by Afilliated HR & Payroll | Oct 16, 2023 | Regulatory Compliance, Reminder
The Tax Cuts and Jobs Act largely winds down at the end of 2025. Maybe. Many of its provisions are political, so much depends on who’s in the White House and who has control of the House and Senate at that time.
Before you start planning, glean some understanding of what the TCJA does and what may change at the end of 2025. This is not a complete accounting, but it will give you an idea of some of the most major changes.
Income tax rates
Rate changes are likely to have the most impact. Consider, for example, the tax rate for a married couple earning between $274,401 and $364,200. Their tax rate in 2023 is 24%. But on Jan. 1, 2026, it becomes 33%, if the government doesn’t make any adjustments. In a few brackets, however, the rate may actually go down, or not change at all. However, the net result is likely to be higher rates for the vast majority of people.
Estate and gift taxes
The TCJA doubled the 2011 estate and gift tax exemption, which was just $5 million. After adjustments for inflation, the threshold is now $12.92 million per individual and $25.84 million for couples. Look for a major cut as levels fall to pre-TCJA levels. This change won’t affect most families, but it could mean a great deal to those with a high net worth. To prepare, some families may want to accelerate their giving in the next year or two.
Other changes
Most will see a decrease in the child tax credit as well as a cut in the standard deduction. Some advisers are noting that this will make itemized deductions more attractive for more taxpayers.
A key change for businesses will be the ending of the Qualified Business Income Deduction. Also called the Section 199A deduction, this generally allows sole proprietorships, partnerships, S corporations, trusts and estates to deduct up to 20% of their qualified business income. It does not apply to C corporations. Since the QBID is so popular with small businesses, there will be a lot of pressure to keep it going, but nothing is final yet.
What to do now?
No one can be sure what may change years in the future. For now, stay in close touch with tax and financial professionals. Many advisers are recommending that no one tie their plans too closely to guesses of what might happen to the TCJA. That is, be prepared to jump either way. Give us a call and we’ll help you steer a prudent course in the coming months.
by Afilliated HR & Payroll | Mar 20, 2023 | Benefits & Compensation, HR Administration, Reminder
Are you working on this year’s tax return or planning for the future? Either way, you should know the rules on business travel tax deductions.
According to the IRS, whether someone travels for work once a year or once a month, figuring out travel expense tax write-offs might seem confusing. Fortunately, the IRS has information to help all business travelers properly claim these valuable deductions while avoiding erroneous deductions that could lead to penalties.
The main travel tax details
Business travel deductions are available when employees must travel away from their tax home or main place of work for business reasons. A taxpayer is traveling away from home if they are away for longer than an ordinary day’s work and they need to sleep to meet the demands of their work while away.
You can’t go over the top and just send the government the bill, however. The IRS reminds travelers that such expenses must be ordinary and necessary. They can’t be lavish, extravagant or for personal purposes. Employers can deduct travel expenses paid or incurred during a temporary work assignment if the assignment length does not exceed one year.
Travel expenses for conventions are deductible if attendance benefits the business. However, the IRS has special rules for conventions held outside North America.
What is deductible?
According to the IRS, the following are all deductible:
- Travel by airplane, train, bus or car between your home and your business destination.
- Fares for taxis or other types of transportation between an airport or train station and a hotel, or from a hotel to a work location.
- Shipping of baggage and sample or display material between regular and temporary work locations.
- Using a personally owned car for business.
- Lodging and meals.
- Dry cleaning and laundry.
- Business calls and communication.
- Tips paid for services related to any of these expenses.
- Other similar ordinary and necessary expenses related to the business travel.
Keep good records
The IRS may question your deductions, so be sure to keep good records. These records will also help you prepare your tax returns. Evidence of your travel may include receipts, canceled checks and other documents that support a deduction, according to the IRS.
Finally, note that this is just an introduction to what can be a complicated topic. Especially if you travel extensively, be sure to work with a qualified tax professional. Meanwhile, you can check further details on the IRS site.
by Afilliated HR & Payroll | Feb 21, 2023 | Reminder
At-will employment means that the employer or employee can end the employment relationship for almost any reason (with or without cause) at any time (with or without notice).
It does not, however, allow you to terminate someone for an illegal reason, like their inclusion in a protected class or their exercise of a legal right.
Every state (except Montana) assumes the employment relationship is at-will unless there is a legal agreement in place that says otherwise. Assuming you want to maintain the at-will relationship with employees, we recommend including clear language about this in your employee handbook. But keep in mind that even with an at-will relationship, terminations carry risk. A terminated employee can always claim that they were terminated for an illegal reason, at which point you’ll want to be able to show otherwise. To reduce that risk and nip any potential claims in the bud, you should have and document a lawful, business-related reason for each termination.
You can find more information on employment termination and at-will employment on the platform. If you would like more information on drafting an employment contract, please contact an attorney.
by Afilliated HR & Payroll | May 18, 2022 | HR Administration, Industrial Relations, Regulatory Compliance, Reminder
Now that we’ve become a “remote first” company with most of our employees working from home, we’ve started hiring remote employees in other parts of the country. We’re covered by FMLA because we have more than 50 employees—even at our headquarters alone. Will our remote employees be eligible for FMLA leave once they’ve worked the required amount of time?
Yes, these new remote employees will likely be entitled to take leave under the federal Family and Medical Leave Act (FMLA), but not just yet. To be eligible for leave under the FMLA, an employee must have worked for your company for at least 12 months, have worked at least 1,250 hours during the 12-month period immediately before their leave, and work at a worksite with 50 or more employees within a 75-mile radius.
Unlike other situations, for purposes of FMLA, an employee’s home is not a worksite. Rather, their worksite is the office they report to or receive assignments from. So, if your remote employees report to or get their assignments from your headquarters, then they are considered to work at a worksite that has 50 or more employees. If you have multiple physical offices, you’ll need to evaluate which location would be considered each employee’s worksite, and then how many employees fall under that worksite.
Bottom line: an employee whose worksite has 50 or more employees will be eligible for FMLA leave once they’ve worked 1,250 hours and hit their one-year anniversary.
Content courtesy of the HR Support Center – https://affiliatedpayroll.myhrsupportcenter.com
by Afilliated HR & Payroll | May 13, 2022 | HR Administration, Regulatory Compliance, Reminder
What is age discrimination?
Age discrimination (sometimes called ageism) means treating people less favorably because of their age. In the workplace, this commonly happens when an employer favors a younger worker over an older one. In some cases, age discrimination is unlawful.
If your organization has 20 or more employees (for 20 or more weeks in the current or previous year), then it is covered by the federal Age Discrimination in Employment Act (ADEA). Enacted in 1967, this law forbids age discrimination against people who are 40 or older. The ADEA requires covered employers to avoid and prevent age discrimination in all aspects of employment. This includes, but is not limited to, hiring, work assignments, wages, bonuses, promotions, discipline, and termination. Many states have age discrimination laws that kick in at a lower employee count and some even protect younger workers.
You don’t have to intend to discriminate to violate the ADEA. You might even have good intentions. Let’s say that you recently hired an employee in their late 60s and their start date is tomorrow, but you’ve just been informed about COVID exposure in your workplace. Fearing that the new employee may be more at risk because of their age, you push back their start date. Doing this would be a clear case of age discrimination (the proper course of action would be to reach out to the new employee to see what they’d like to do given the situation).
The best way to avoid discrimination is to base employment decisions only on factors that are job related and irrespective of age.
Content courtesy of the HR Support Center – https://affiliatedpayroll.myhrsupportcenter.com
by Afilliated HR & Payroll | May 4, 2022 | Reminder
The IRS says, “All taxpayers should review their federal withholding each year to make sure they’re not having too little or too much tax withheld.” However, employees may not be aware of the IRS’ suggestion, which is why employers should tell them about it.
The employee should look at their check stub each pay period and view the current and YTD FWH to make sure they are on target for the current year individual tax return period.
Why employees should review their withholding
If they have too little federal income tax withheld, employees may end up owing taxes or being hit with a penalty at tax time. Conversely, if they have too much tax withheld, their paychecks will be smaller — which might hurt them financially, as they must wait until tax time to get a refund.
Employees should submit a new Form W-4 if necessary
All new hires must complete a Form W-4, which helps determine how much federal income tax to withhold from their wages. The employee’s Form W-4 information is driven by a person’s personal and financial situation. If an employee experiences certain life changes during the year, they may need to give you a new Form W-4.
Employees should review their withholding every year if they:
- Have a spouse who works as an employee.
- Have two or more jobs simultaneously.
- Work partially during the year.
- Have dependents who are at least 17 years old.
- Claim tax credits such as the child tax credit.
- Itemized deductions on prior year tax returns.
- Earn high incomes.
- Have complex tax returns.
- Had large refunds or large tax bills for the previous year.
Employees may need to update their W-4 if they experience life changes, such as:
- The IRS says, “All taxpayers should review their federal withholding each year to make sure they’re not having too little or too much tax withheld.” However, employees may not be aware of the IRS’ suggestion, which is why employers should tell them about it.The employee should look at their check stub each pay period and view the current and YTD FWH to make sure they are on target for the current year individual tax return period.Why employees should review their withholding
If they have too little federal income tax withheld, employees may end up owing taxes or being hit with a penalty at tax time. Conversely, if they have too much tax withheld, their paychecks will be smaller — which might hurt them financially, as they must wait until tax time to get a refund.
Employees should submit a new Form W-4 if necessary
All new hires must complete a Form W-4, which helps determine how much federal income tax to withhold from their wages. The employee’s Form W-4 information is driven by a person’s personal and financial situation. If an employee experiences certain life changes during the year, they may need to give you a new Form W-4.
Employees should review their withholding every year if they:
- Have a spouse who works as an employee.
- Have two or more jobs simultaneously.
- Work partially during the year.
- Have dependents who are at least 17 years old.
- Claim tax credits such as the child tax credit.
- Itemized deductions on prior year tax returns.
- Earn high incomes.
- Have complex tax returns.
- Had large refunds or large tax bills for the previous year.
Employees may need to update their W-4 if they experience life changes, such as:
- Marriage.
- Divorce or legal separation.
- Childbirth.
- Adoption of a child.
- Retirement.
- Bankruptcy.
- Home purchase.
- Starting a new job or stopping a second job.
- Their spouse gaining or losing a job.
- Adjustments to income, such as student loan income deduction.
- Gain of tax credits or itemized deductions, such as medical expenses, donations to charity, education credit and child tax credit.
- Gain of dividends, self-employment income, IRA distributions, capital gains, interest income, and other taxable income not subject to withholding.
Although year-end may be a convenient time to review filing and withholding statuses, taxpayers can submit a new Form W-4 anytime. Often, they will see a need to do so after preparing their tax returns each year. Depending on where your employees work, they may also need to review their state and/or local tax withholdings every year.
Direct your employees to the IRS Tax Withholding Estimator
The Tax Withholding Estimator helps employees ensure the correct amount of federal income tax is withheld from their paychecks. Employees can review the Tax Withholding Estimator FAQs if they have questions about using the estimator. Also, they can consult their tax advisers.
- Starting a new job or stopping a second job.
- Their spouse gaining or losing a job.
- Adjustments to income, such as student loan income deduction.
- Gain of tax credits or itemized deductions, such as medical expenses, donations to charity, education credit and child tax credit.
- Gain of dividends, self-employment income, IRA distributions, capital gains, interest income, and other taxable income not subject to withholding.
Although year-end may be a convenient time to review filing and withholding statuses, taxpayers can submit a new Form W-4 anytime. Often, they will see a need to do so after preparing their tax returns each year. Depending on where your employees work, they may also need to review their state and/or local tax withholdings every year.
Direct your employees to the IRS Tax Withholding Estimator
The Tax Withholding Estimator helps employees ensure the correct amount of federal income tax is withheld from their paychecks. Employees can review the Tax Withholding Estimator FAQs if they have questions about using the estimator. Also, they can consult their tax advisers.
