New Year, New Updates

One of the incredibly fun things about being an employer is keeping track of all the updates related to tax forms that impact benefits and withholdings for your employees. Okay, maybe that doesn’t sound so fun – but it is important!

As 2017 quickly approaches, here’s a brief update on some of the updates you should be prepared for in the new year:

W2s

The IRS has kindly updated the W-2 deadline to January 31 (in case you don’t remember what a W-2 is, here’s your refresh). This is an important deadline to pay attention to as employers typically used to have until the end of February, if filing on paper, or the end of March, if filing electronically, to submit this form.

Why the change? The IRS is complying with a new federal law, which is trying to make it easier for them to detect and prevent fraud. This rule also applies to Form 1099-MISC (here’s your reminder).

Flex Spending Accounts

For any plan starting in 2017, the employee salary reduction for contributing to health flexible spending accounts was increased to $2,600. It was previously $2,550 in 2016.

Medical Savings Account

If your organization has a high deductible health plan, your employees (or you as the employer) can make contributions to it.

What do we mean by a high deductible plan? Well for 2017, the IRS states a high deductible plan is one with an annual deductible of $2,250-$3,350 for individual coverage (this is the same as it was for 2016). If your employee has family coverage, this deductible changes to $4,500-$6,750 (previously $4,450-$6,700 in 2016).

The maximum out-of-pocket expense has also been raised to $4,500 for individuals (previously $4,450) and $8,250 for family ($8,150 in 2016).

Social Security

The Social Security wage base was increased by $8,700 for 2017, bringing it to $127,700. The maximum tax employees and employers will pay for Social Security in 2017 will be $7,886.40.

There continues to be no limit to the wages subject to Medicare tax. In other words, all applicable wages are subject to 1.45% tax for Medicare.

And don’t forget about your organization

The IRS has also changed a few of the company filings as well. These include partnership tax returns and C-corporation tax returns.

Not quite sure what we’re talking about? Learn more about entity selection for your organization.

Partnership tax returns are now due March 15, instead of April 15. C-corporations, on the other hand, will now have their tax returns due April 15 instead of March 15.

But what if your corporation doesn’t follow a calendar year? Well, there’s still rules that apply to you too. If your partnership isn’t on a calendar year, your return is due on the 15th of the third month following your year end. The same is true for C-corporations, who will need to file on the fourth month after their year-end.

However, if your corporation has a June 30 year-end, you do not get the extra month. You will still need to file your returns on September 15th.

The moral of the story …

In case you didn’t think accounting and the financial side of your business was complex enough, there’s the issue of updates from the IRS. These must be complied with and they can be complicated. If in doubt, ask. We’re always here to help.

Tax Season Means Tax Planning

It’s coming up on a little thing we like to call busy, I mean, tax season. This particular time in the life of a tax professional is marked by, you guessed it, taxes. Which brings us to the point of our post today … are you thinking about your taxes?

It’s important to do more than just rush into your taxes, hoping for a refund. Rather, by strategically thinking about your taxes (both personally and professionally) and planning for them, you can make the most of this season and your finances.

But where to begin? Here are some of the basic things you may encounter on your taxes:

  • Itemized v. standard deductions
  • Individual income tax – this is different based on if you’re married filing jointly, filing single, etc.
  • Child tax credit – can be used for children under the age of 17
  • Charitable contribution deduction – remember these tips?
  • Employee benefit plans and individual retirement plans
  • Taxable Social Security benefits
  • Education Credits and deductions
  • Estate and trust income tax rates

Taxes can be complex, but by taking the time to understand what’s going on in your finances, you’ll be in a better place for tax season and for the future.

To learn more quick tax planning information, check out our 2015-16 Tax Planning Guide.