By Mark Ward, Payroll Experts, Inc
Hello Friends! We hope you have all had a wonderful holiday season. Whether we like it or not, 2013 is here! Along with the arrival of the new year, many payroll compliance challenges and regulations have also arrived. Your team of Payroll Experts’ are ready for the challenge and are committed to keeping your business compliant with the ever changing regulations and providing you with industry leading tools to manage the challenges payroll presents.
Where do we start……. Let’s start with tax changes!
Social Security Tax: Immediately you and your employees are going to see the effects of the expiration of the Social Security Tax Holiday we’ve enjoyed for a few years. The tax rate for Social Security (OASDI) has jumped back up to 6.2% from 4.2%. What does this mean? All your employees will have 2% more withheld in social security tax from their paychecks. This tax is paid on wages up to $113,700. Be prepared – your employees will immediately notice a difference. When they come calling, you’ll know the answer.
Medicare Tax: The recently enacted health care changes are also affecting the Medicare Tax. In the past the tax rate was 1.45% on all wages. The new laws now have the tax at 1.45% on wages up to $200,000 and then the rate jumps to 2.35% on wages above $200,000. What does this mean? When employees receive pay above $200,000 .9% more will be withheld from their paychecks.
Federal Tax Tables: The IRS has been waiting on Congress before being able to release new tax withholding tables for 2013. We anticipate the release of 2013 tax tables sometime in February. Once the tables are released our systems will sync with the IRS tax tables. Be prepared – once again your employees are going to feel the effects of this and will notice the difference in their paychecks.
State Unemployment: Many states have adjusted (some up, some down) their state unemployment rates they charge to businesses. This is an employer paid tax and we collect/pay this tax on your behalf with every payroll. Many of you have already sent us the notices of your unemployment tax rate changes. If you haven’t sent them please send them to us immediately. However, we also need to prepare you that many states change their minds about the rates they charge in the 1st quarter. It’s a mountain of work but be prepared for us to possibly contact you sometime in the 1st or 2nd quarter about state unemployment adjustments.
Federal Unemployment: This is another employer paid tax. The initial tax rate for 2013 is staying the same at .6%. However, many states have defaulted on their payback of Federal Unemployment Loans. When states default the tax rate then goes up. If you were affected in 2012 we have already notified you. If you are affected in 2013 we will notify you when the IRS releases the information – it is always at the end of the year.
Record Keeping Requirements: As always there are many regulations about maintaining payroll records. Here are a couple of links to previous blog posts we’ve made:
Another great service we offer to help keep you compliant with document retention regulations is our Reportfolio CD. For $125 we will prepare a CD for you that will have all your 2012 payroll reports, tax filings, W-2’s and other related payroll documentation that we have for you. Please contact your payroll specialist if you’d like the Reportfolio CD.
Year End Tax Forms: We are working basically around the clock in preparing your year-end tax filings along with W-2’s for your employees. We will have the printed W-2’s ready for delivery or pickup by the 21st of January. Copies of the W-2’s and your quarterly tax filings will be posted to your online Reports Self Service Portal by Jan 14th.
CONCLUSION: With all this mundane talk about taxes we have probably bored you. How did I get so lucky to have to write the “Boring Stuff” article? As I stated in the opening paragraph, we are committed to keeping you compliant and also providing you with industry leading tools in managing the challenges payroll presents. To add some excitement to this article, I just want to say we have some awesome new tools we are ready to roll out to you!!! I love them – they are going to simplify and empower you as we walk this exciting path of payroll together! Our February PayrollMatters Newsletter will introduce you to these new tools – THEY ROCK, BE EXCITED! Thank you for giving us the opportunity to work with you. We admire you and celebrate your successes!