The Internal Revenue Service has introduced a temporary one-year pilot program that will potentially enable certain small businesses with retirement plans to avoid penalties for not filing a Form 5500-EZ, and certain Forms 5500.
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Taxable versus Tax-exempt Investments
For some high-income taxpayers, their tax liability due to the IRS was unusually high this past tax season, and not for the most obvious reason–the 2013 increase in the top income tax rates.
read more…Employer Obligations for the Additional Medicare Tax
The IRS has issued final regulations relating to the Additional Medicare Tax on income above threshold amounts, as added by the Affordable Care Act.
Employers are responsible for withholding and reporting the 0.9% Additional Medicare Tax, which became effective in 2013. If an employer fails to withhold the correct amount from wages it pays to an employee, the employer may be liable for the amount not withheld and subject to applicable penalties.
In general, employees and their employers must each pay a Medicare tax, at a rate of 1.45%, on the entire amount of the employees’ wages. Effective for employees beginning in 2013, the 0.9% Additional Medicare Tax is imposed on individuals for wages in excess of $250,000 for married taxpayers filing jointly, $125,000 for married taxpayers filing separately and $200,000 for single taxpayers. Thus, for high-wage earners, the employer portion of the Medicare tax remains at 1.45%, but the employee portion can be a total of 2.35% of wages in excess of the threshold amounts.
To comply with the Additional Medicare Tax requirement, employers must withhold the 0.9% Additional Medicare Tax from wages it pays to an employee in excess of $200,000 in a calendar year, without regard to the employee’s filing status, wages paid by another employer or income from self-employment. Thus, generally the employer need not obtain additional information from the employee regarding the employee’s expected actual liability to withhold amounts due under the Additional Medicare Tax.
Employers are responsible for withholding and reporting the 0.9% Additional Medicare Tax, which became effective in 2013. If an employer fails to withhold the correct amount from wages it pays to an employee, the employer may be liable for the amount not withheld and subject to applicable penalties.
In general, employees and their employers must each pay a Medicare tax, at a rate of 1.45%, on the entire amount of the employees’ wages. Effective for employees beginning in 2013, the 0.9% Additional Medicare Tax is imposed on individuals for wages in excess of $250,000 for married taxpayers filing jointly, $125,000 for married taxpayers filing separately and $200,000 for single taxpayers. Thus, for high-wage earners, the employer portion of the Medicare tax remains at 1.45%, but the employee portion can be a total of 2.35% of wages in excess of the threshold amounts.
To comply with the Additional Medicare Tax requirement, employers must withhold the 0.9% Additional Medicare Tax from wages it pays to an employee in excess of $200,000 in a calendar year, without regard to the employee’s filing status, wages paid by another employer or income from self-employment. Thus, generally the employer need not obtain additional information from the employee regarding the employee’s expected actual liability to withhold amounts due under the Additional Medicare Tax.
When Does Once a Year Really Mean Once a Year?
One of the more confusing areas of tax law is the area of retirement planning and Individual Retirement Accounts (IRAs). In fact, there are so many nuances to IRAs, we’ve recently learned that the IRS can’t always get it right either!
read more…Employee Affordable Care Act Penalty
Under the Affordable Care Act (ACA), employers with 50 or more full time equivalent employees are required to offer affordable health coverage options to those full time employees and their dependents. Failure to comply will result in hefty penalties.
read more…The IRS to Prepare Tax Returns?
A recent article in The Plain Dealer addressed a contentious issue that has been circulating for years: with the steady rise of tax-evasion and identity theft, should the Internal Revenue Service be the one to prepare returns for taxpayers?
read more…IRS Crackdown on Employee Misclassification
The Internal Revenue Service is cracking down on employers who misclassify workers in a government effort to boost tax revenue.
read more…New Regulations for Longevity Income Annuities
The Treasury and the IRS have issued final rules on longevity income annuities (also known as a “deferred income annuity” or “longevity insurance”).
read more…IRS Issuing Form 1099-K Notices
The Internal Revenue Service is at it again.
read more…Electronic Delivery of K-1s to Partners and Members
As society continues to move away from paper-based documents toward electronic forms of those documents, one of the challenges facing businesses is how to strike the proper balance between the efficient delivery of such documents and the protection of the rights of those who may not choose to receive such documents digitally. Over the past several years, the number of partnerships and LLCs that offer electronic delivery of K-1s to their partners and members has increased significantly and, in light of this, the IRS has put rules in place to regulate the process of that electronic delivery. The purpose of this message is to inform you of those procedures, as stipulated by the IRS, and to explain how that affects our ability to facilitate the electronic delivery of K-1s to your partners, if you so choose.
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Since 1938, Zinner has counseled individuals and businesses from start-up to succession. At Zinner, we strive to ensure we understand your business and recognize threats that could impact your financial situation.
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