Employment Tax Update: Fiscal Cliff and Other Entertaining Stuff February

PwC Agenda 2 February 2013SVAPA Fiscal Cliff-American Taxpayer Relief Act New York – MCTMT ruling Healthcare Reform Health Coverage Reporting Medicare Increase Quality Stores Decision Federal Payroll Changes State and Local Payroll Changes Work Life Balance

PwC Fiscal Cliff- An update Employee Social Security tax rate returns to 6.2% -Employers have until Feb 15 to implement new rate -Social Security fund is expected to start going bankrupt in 2033 Withholding Rate changes -Employers have until Feb 15 to implement new rates -Increase top tax rate in 2013 from 35% to 39.6% -Supplemental rate is 25% -Supplemental rate for payments greater than $1m is 39.6% February SVAPA

PwC Fiscal Cliff-An update Transportation Fringe -Retroactively increases the tax-free exclusion for mass transit expenses for 1/1/12 to 12/31/12 to $240, 01/01/13 now $245 -Adjustments are not optional-amended returns must be filed -Form 941 “Special Administrative Procedure’ announced in Notice If you provided more than $125 but less than $240 in transit benefits out of your funds or through salary reduction, it should be excluded from income. -Form 941-X -If no W-2s to SSA yet, you can VOID -If W2s have been sent, you have to create a W2c SVAPA 4 February 2013

PwC Fiscal Cliff-An Update Educational Assistance -Permanently extended at $5,250 Adoption Assistance -Permanently extended and currently at $12,970 Emergency Unemployment Extended Benefits -Extended through January 1, 2014 WOTC will be retroactively extended from 1/1/12 to 12/31/13 SVAPA 5 February 2013

PwC Fiscal Cliff-An update Backup withholding -Still at 28% Employer credit for employer-provided child care facilities is maintained Child care expense credit is $3,000 for one child and $6,000 for two or more children SVAPA 6 February 2013

PwC New York - MCTMT New York Metropolitan Commuter Transportation Mobility Tax ruling A Nassau County Supreme Court decision found the MCTMT to be unconstitutional on August 22, This litigation is not concluded. Taxpayers who have been paying this tax should continue to pay and file returns. Protective claims and process for filing. If this requirement changes, the New York Department of Taxation and Finance will notify taxpayers. 7 February 2013SVAPA

PwC Health Coverage Reporting The Affordable Care Act requires employers to report the cost of coverage under an employer-sponsored group health plan. Box 12, Code DD IRS has issued a table this shows exactly what should be reported -Employer and employee portions of health care cost Coordination with HR -Have you started gathering the data? -Are you prepared and have you tested the upload? Coordination with vendor / W-2 preparer 8 February 2013SVAPA

PwC Increased Medicare Withholding For tax years beginning after December 31, 2012, an additional 0.9% hospital insurance tax (Medicare) applies to high-earning workers and self employed. Code Sec. 3101(b)(2), employment wages received in excess of: $250,000 for joint returns; $125,000 for married taxpayers filing a separate return; and $200,000 in all other cases. Under Code Sec. 1401(b)(2), the additional 0.9% Medicare tax applies to self- employment income for the tax year in excess of the above figures. Employers are obligated to withhold the additional 0.9% Medicare tax only on the individual's wages in excess of $200,000 (disregard wages received by the spouse). If the additional Medicare tax is not collected by the employer withholding, the individual is obligated to pay the tax. There is no employer match for the additional Medicare tax. The IRS said it does not plan to add additional boxes to Form W-2. 9 February 2013SVAPA

PwC Increased Medicare Withholding FAQs provided by the IRS Married co-workers Mergers/Acquisitions Agent payments Paymaster 941 to be changed SVAPA 10 February 2013

PwC Quality Stores Sixth Circuit Affirms Quality Stores Decision on FICA Taxation of Severance Pay – Billions of Dollars in Refund Claims Are at Issue Severance payments made to employees pursuant to an involuntary reduction in force were not "wages" for FICA tax purposes The statute of limitations for filing a refund claim for severance payments made in 2009 closes on April 15, See §6513(c). Where the Sixth Court decision is applicable: -Kentucky -Michigan -Ohio -Tennessee 11 February 2013SVAPA

PwC Federal Taxes in 2013 FICA Base$113,700 Medicare1.45% for first $200k 2.35% for wages greater than $200k 401k, 403b$17,500 Catch up Contribution$5,500 Annual Comp Limit$255,000 Mileage56.5 cents Mileage for moving24 cents Foreign Earned Income Exclusion$97, February 2013SVAPA

PwC Federal Taxes in 2013 Flexible Spending Limit$2,500 Health Savings AccountAnnual deductible for individual coverage $1,250, family $2,500 Maximum annual election for individuals $3,250 and $6,450 for family coverage Form 941 Schedule RAgents must complete when filing an aggregate return preparing the allocation schedule SVAPA 13 February 2013

PwC SUTA Affects on FUTA FUTA tax (normally $42 per employee annually) is expected to nearly triple to an average of $124 per employee by At least 23 states have depleted state UI trust funds, and have had to draw from a special federal UI loan fund as of May 21, Nineteen States are now FUTA Credit Reductions for February 2013SVAPA

PwC State Income Tax Withholding - Mobility 3485/H.R. 1864, the Mobile Workforce State Income Tax Simplification Act of 2012 To limit the authority of States to tax certain income of employees for employment duties performed in other States IN THE SENATE OF THE UNITED STATES August 2, Mr. BROWN of Ohio introduced the bill which was read twice and referred to the Committee on Finance Letter to Senate committee from 184 employer asking the Senate to pass the bill 15 February 2013SVAPA

PwC Audit Activity at the State and Federal Level IRS audits -Contractor focused -Nonresident withholding State audits -NY -CA Locals 16 February 2013SVAPA

PwC California Specific Items California Garnishments: Effective July 1, 2013 Lesser of 25% of the employee’s disposable income; or the amount by which the employee’s disposable earnings for the week exceeds 40 times the state minimum hourly wage ($8/hour) Currently 30 times San Jose Minimum Wage Effective , raised to $10 an hour for employees working in San Jose Business Day Replaces Banking Day Effective SVAPA 17 February 2013

PwC Work Life Balance My life as a motivational speaker I haven’t climbed Mount Everest I haven’t had my leg gnawed off by wild ferrets Nine Methods of Life Balance February 2013 Paytech

PwC Nine Methods for Life Balance SVAPA 1.Healthy Living is About More Than Diet Being true to yourself and being present 2.Peace and a Positive Mind Minimize distractions personally and professionally 3.The Value of a Giving Heart and Spirit Give and you will receive 4.Live in your POWER Perspective, Ownership, Wisdom, Engagement, Reward 19 February 2013

PwC Nine Methods for Life Balance SVAPA 5.Work to Maximize Your Opportunities Recognize your achievements 6.Happy is a Choice Contentment and joy are lifestyles 7.Build Lasting Confidence True confidence should come from a life well lived and enjoyed 8. The Courage to Be Faithful Faithful to who you are 9.Exponential Living Comfortable with who you are, not only what you do 20 February 2013

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