Vision Payroll

April 26, 2014

IRS Releases Revised Form 941-X

 

IRS Releases Revised Form 941-X

IRS Releases Revised Form 941-X

The Internal Revenue Service (IRS) recently released a revised version of Form 941-X, Adjusted Employer’s QUARTERLY Federal Tax Return or Claim for Refund.

COBRA Premium Assistance Credit May Only Be Claimed on Form 941-X

For tax periods beginning after 2013, the COBRA premium assistance credit may only be claimed on Form 941-X. Employers are longer able to claim the credit on either Form 941 or Form 941-SS. Employers are instructed to first file the Form 941 or Form 941-SS and then file the Form 941-X. Employers should not file the Form 941-X in advance of their regular filing.

Social Security Tax Rates May Differ

Depending on the period being amended, different social security tax rates may be in effect. For years other than 2011 and 2012, the employee and employer social security tax rates are 6.2% each or a total of 12.4%. For 2011 and 2012, the employee tax rate is 4.2% and the employer tax rate is 6.2% for a total of 10.4%. The correct rate should be used for the period being amended.

Contact Vision Payroll for Questions on Form 941-X

Contact Vision Payroll if you have further questions on Form 941-X.

June 22, 2012

Question of the Week: What Is the Additional Medicare Tax?

What Is the Additional Medicare Tax?
What Is the Additional Medicare Tax?
This week’s question comes from Savannah, a corporate controller.

Savannah asks:

Some of our employees are asking us about the Additional Medicare Tax and when we will start withholding it. What is the Additional Medicare Tax?

Answer: The Additional Medicare Tax was enacted as part of the Patient Protection and Affordable Care Act. The Additional Medicare Tax is effective for tax years beginning after December 31, 2012. The rate of the Additional Medicare Tax is 0.9% on wages subject to Medicare Tax that are in excess of an individual’s threshold based on the individual’s filing status for federal income taxes.

Railroad Retirement Tax Act (RRTA) Compensation Is Subject To Additional Medicare Tax

All RRTA compensation that is in excess of the applicable threshold for an individual’s filing status is subject to additional Medicare Tax if it is subject to Medicare Tax.

Individuals Liable for Additional Medicare Tax at Certain Thresholds

If an individual (or individual and spouse, if filing jointly) have qualified income in excess of the threshold for that individual’s filing status, the individual is labile for Additional Medicare Tax. Qualified income is wages, other compensation, and self-employment income.

Thresholds for Different Filing Statuses in 2013

The thresholds in 2013 are as follows:

Filing StatusThreshold
Married Filing Separately$125,000
Single$200,000
Head of Household with Qualifying Person$200,000
Qualifying Widow or Widower with Dependent Child$200,000
Married Filing Jointly$250,000

More Information on the Additional Medicare Tax Will Be Forthcoming

Over the next few weeks, Vision Payroll will be providing more information on the Additional Medicare Tax. Be sure to check back regularly for further updates.

October 30, 2011

IRS Releases 2011 Form 944

IRS Commissioner Douglas H. Shulman
IRS Commissioner Douglas H. Shulman
The Internal Revenue Service (IRS) has released the 2011 Form 944, Employer’s ANNUAL Federal Tax Return, and related instructions. Form 944 is designed so the smallest employers (those whose annual liability for social security, Medicare, and withheld federal income taxes is $1,000 or less) will only file once a year instead of every quarter.

Several Changes Have Been Made To the 2011 Form 944

The 2011 Form 944 has several new items. The new items include the following:

Employee Tax for Social Security Cut To 4.2%

The employee tax rate for social security has been cut to 4.2%, although the employer rate remains at 6.2%. The Medicare tax rate remains at 1.45% for both employees and employers.

COBRA Premium Assistance Credit Continues

The credit for COBRA premium assistance payments applies to premiums paid for employees involuntarily terminated between September 1, 2008, and May 31, 2010, and to premiums paid for up to 15 months. The credit is claimed on line 9a.

Social Security Wage Base for 2011

Do not withhold or pay social security tax after an employee reaches $106,800 in social security wages for the year. There is no limit on the amount of wages subject to Medicare tax.

Advance Payment of Earned Income Credit (EIC)

The option of receiving advance payroll payments of EIC expired on December 31, 2010. Individuals eligible for EIC in 2011 can still claim the credit when they file their federal income tax return.

Electronic Deposit Requirement

Beginning January 1, 2011, you must deposit all depository taxes (such as employment tax, excise tax, and corporate income tax) electronically using the Electronic Federal Tax Payment System (EFTPS). Forms 8109 and 8109-B, Federal Tax Deposit Coupon, cannot be used after December 31, 2010.

Vision Payroll Will File Form 944 for Eligible Taxpayers

Contact Vision Payroll if you have further questions on Form 944.

January 10, 2011

2010 Form W-2 Tips, Part 7, Box 6 Medicare Tax Withheld

Filed under: News — Tags: , , , — Vision @ 6:24 pm

This is one in a continuing series on the 2010 Form W-2, Wage and Tax Statement, which employers must generally furnish to employees no later than January 31, 2011. Forms mailed on the due date are considered furnished if properly addressed. Employers unable to meet that deadline may file a request for extension of time to furnish the forms. Today we review Box 6, Medicare tax withheld.

No Limit in 2010 on Medicare Tax Withheld

Box 6 shows the total amount of employee Medicare withheld, including the amount withheld on tips. It does not include any employer contribution toward Medicare on the employee’s behalf. The 2010 rate was 1.45% and unlike social security, there is no taxable wage base. Therefore, there is no upper limit to the amount entered in this box. If the employer paid the employee’s share of such taxes rather than withholding them, the tax must be grossed up and included in boxes 1, 3, and 5.

Box 7, Social Security Tips Is the Next Topic

The next topic in this continuing series will be Box 7, social security tips. Contact Vision Payroll with any questions on the 2010 Form W-2.

January 9, 2011

2010 Form W-2 Tips, Part 6, Box 5 Medicare Wages and Tips

Filed under: News — Tags: , , , — Vision @ 12:39 pm

This is one in a continuing series on the 2010 Form W-2, Wage and Tax Statement, which employers must generally furnish to employees no later than January 31, 2011. Forms mailed on the due date are considered furnished if properly addressed. Employers unable to meet that deadline may file a request for extension of time to furnish the forms. Today we review Box 5, Medicare wages and tips.

No Limit in 2010 on Medicare Wages

Box 5 shows the total amount of wages subject to Medicare tax. For most employees, this amount equals the sum of boxes 3 and 7, with one exception. There is no limit on the amount of Medicare wages as there is with social security wages. Additionally, depending on the date of hire, some governmental employees may have Medicare wages, but not social security wages.

Box 6, Medicare Tax Withheld Is the Next Topic

The next topic in this continuing series will be Box 6, Medicare tax withheld. Contact Vision Payroll with any questions on the 2010 Form W-2.

December 1, 2010

Tip of the Week: IRS Releases 2010 Form 944

IRS Commissioner Douglas H. Shulman
IRS Commissioner Douglas H. Shulman
The Internal Revenue Service (IRS) has released the 2010 Form 944, Employer’s ANNUAL Federal Tax Return, and related instructions. Form 944 is designed so the smallest employers (those whose annual liability for social security, Medicare, and withheld federal income taxes is $1,000 or less) will only file once a year instead of every quarter.

Several Changes Have Been Made To the 2010 Form 944

The 2010 Form 944 has several new items. The new items include the following:

Qualified Employer’s Social Security Tax Exemption

Qualified employers are allowed an exemption for their share (6.2%) of social security tax on wages/tips paid to qualified employees after March 31, 2010, and before January 1, 2011.

Qualified Employer’s Social Security Tax Credit

Qualified employers are allowed a credit for their share (6.2%) of social security tax on wages/tips paid to qualified employees after March 18, 2010, and before April 1, 2010.

COBRA Premium Assistance Credit Extended

The credit for COBRA premium assistance payments applies to premiums paid for employees involuntarily terminated between September 1, 2008, and May 31, 2010, and to premiums paid for up to 15 months.

Social Security Wage Base for 2010 and 2011

Do not withhold or pay social security tax after an employee reaches $106,800 in social security wages for the year. There is no limit on the amount of wages subject to Medicare tax.

Advance Payment of Earned Income Credit (EIC)

The option of receiving advance payroll payments of EIC expires on December 31, 2010. Individuals eligible for EIC in 2011 can still claim the credit when they file their federal income tax return. Individuals who receive advance payments of EIC in 2010 must file a 2010 federal income tax return.

Electronic Deposit Requirement

The IRS has issued proposed regulations under §6302 of the Internal Revenue Code of 1986 which provide that beginning January 1, 2011, you must deposit all depository taxes (such as employment tax, excise tax, and corporate income tax) electronically using the Electronic Federal Tax Payment System (EFTPS). Under these proposed regulations, which are expected to be finalized by December 31, 2010, Forms 8109 and 8109-B, Federal Tax Deposit Coupon, cannot be used after December 31, 2010.

Vision Payroll Will File Form 944 for Eligible Taxpayers

Contact Vision Payroll if you have further questions on Form 944.

July 5, 2010

Impact of the Small Business Health Care Tax Credit on Employment Tax Payments

The new health reform law gives a tax credit to certain small employers that provide health care coverage to their employees, effective with tax years beginning in 2010. Over several weeks, Vision Payroll will be providing further information on the Small Business Health Care Tax Credit. Today’s topic is Impact of the Small Business Health Care Tax Credit on Employment Tax Payments.

Employers may not reduce the amount of employment tax payments paid and use the Small Business Health Care Tax Credit to offset the taxes not paid. Federal employment taxes include both those imposed on the employer and those imposed on the employee. They include federal unemployment tax, the employer portion of Old-Age Survivors and Disability Insurance (OASDI) tax, also known as social security and Medicare, federal income tax withheld, social security tax withheld, and Medicare tax withheld. The Small Business Health Care Tax Credit may only offset income tax.

The next topic to be covered in this series is Transition Relief for Employers That Do Not Pay a Uniform Percentage. Contact Vision Payroll if you have further questions on Impact of the Small Business Health Care Tax Credit on Employment Tax Payments.

June 16, 2010

Tip of the Week: IRS Releases Updated Form 8846

The Internal Revenue Service (IRS) recently released an information sheet attached to 2009 Form 8846, Credit for Employer Social Security and Medicare Taxes Paid on Certain Employee Tips. The note on the information sheet relates to employers that have claimed payroll tax forgiveness under the Hiring Incentives to Restore Employment Act of 2010 (HIRE Act).

According to the note, employers should do the following (all line references are to Form 8846):

If any tipped employee’s wages are exempt from social security taxes, check the box on line 4 and attach a separate computation showing the amount of tips subject to only the Medicare tax rate of 1.45%. Subtract these tips from the line 3 tips, and multiply the difference by .0765. Then, multiply the tips subject only to the Medicare tax by .0145. Enter the sum of these amounts on line 4.

Contact Vision Payroll if you have any further questions on the revision to Form 8846.

March 17, 2010

Tip of the Week: Jobs Bill to Provide Tax Relief to Employers

HR 2847, An Act making appropriations for the Departments of Commerce and Justice, and Science, and Related Agencies for the fiscal year ending September 30, 2010, and for other purposes, was passed by Congress and sent to President Barack Obama who indicated he will sign it March 18, 2010. The law, also called the Hiring Incentives to Restore Employment Act or HIRE Act, allows employers who hire employees after February 3, 2010 (and before January 1, 2011) who were unemployed for sixty days in the period from February 3, 2010 to December 31, 2010 to not pay the employer portion of the social security tax (6.2% of taxable earnings). Employers must still collect and pay the employee portion of the social security tax. Additionally, the employer and employee portion of the Medicare tax must still be collected and paid for all employees. The Internal Revenue Service (IRS) is not planning to change the Form 941 for the first quarter 2010 (the three months ended March 31, 2010). Credits for taxes paid in this quarter will be available on the Form 941 filed for the second quarter 2010. The credit amount would be treated as an additional payment for the second quarter 2010. Employers who employ such qualifying individuals for a fifty-two week period would also be eligible for a $1,000 credit against income taxes. Contact Vision Payroll if you have any questions on the new law.

March 7, 2010

IRS To Honor Medical Resident FICA Refund Claims

In IR-2010-025, the Internal Revenue Service (IRS) announced that it “has made an administrative determination to accept the position that medical residents are excepted from FICA taxes based on the student exception for tax periods ending before April 1, 2005, when new IRS regulations went into effect.” According to the release, “[t]he IRS will…begin contacting hospitals, universities and medical residents who filed FICA (Social Security and Medicare tax) refund claims for these periods with more information and procedures. Employers and individuals with pending claims do not need to take any action at this time.”

Contact Vision Payroll if you have any questions on the FICA determination.

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