Overview: A growing employer trend over the past several years has been to integrate payroll within the HR department. So now more than ever HR managers need to understand all the complex issues and requirements involved in payroll tax law compliance in order to effectively oversee payroll processing and ultimately avoid costly penalties. This involves managing the following tasks, among many others:
Health Care Reform Law Provisions Affect Payroll - The Affordable Care Act includes several new payroll related provisions that employers are required to comply with starting in January 2013 and beyond: Form W-2 reporting of the cost of employer-provided group health plan coverage, the additional Medicare tax on high earners, provisions on health care benefits for employee's children under age 27, and reduced health flexible spending arrangement deferral limits, among others.
Impact of the American Taxpayer Relief Act (ATRA) of 2012 - ATRA 2012 had a major impact on payroll by permanently extending certain expiring Bush-era tax provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001, P.L. 107-16 (EGTRRA), temporarily extending other payroll related provisions that expired at the end of 2011 and 2012, increasing the top marginal income tax rate on the wealthiest one percent of Americans and the withholding rate on supplemental wages over $1 million. ATRA also allowed the employee portion of the Social Security tax rate to revert to 6.2 percent from 4.2 percent, causing most employees’ net pay to be lower in 2013.
Rena Pirsos, J.D., Legal Editor
In-depth review of the spectrum of Minnesota employment law requirements HR must follow with respect to payment of wages.
Delaware is now the 11th state to permit same-sex marriage under a new law that will go into effect on July 1, 2013.
The Depositing and Reporting Withheld Taxes section of the Employment Law Manual has been updated to reflect final regulations issued by the Internal Revenue Service regarding employer identification numbers.
The Taxation of Employee Benefits section of XpertHR's Payroll chapter has been updated to include the 2014 inflation-adjusted health savings account contribution limitations as determined under § 223 of the Internal Revenue Code.
The Internal Revenue Service (IRS) has issued final regulations, effective January 1, 2014, requiring employers that have an employer identification number (EIN) to provide updated EIN application information to the IRS when required by forms, instructions or other guidance that the IRS plans to issue in the near future.
The Internal Revenue Service has released the calendar year 2014 inflation-adjusted amounts for health savings accounts (HSAs) as determined under § 223 of the Internal Revenue Code.
Employee benefits, such as health insurance, sick pay, disability pay, workers' compensation insurance and retirement savings plans, may be subject to withholding for federal income taxes (FIT), Social Security and Medicare (FICA) taxes or federal unemployment (FUTA) taxes. This section assists HR professionals in understanding how each particular type of benefit plan must be structured and how to properly tax and report contributions, reimbursements and distributions in order to ensure compliance with the Internal Revenue Code.
One of the most important payroll related tasks is ensuring that taxes withheld from employees' pay are deposited and reported properly and on time. This section reviews tax deposit schedules, the Electronic Federal Tax Payment System (EFTPS) and other electronic filing requirements, potential penalties for noncompliance, and important tax forms (e.g., 941, W-2, W-3, 1099).
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HR and legal considerations for employers regarding payroll.
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