Photo courtesy of Nick TranSan Diego Chapter
American Payroll Association 

2016 Tax Updates

TAXES

2016

Federal

Social Security Tax

6.2% Limit $118,500

Medicare

1.45% no limit

Medicare Wages $200,000+

additional .09% no limit

Supplemental Wage Rate

25%

Supplemental Wage Rate (Pay over $1 Million)

39.60%

California

SDI

.09% Limit $106,742

Supplemental Wage Rate [rate 10.23% for Bonuses]

6.60%

OTHER

401(k) standard withholding limit

$ 18,000.00

401(k) catch-up withholding limit [for employees 50 years and +]

$ 6,000.00

FSA Contributions [flexible spending account]

$ 2,550.00

Mileage reimbursement rate

54 cents

IRS Updates:

Retroactive increase in excludible transit benefits for 2015. The Consolidated Appropriations Act, 2016, increased the monthly transit benefit exclusion from $130 per participating employee to $250 per participating employee for the period of January 1, 2015, through December 31, 2015. Employers will be provided instructions on how to correct the social security and Medicare taxes on the excess transit benefits in future guidance. A link to that guidance will be provided at www.irs.gov/pub15b. Qualified parking exclusion and commuter transportation benefit. For 2016, the monthly exclusion for qualified parking is $255 and the monthly exclusion for commuter highway vehicle transportation and transit passes is $255. See Qualified Transportation Benefits in section 2.For high earners, therefore, the total Medicare tax rate will be 2.35%.

Work opportunity tax credit for qualified tax-exempt organizations hiring qualified veterans extended. The work opportunity tax credit is now available for eligible unemployed veterans who begin work after December 31, 2014, and before January 1, 2020. Qualified tax-exempt organizations that hire eligible unemployed veterans can claim the work opportunity tax credit against their payroll tax liability using Form 5884-C. For more information, visit IRS.gov and enter "work opportunity tax credit" in the search box.

Publication 15, The Circular Ehttps://www.irs.gov/pub/irs-pdf/p15.pdf

Employer's Supplemental Tax Guide (Supplement to Circular E, Employer's Tax Guide, Publication 15)https://www.irs.gov/publications/p15a/ar01.html

Publication 15-B, Employer's Tax Guide to Fringe Benefits https://www.irs.gov/publications/p15b/ar02.html

Publication 80, Circular SS Federal Tax Guide for Employers in the U.S. Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islandshttps://www.irs.gov/publications/p80/ar01.html

ACA Information Center for Tax Professionals http://www.irs.gov/Tax-Professionals/ACA-Information-Center-for-Tax-Professionals

 

TAX CALENDAR

 

IRS: Has released the 2016 Publication 509 Tax Calendars.

https://www.irs.gov/pub/irs-pdf/p509.pdf

Legal holidays for 2016:

January 1— New Year's Day

January 18— Birthday of Martin Luther

King, Jr.

February 15— Washington's Birthday

April 15— District of Columbia Emancipation

Day (observed)

May 30— Memorial Day

July 4— Independence Day

September 5— Labor Day

October 10— Columbus Day

November 11— Veterans Day

November 24— Thanksgiving Day

December 26— Christmas Day (observed)

  

FORMS

Form W-2 & W-3   

You may file Forms W-2 and W-3 electronically on the SSA’s Employer W-2 Filing Instructions and Information web page at www.socialsecurity.gov/employer.  You can create fill-in versions of Forms W-2 and W-3 for filing with SSA. You may also print out copies for filing with state or local governments, distribution to your employees, and for your records.

Links to the 2015 and 2016 Form W-2 are below.  

Tax Year 2015

Form W-2  

Instructions for Forms W-2 and W-3 (PDF)

Tax Year 2016   

Form W-2

Instructions for Forms W-2 and W-3 (PDF)

Instructions for Forms W-2 and W-3 (HTML)

  

 Form W-4, Exempt Status   

 On February 16 Forms W-4 claiming exemption from withholding expire. Request a new Form W-4 from employees who claimed exempt for the previous tax year. If the employee doesn't give you a new Form W-4, withhold tax based on the last valid Form W-4 you have for the employee that doesn't claim exempt or, if one doesn't exist, withhold as single with zero withholding allowances. Do not refund taxes withheld prior to receipt of the new W-4 form.

 

 

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