A note from Senior Tax Accountant Laura Hunter, CPA:
As we approach the end of the year, there are certain reporting requirements that you need to be conscious of and pending tax changes that you should prepare for.
Key Payroll Changes
If you outsource your payroll services, your provider likely is aware of these issues, but it is worth keeping them in mind:
- Employers who filed more than 250 W-2s last year must report employer-sponsored health care benefits on the W-2 this year.
- To ensure that businesses are not intentionally under-reporting income, the IRS requires third-party payment entities to issue a Form 1099-K for merchant card transactions, which the IRS will match against businesses’ reported income.
- Beginning in 2013, all individuals who earn more than $200,000 or married couples who earn more than $250,000 will pay an Additional Medicare Tax of 0.9%. Employers are only responsible for withholding the additional tax from individuals whom they pay more than $200,000. So, for instance, if a married couple each makes $150,000, their respective employers will not need to withhold the 0.9% tax but the couple will be responsible for paying it on the 2013 tax return.
- Employees will pay more in Social Security taxes in 2013, as the tax rate and wage base increase. Employees will be assessed a 6.2% payroll tax on the first $113,700 of wages in 2013 – up from 4.2% on $110,100 in wages in 2012. The payroll tax rate was temporarily lowered from 6.2% to 4.2% in 2011 and 2012.
- Employers in Ohio and Kentucky will once again face an increase in federal unemployment tax (FUTA). Because each state still has unpaid federal loans, the states’ FUTA credit was reduced for a second straight year, which essentially means that employers in those states must bear more of the tax burden. In addition, the FUTA wage base in Kentucky will rise from $9,000 to $9,300; it remains $9,000 in Ohio.
For more information on these or any tax issue, contact your Barnes Dennig tax representative at (513) 241-8313.