IRS Advises Taxpayers to Take a Fresh Look as 2021 Year-End Nears

The Internal Revenue Service reminds taxpayers that the last quarter of 2021 is a good time to check withholding. Life brings constant changes to individual financial situations. Events like marriage, divorce, a new child or home purchase can all be reasons to adjust withholding. The convenient Tax Withholding Estimator, also available in Spanish, will help taxpayers determine if they have too much withheld and how to make an adjustment to put more cash into their own pocket now. In other cases, it will help taxpayers see that they should withhold more or make an estimated tax payment to avoid a tax bill when they file their tax return next year.

Items that may affect 2021 taxes

Things to consider when adjusting withholding for 2021 are:

  • Coronavirus tax relief – Tax help for taxpayers, businesses, tax-exempt organizations and others – including health plans – affected by coronavirus (COVID-19).
  • Disasters such as wildfires and hurricanes – Special tax law provisions may help taxpayers and businesses recover financially from the impact of a disaster, especially
    when the federal government declares their location to be a major disaster area.
  • Job loss – IRS Publication 4128, Tax Impact of Job Loss (.pdf), explains how this unfortunate circumstance can create new tax issues.
  • Workers moving into the gig economy due to the pandemic – IRS advises people earning income in the gig economy to consider estimated tax payments to avoid a
    balance or penalties when they file.
  • Life changes such as marriage or childbirth – Getting married or having a child are just a couple of life events that can affect your refund or how much you owe.

Pay as you go
Taxes are generally paid throughout the year whether from salary withholding, quarterly estimated tax payments or a combination of both. About 70% of taxpayers, however, over
withhold their taxes every year, which typically results in a refund. The average refund in 2021 was more than $2,700. Taxpayers can pay online, by phone or from the IRS2Go app. They can schedule payments for future dates, which can be useful during filing season, for payment plan payments or for estimated tax payments.

Taxpayers can also log into their IRS.gov/account to view the amount they owe, their payment plan details and options, their payment history (up to 5 years), any scheduled or pending
payments, and key tax return information from their most recent tax return.

Tax Withholding Estimator
The IRS Tax Withholding Estimator makes it easier for everyone to have the right amount of tax withheld. This is especially important for anyone who faced an unexpected tax bill or a penalty
when they filed this year, or whose jobs or tax circumstances have changed during the year. The tool offers workers, as well as retirees, self-employed individuals and other taxpayers, a
user-friendly, step-by-step tool for effectively tailoring the amount of income tax they have withheld from wages and pension payments. For more information about taxes, estimated taxes and tax withholding, see Tax Withholding at IRS.gov.

NY Paid Family Leave..All the Info You Need

I received this notification via email.  I thought it was a valuable resource on the state’s paid family leave so I am passing it along in case you need the info but did not receive the notice.  I hope it is helpful.

Starting next week, the New York State Workers’ Compensation Board will host Paid Family Leave webinars for employers and HR professionals.

Each one-hour session will provide an overview of the state’s landmark Paid Family Leave benefit, including benefit and contribution rate information for 2022, employers’ role in the request process, and updated resources you can use to share Paid Family Leave information with your employees. We’ll also leave time at the end to answer any questions you may have.

Paid Family Leave is employee-paid insurance that provides employees with job-protected, paid time off from work to bond with a new child, care for a family member with a serious health condition, or assist when a spouse, domestic partner, child or parent is deployed abroad on active military service. As of March 2020, Paid Family Leave may also be available in the event an employee, or their minor dependent child, is subject to a mandatory or precautionary order of quarantine or isolation due to COVID-19.

Registration is not required. To join, please select the “Join webinar” link below. Add it to your calendar so you don’t forget!

Paid Family Leave for Employers/HR Professionals
Thursday, October 14, 2021
12:00 P.M. – 1:00 P.M.
Join webinar
Add to your calendar!

Thursday, October 21, 2021
12:00 P.M. – 1:00 P.M.
Join webinar
Add to your calendar!


Additional Paid Family Leave resources are available

New York State offers complete details on Paid Family Leave at PaidFamilyLeave.ny.gov, including updates for 2022 and COVID-19. The employer page also contains helpful resources, including employer formsfact sheets and past webinars. Help is also available via a toll-free Paid Family Leave Helpline at (844) 337-6303, Monday through Friday, 8:30 a.m. – 4:30 p.m.


Having trouble?

If you are having trouble registering for or attending any webinar, check out these Webinar FAQs.

Taking Employees Tips? Not So Fast Says the DOL!

The U.S. Department of labor has announced a final rule that restores the department’s ability to assess civil money penalties against employers who take tips earned by their employees. The rules apply regardless if the violations are willful or not.  The ruling also clarifies specific occasion when a manager or a supervisor can keep tips.  The news release, issued on September 23, 2021 is as follows:

The U.S. Department of Labor today announced a final rule that restores the department’s ability to assess civil money penalties against employers who take tips earned by their employees, regardless of whether those violations are repeated or willful. In addition, today’s rule modifies the department’s broader civil money penalties regulations addressing when a violation is willful, further aligning these regulations with applicable precedent and how the department litigates willfulness. The rule also allows managers and supervisors to contribute to valid tip pooling arrangements, without receiving tips from those pools.

“Workers who depend on tipped wages are every bit as entitled to expect to keep what they’ve earned as other workers,” said U.S. Secretary of Labor Marty Walsh. “An employer who withholds workers’ tips in violation of the law deprives them of that security and, in some cases, leads to workers earning less than the federal minimum wage. This final rule helps us protect their earnings by strengthening tools to hold employers legally responsible for those violations.”

With this rule’s publication, the department withdraws the civil money penalties’ provisions in the 2020 Tip final rule that would have allowed the department to assess these penalties for violations only when employers kept employees’ tips and the department found their violations to be repeated or willful. The Consolidated Appropriations Act of 2018 allows the department to impose civil money penalties to $1,100 when employers keep employees’ tips – in violation of the law – regardless of whether violations are repeated or willful.

The final rule also clarifies that – while managers and supervisors may not receive tips from mandatory tip pools or tip-sharing arrangements – managers or supervisors may contribute to mandatory tip pools or sharing arrangements. In addition, the rule clarifies that a manager or supervisor may keep tips only when the manager or supervisor receives tips from customers directly for service a manager or supervisor directly and “solely” provides.

“The final rule announced today strengthens protections for tipped workers – who are largely women, immigrants and people of color – and advances equity in the workplace,” said Wage and Hour Division Acting Administrator Jessica Looman. “Civil money penalties are an incentive for employers to comply with their legal responsibilities. When they do comply, essential workers benefit. When employers don’t comply, these penalties are a useful enforcement tool we can use to help achieve compliance.”

The Fair Labor Standards Act allows employers with tipped workers to pay as little as $2.13 per hour in direct wages, while taking a credit against the tips earned by the employee to make up the balance of the federal minimum wage of $7.25 per hour.

 

What’s The IRS Been Up to During the Pandemic? Let The Commissioner Fill You In

Chuck Rettig is the 49th Commissioner of the IRS. As Commissioner, Rettig presides over the nation’s tax system, which collects more than $3.5 trillion in tax revenue each year. This revenue funds most government operations and public services. He manages an agency of about 80,000 employees and a budget of approximately $11 billion. In a recent post to the ” A Closer Look” page on the IRS website,  Mr. Rettig gave an upfront and closer look to the work the IRS has been doing during the pandemic.  He discusses in his post how pandemic-related issues are still causing the IRS to experience record levels of activity and despite all that, the agency is making progress and is serving taxpayers.  Here is the text of his September 14, 2021 column:

The IRS plays an important role in serving our country. We interact with more Americans than any other U.S. government agency – virtually every individual and business in the country. We process 96 percent of the funding for our nation’s vital programs, but our agency and our people have had to really step up in the past year and a half to provide even more support to Americans in need. And just like businesses and other agencies around the country, we had to pause or modify some operations during the pandemic until we had safe and secure remote options in place to enable our employees to perform their work and serve taxpayers. I am extremely proud of the dedication of our workforce toward helping American taxpayers fulfill their tax responsibilities and resolve tax issues while they dealt with the COVID-19 situation.

While we had to temporarily scale back operations, important economic relief measures passed by Congress during the pandemic gave us many new responsibilities, and we have proudly worked to deliver Economic Impact Payments, advance payments of the Child Tax Credit (CTC) and many other critical initiatives in 2020 and 2021. We appreciate and understand the frustration caused by the high volume of manually processed returns, the limited information available to taxpayers about the status of the return processing, the refund delays, and the difficulty reaching IRS employees. We also understand that complex tax issues, recent legislation and the pandemic have  record numbers of taxpayers looking for help.

At every turn, our employees have gone above and beyond during the pandemic to keep our operations going, and through it all, we have appreciated the patience and understanding of taxpayers and the tax community. Even so, and despite our best efforts, pandemic-related issues are still causing us to experience record levels of activity that continue to affect operations across the agency, including the processing of tax returns and refunds. To put this in perspective, the IRS has received 199 million phone calls the first six months of this year – five times the normal annual volume – and we have manually reviewed 11 times more tax returns this year (11 million) to correct errors and gather missing information from taxpayers.

I am committed to ensuring the IRS will continue to do all we can to serve taxpayers. During the pandemic, we have had to find new ways to pursue our mission. As we faced enormous challenges, we didn’t always get it right, but we worked hard, often with limited resources. Where possible, we have redeployed resources to accommodate the increased demand. Our goal is to provide the quality of assistance taxpayers deserve, but we have been unable to satisfy this goal despite recent efforts to overcome significant challenges. On behalf of the entire IRS workforce, I want to assure you we will continue making progress, working together with Congress, the Administration and our partners inside and outside the tax community.

We know this has been and continues to be a frustrating time for many taxpayers and tax professionals – and it’s been a challenging time for all of us at the IRS as well. We have done the best we could under the circumstances, and we will continue to do our best as we face the current challenges. Our response to the unprecedented COVID challenges – including issuing almost $1.5 trillion in combined historic economic relief and individual refunds – illustrates the importance of every American to the IRS and the importance of the IRS to every American. I want to give you a glimpse of what we’re facing inside the IRS, and what we’re doing – to help struggling taxpayers and to get caught up during this unprecedented time.

 

APA Recommends Simplified Version of Form W-4

The American Payroll Association has sent a letter to the Internal Revenue Service (IRS) recommending that the IRS create a new and separate W-4 form for employees who have a single job and no dependents.  The form, Form W-4SN, Employee’s Withholding Certificate — Single Job, No Dependents, would be used by employees whose situation would allow them simply to complete Form W-4, Employee’s Withholding Certificate, Steps 1, 4(c), and 5.

As most payroll professionals know, employees continue to struggle with completing the Form W-4 in its current form.  They find it difficult to understand the instructions and many times complete the form in error or in a manner that makes it invalid and cannot be processed by payroll. The APA believes that a simplified version using Steps 1, 4(c), and 5 can be implemented effectively for improved accuracy and without creating confusion for employees.

The APA worked with the IRS during the initial stakeholder engagement for the 2020 Form W-4 and a simplified version of the form was discussed back then. However, it was rejected because of the complications of programming and tracking. The new recommended form maintains the same lines and boxes as found on the current Form W-4. This eliminates the original issues with programming and tracking.

The APA attached a sample of the form W-4SN to help explain its recommendations.

The APA is recommending a six-month effective date to allow for payroll software adjustments, payroll training, and employee awareness.

What do you think?  Let us know your opinion of the recommended form in the comments section.

About the APA: Established in 1982, APA is a not-for-profit association serving the interests of more than 20,000 payroll professionals nationwide. APA’s primary mission is to educate its members and the payroll industry about best practices associated with paying America’s workers while complying with applicable federal, state, and local laws and regulations. APA members are directly responsible for calculating wages and employment taxes for their employers.

Wage and Hour Wednesday: DOL Withdraws Trump “Independent Contractor” Rule

Our blog for Wage and Hour Wednesday deals with the Biden administration withdrawing the Independent contractor rule set into motion during the last days of the Trump administration.

In the press released issued this morning:

The U.S. Department of Labor today announced the withdrawal – effective May 6 – of the “Independent Contractor Rule,” to protect workers’ rights to the minimum wage and overtime compensation protections of the Fair Labor Standards Act (FLSA). The Department is withdrawing the rule for several reasons, including:

  • The independent contractor rule was in tension with the FLSA’s text and purpose, as well as relevant judicial precedent.
  • The rule’s prioritization of two “core factors” for determining employee status under the FLSA would have undermined the longstanding balancing approach of the economic realities test and court decisions requiring a review of the totality of the circumstances related to the employment relationship.
  • The rule would have narrowed the facts and considerations comprising the analysis whether a worker is an employee or an independent contractor, resulting in workers losing FLSA protections.

Withdrawing the independent contractor rule will help preserve essential workers’ rights. The FLSA includes provisions that require covered employers to pay employees at least the federal minimum wage for every hour they work and overtime compensation at not less than one-and-one-half times their regular rate of pay for every hour over 40 in a workweek. FLSA protections do not apply to independent contractors.

In addition to preserving access to the FLSA’s wage and hour protections, the department anticipates that withdrawing the independent contractor rule will also avoid other disruptive economic effects that would have been harmful to workers had the rule gone into effect.

For more information about the FLSA or other laws enforced by the Wage and Hour Division, visit https://www.dol.gov/agencies/whd, or call toll-free 1-866-4US-WAGE.

 

Guest Blogger Day: 8 Expenses to Factor into Your Home Budget

Friday is our guest blogger day and we have a great one for you.  Even payroll professionals still need to handles the basics of family budgets.  We hope you find this article from earnin.co useful.  Please let us know in the comments section below.

Your home budget, also known as your household budget, is the money you set aside that will go toward essential living expenses. It’s critical to budget your finances to only spend what you can afford and reach your savings goals.

You can guess what kind of things go into a home budget: rent or mortgage, groceries, savings, debt repayment, utilities, etc. However, people sometimes forget to factor the following expenses into their budgets, which catches them by surprise and forces them to reallocate their spending. Keep these costs in mind when figuring out how to budget your monthly paycheck and savings:

Transportation & Parking

You know you’ll need to pay for your vehicle each month if you own or lease one, but what about gas? Parking? If you don’t own a car, then how much does public transportation cost in your area?

According to Student Loan Hero, the United States’ median household income was $61,937 in 2018. Households that earned this amount spend an average of $763 per month on transportation, including gasoline and car payments. Public transportation is cheaper, but again, it depends on where you live — you still might spend as much as $160 per month if you exclusively use Bay Area Rapid Transit in San Francisco.

Insurance Premiums

Insurance premiums are a significant hit on your wallet, but they’re necessary to have. Health and car insurance go without saying, but you may owe mortgage insurance if you put less than 20% down when purchasing your home. There’s also life insurance, personal insurance, contributions to social security, and more.

It’s difficult to calculate how much the average person in the U.S. spends on insurance because people’s situations vary tremendously. You might be lucky and only spend a few hundred dollars a month if you live in an inexpensive state and only need the basics. If you need more, then you could spend well over a thousand. Other factors affect your insurance premiums, too, such as your age, marital status, job, and education level, so combine all kinds of insurance you need to pay for when calculating your monthly household budget.

Out-of-Pocket Costs and Emergencies

Insurance doesn’t cover everything, though. Medical care is notoriously expensive in the U.S., so you should be prepared to pay out-of-pocket costs that exceed the scope of your health plan.

Disasters strike in other ways, too. Hopefully, it’s small — maybe you spilled coffee on your only nice shirt and need to buy a new one for work — but it might be an outright emergency, such as someone robs you or a natural disaster impacts your home. It’s crucial to have emergency money set aside to cover an irregular or unforeseen circumstance.

Pet Care

You budgeted to feed yourself, but what about your pet? These costs might be low if all you need to buy is food every month and a few toys that last you a year, but vet bills can be expensive if your animal friend has health issues. If you prefer to outsource much of your pet care, you should budget much more to account for sitters, boarding, and walks. Of course, pet care expenses depend on the kind of animal you have, so anticipate how much financial TLC your pet will need.

Subscriptions and Memberships

Subscriptions and membership fees on auto-renewal can sneak up on you. Don’t fall into the trap of thinking you’ve planned your budget for the month perfectly, only to be hit with a $15 Netflix bill you forgot to account for. These costs shouldn’t be out-of-sight, out-of-mind, so keep track of streaming services, subscription boxes, or shopping memberships you pay for.

Fees, Fees, and More Fees

Fees are everywhere. They’re like pests you can’t seem to get rid of, but you forget about them when they’re not in the room. Make a list of all the fees you might need to pay throughout the month, including:

  • Bank account maintenance fees;
  • ATM fees;
  • Overdraft fees;
  • HOA dues;
  • Credit card fees;
  • Late fees;
  • Monthly service fees.

 

And more. There are ways to avoid or reduce many of these, but don’t buy something you don’t need if a fee will hit you later and you’re living paycheck to paycheck.

Home & Vehicle Maintenance

It’s rare for everything to work as it should, especially if you can’t afford high-quality goods that last longer. Expect to pay for vehicle upkeep, appliances that stop functioning, and fixing potential damage. These costs are related to your emergency funds, but paying for regular maintenance will (hopefully) prevent actual emergencies from happening in the first place.

Different Kinds of Savings

Save as much as you can. Don’t forgo leisure entirely — it’s important to your mental health to have fun, and you deserve to — but besides general savings accounts, remember to save to buy a house, pay for college (or someone else’s education), emergencies, retirement, and more. Your monthly contribution to each may vary, but having substantial savings will set you up for major purchases later in life.

Budgeting is an essential skill. You can use a budget finance app if you need assistance, but remember to factor in every possible expense to avoid tight situations.

This article originally appeared on Earnin.

Please note, the material collected in this blog is for informational purposes only and is not intended to be relied upon as or construed as advice regarding any specific circumstances. Nor is it an endorsement of any organization or Services.

 

IRS: What Employers Need to Know About Repayment of Deferred Payroll Taxes

The IRS has provided guidance on the repayment of the deferred employee’s social security.  This guidance was provided in the e-News for Payroll professionals March 26, 2021 newsletter. 

The Background

To give people a needed temporary financial boost, the Coronavirus, Aid, Relief and Economic Security Act allowed employers to defer payment of the employer’s share of Social Security tax. IRS Notice 2020-65 PDF allowed employers to defer withholding and payment of the employee’s Social Security taxes on certain wages paid in calendar year 2020. Employers must pay back these deferred taxes by their applicable dates.

The employee deferral applied to people with less than $4,000 in wages every two weeks, or an equivalent amount for other pay periods. It was optional for most employers, but it was mandatory for federal employees and military service members.

Repayment of the employee’s portion of the deferral started January 1, 2021 and will continue through December 31, 2021. Payments made by January 3, 2022, will be timely because December 31, 2021, is a holiday. The employer should send repayments to the IRS as they collect them. If the employer does not repay the deferred portion on time, penalties and interest will apply to any unpaid balance.

Employees should see their deferred taxes in the withholdings from their pay. They can check with their organization’s payroll office for details on the collection schedule.

How to repay the deferred taxes

Employers can make the deferral payments through the Electronic Federal Tax Payment System or by credit or debit card, money order or with a check. These payments must be separate from other tax payments to ensure they applied to the deferred payroll tax balance. IRS systems won’t recognize the payment if it is with other tax payments or sent as a deposit.

EFTPS will soon have a new option to select deferral payment. The employer selects deferral payment and then changes the date to the applicable tax period for the payment. Employers can visit EFTPS.gov, or call 800-555-4477 or 800-733-4829 for details.

If the employee no longer works for the organization, the employer is responsible for repayment of the entire deferred amount. The employer must collect the employee’s portion using their own recovery methods.

Let the Podcasts Begin

Recently I was asked to do my first podcast ever.  Outgrowth a Slice of Pro Beauty Podcast, a group that caters to beauty salon owners and workers, asked me to come on the podcast to discuss the payroll pitfalls when working in or running a salon.  The discuss is in two parts and covers misclassifying workers and the resulting legal ramifications in addition to a whole range of payroll areas that can cause compliance problems. Though generally geared to the beauty salon business, my discussion would be useful to anyone who needs to worry about compliance issues.

I hope you find it useful and informative.

 

 

Be sure to register for our first payroll lecture/webinar of the year.  The topic is the 2021 Form 941 and is being held on Wednesday, March 24th starting at 10:00 am Pacific.  Click here for more details and to register.  Use coupon code CJYFRQA6 at check out to receive a 10% discount as a Payroll 24/7 BLOG FOLLOWER.  The webinar is pending approval by the APA for 1.5 RCHs.