 – PA Certificate of Residency Recommended –Application –Background Checks-Credit, DL, Criminal –Direct Deposit Authorization

3 Federal Withholding 2015 Pub 15 (Circular E) No federal income tax withholding on disability payments for injuries incurred as a direct result of a terrorist attack directed against the United States. D Same-sex marriage. For federal tax purposes, individuals of the same sex are considered married if they were lawfully married in a state (or foreign country) whose laws authorize the marriage of two individuals of the same sex, even if the state (or foreign country) in which they now live does not recognize same-sex marriage. For more information, see Revenue Ruling , I.R.B. 201, available at Outsourcing payroll duties. Employers are responsible to ensure that tax returns are filed and deposits and payments are made, even if the employer contracts with a third party to perform these acts. The employer remains responsible if the third party fails to perform any required action. If you choose to outsource any of your payroll and related tax duties (that is, withholding, reporting, and paying over social security, Medicare, FUTA, and income taxes) to a third-party payer, such as a payroll service provider (PSP) or reporting agent, visit IRS.gov and enter “outsourcing payroll duties” in the search box for helpful information on this topic. For more information on the different types of third party payer arrangements, see section 16. Zero wage return. If you have not filed a “final” Form 941 or Form 944, or are not a “seasonal” employer, you must continue to file a Form 941 or Form 944, even for periods during which you paid no wages. The IRS encourages you to file your “Zero Wage” Forms 941 or 944 electronically using IRS e-file at

4 Federal Withholding 2015 Pub 15 (Circular E) Forms W-4 claiming exemption from withholding expire. Any Form W-4 claiming exemption from withholding for the previous year has now expired. Begin withholding for any employee who previously claimed exemption from withholding but has not given you a new Form W-4 for the current year. If the employee does not give you a new Form W-4, withhold tax based on the last valid Form W-4 you have for the employee that does not claim exemption from withholding or, if one does not exist, as if he or she is single with zero withholding allowances. See section 9 for more information. If the employee furnishes a new Form W-4 claiming exemption from withholding after February 15, you may apply the exemption to future wages, but do not refund taxes withheld while the exempt status was not in place. Treating employees as nonemployees. You will generally be liable for social security and Medicare taxes and withheld income tax if you do not deduct and withhold these taxes because you treated an employee as a nonemployee. You may be able to calculate your liability using special section 3509 rates for the employee share of social security and Medicare taxes and the federal income tax withholding. The applicable rates depend on whether you filed required Forms You cannot recover the employee share of social security tax, Medicare tax, or income tax withholding from the employee if the tax is paid under section You are liable for the income tax withholding regardless of whether the employee paid income tax on the wages. You continue to owe the full employer share of social security and Medicare taxes. The employee remains liable for the employee share of social security and Medicare taxes

5 Federal Withholding New Hire Consider New W-4 Annually When Address Changes When Name Changes When Withholding Changes When Pay Rate Changes When Changing, Adding or Stopping 401k or

6 Federal Withholding Exempt – Employers no longer required to file W4 with 941 Married / Single / Head of Household Married / Single / Head of Household – plus $ Straight % Straight $ Consider additional W/H vs Q Est Tax Payments Year End “All Net” Fed Tax Payments

7 State Withholding PA % Flat Rate NJ - six brackets and a top rate of 8.97% DE - six brackets and a top rate of 6.6%

8 PA Local Taxes Earned Income Tax Employer Required to W/H the Higher of Lived- in or Worked-in Both ER & EE PSD Code Required Philadelphia beats all other EIT –ER must W/H Phila resident regardless of Worked in –Phila ER must W/H for all Non-Resident –Phila Payroll Registration, Q and Annual filings

9 PA Local Taxes

10 PA Local Taxes

11 PA Local Taxes

12 PA Local Taxes Local Services Tax Originally OPT then EMST then LST in 2007 Up to $52 annually If over $10 then exempt less than $12,000 If over $10, must be assessed and collected based on payroll period

13 Thank You for Attending Today’s Seminar. If you have any further questions about payroll taxes, please contact: Allen Noll, President The Payroll Factory

14 Allen R. Noll, CPA, President Web Links from today’s talk: thepayrollfactory.com/wp-content/uploads/2014/08/Certificate-Act-32_2.pdf