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PAYROLL TAX AND 1099 REQUIREMENTS 2015 – 2016

Social Security and Medicare for 2016 The total withholding for social security continues at 6.2% for the employee withholding and 6.2% for the employer match. The wage base for 2016 remains the same at $118,500 and the maximum tax is $7,347 (6.2% of $118,500).  There is no limit on the amount of earnings subject to Medicare tax.  The Medicare tax rate remains at 1.45%, with the exception of “Additional Medicare Tax” for higher wage earners (explained below).  The employer match also remains the same at 1.45% of gross wages with no ceiling. 

Additional Medicare Tax – Employers are required to withhold an Additional Medicare Tax of .9% on wages and other compensation that is paid to an employee in excess of $200,000 in a calendar year.  There is no employer match on the compensation subject to Additional Medicare Tax.

Minimum Wage for 2016 – The minimum wage increases to $9.00 per hour for all wages paid in NYS.

Withholding Tables - IRS and NYS have updated the withholding tables on their websites for wages paid in 2016.

Federal Unemployment Insurance – The federal wage base for unemployment insurance continues at $7,000 for 2016 with the effective tax rate of .6%

NYS Unemployment Insurance - NYS unemployment wage base for 2016 has been raised to $10,700. 

Forms NYS-45 and NYS-45-ATT continue to be electronically submitted through the New York State Website listed on Page 4.

Form LS 56 (or Equivalent) – You must have a completed Form LS 56 (or LS 52-59 depending on the type of employee), Notice and Acknowledgement of Pay Rate and Payday, on file for all new employees.  This form should be updated every time a change in wages occurs.  It is no longer necessary to update this form by February 1st each year.  A signed, completed copy must also be provided to the employee.  A copy of Form LS 56 can be obtained at www.labor.ny.gov/home. (Labor Law 195(1))

Employer Sponsored Health Coverage – For 2016, employers should continue to track health insurance costs by employee for reporting on Form W-2 for the year.  For employers with less than 250 employees, it is optional for 2015 W-2 reporting. 

Form 1099 – 1099 penalties of $250 will be enforced for failure to file required 1099’s.   Again, we stress how important it is to require the payee to complete Form W-9 before payment is made.  If a completed Form W-9 is not obtained, then you must withhold 28% tax from the payment and you will be required to submit the backup withholding to the IRS on Form 945.  Go to www.irs.gov to get the complete details regarding backup withholding. 

New York State Forms – NYS continues to try to be paperless.  Forms are available at the Online Center.  NYS is encouraging that all employers utilize the Online Center for filing purposes.

PAYMENT OF WITHHOLDING TAXES

Federal Payment Requirements:

IRS has notified you during the fourth quarter of 2014 of your depository status for 2015.  This status is determined by your history of total withholding liability for the period 07/01/13 through 06/30/14.  If that total is more than $50,000, you are required to make semi-weekly deposits. If your accumulated liability for a quarter is over $2,500, you must make monthly deposits.  The computation of liability remains the same:

Total Deposit = (Social Security W/H @ 6.2% X 2) + (Medicare W/H @ 1.45% X 2) + Federal W/H
(also include “Additional Medicare Tax” withholding for wages greater than $200,000)

Payment of payroll tax liability is determined by the following:

Deposit Rule

1. End of year, liability is under $1,000


2. End of quarter, liability is under $2,500


3. End of month, liability is under $2,500

4. Monthly Depositor

5. Semi-Weekly Depositor

a. Pay Date Wed thru Friday
b. Pay Date Sat thru Tuesday
6. Over $100,000

Deposit Due

1. Use annual Form 944 to make your deposit


2. No deposit needed, attach check to Form 941

3. Accrue to next month (unless at end of quarter)

4. Deposit due on 15th day after end of month

5. Depends on Date of Pay:

a. Deposit due following Wednesday
b. Deposit due following Friday
6. Deposit due within one banking day

REMINDER - for employers using EFTPS, all types of federal tax must be paid electronically.

-------------------------- If questions remain, call Mostert, Manzanero & Scott, LLP -----------------------------

New York State Payment Requirements:

Liability is computed based on actual total withholding of New York State tax and is summarized as follows:

Deposit Rule

Total Withholding:

$0 to $699.99

Over $700

Deposit Due

 

Due quarterly with Form NYS-45

Due to NYS electronically with Form NYS-1 within five business days of the payroll date that created the liability in excess of $700 (due within three days if total liability for withholding tax in 2014 was over $15,000)

If at the end of a quarter, the withholding liability is under $700 and a payment has been made during the quarter, a payment of the balance should be made prior to the last day of the month following the end of the quarter --OR-- it may be paid with the quarterly report.

Quarterly Reporting Requirements
(Due the last day of January, April, July and October)

FEDERAL WITHHOLDING TAXES - FORM 941

Form 941, "Employer's Quarterly Federal Tax Return", used by employers who withhold income, social security and medicare from employees’ wages, must be filed every quarter (with the exception of seasonal employers), even if employees had no wages. The returns for the quarter are due the last day of the month following the quarter ended. 

DEPOSITS OF FEDERAL UNEMPLOYMENT INSURANCE TAX FOR FORM 940

Federal Unemployment Insurance (FUTA Tax) is computed on a quarterly basis at the net rate of 0.6% of the first $7,000 in gross wages paid per employee per calendar year.    No deposit is required for any quarter in which the liability plus the accumulated liability for the previous quarters is less than $500 (except for fourth quarter).  You must make your deposit using EFTPS if over $500.  See annual filing below.

NYS COMBINED WITHHOLDING & UNEMPLOYMENT  -  FORM NYS-45 AND NYS-45-ATT

New York State continues to use Form NYS-45, "Quarterly Combined Withholding Wage Reporting and Unemployment Insurance Report" to report quarterly liability for unemployment insurance along with reconciling NYS withholding for the quarter.  The Wage Base for NYS unemployment has been increased to $10,700 for 2016.  This report is due the last day of the month following the end of a quarter and must be electronically filed.

Form NYS-45-ATT is to be used when there are six or more employees.  For fourth quarter only, this form must be filed showing only annual gross wages and withholdings.  This form is the “NYS W-2” and must be electronically filed at the New York State website.

Annual Reporting Requirements

FORM 944 – This is the annual form that enables small businesses that have less than $1,000 in payroll taxes due for the entire year to file.  Payment of tax is made with the form on an annual basis due January 31st of the year after the payroll liability is incurred.  Note:  IRS will advise if you are a 944 filer, but if your liability increases, you must make monthly payments using the $2,500 rule.

FORM 940 – This is the ANNUAL Federal Unemployment Insurance Tax form for employers, which reconciles all payments made for the year to quarterly liabilities.  The balance, if under $500, may be paid with the form otherwise make the deposit using EFTPS.

FORM W-2 – “Wage and Tax Statement.”  Wage statements must be completed and distributed to employees by February 1, 2016.  Please review the instructions before completion.  Use forms W-2C and W-3C to correct previously filed W-2’s and W-3.

FORM W-3 – “Transmittal of Wage and Tax Statements.”  This is a transmittal and reconciliation form to accompany the W-2 Forms. Form W-3, together with W-2's are to be filed by February 29, 2016 with the Social Security Administration.  However, if you electronically file the due date is March 31, 2016.

FORM 1099 – "Federal Information Return for the Calendar Year 2015."  You must provide the recipient with a copy of Form 1099 on or before February 1, 2016.  You must issue Form 1099-MISC for payments of $600 or more made in the course of your trade or business to an unincorporated business for services.  NOTE: You must report all payments to attorneys over $600 regardless of their type of entity on the 1099-MISC Form.

FORM 1096 – “Annual Summary and Transmittal of U.S. Information Returns.”  A separate transmittal Form 1096 along with prepared Form 1099’s must be filed with the Internal Revenue Service by February 29, 2016 for each type of Form 1099 preparedHowever, if you electronically file the due date is March 31, 2016.

ADDITIONAL INFORMATION

This payroll and 1099 requirement letter has been prepared as a guide and does not attempt to take the place of any of the publications provided to you by the various taxing authorities.

If you do not receive the forms from the taxing agencies, you should contact those agencies and request the missing forms be mailed to you as soon as possible. Telephone numbers of the various agencies are:

IRS - Information for Individuals 1-800-TAX-1040, (829-1040)
IRS - Information for Business Specialty Tax Line, 1-800-829-4933
IRS - Forms and Publications 1-800-TAX-FORM, (829-3676)
IRS - Information on Electronic Filing (EFTPS), 1-800-555-4477
IRS – EFTPS Payment by Phone, 1-800-555-3453

U.S. Department of Labor - Syracuse, 1-315-479-3228

Social Security Administration – General Questions, 1-800-772-1213
Social Security Administration – Employers, 1-800-772-6270
     
NYS Dept. of Tax & Fin - Taxpayer Assistance, 1-518-457-5181
NYS Dept. of Tax & Fin - Taxpayer Assistance - Forms, 1-518-457-5431
NYS Dept. of Tax & Fin - Sales Tax Assistance, 1-518-485-2889
NYS Fair Labor Standards, 1-888-469-7365
NYS Fair Labor Standards – Binghamton, 1-607-721-8014
NYS Labor Dept.- Unemployment Insurance Information, 1-888-899-8810
NY City Office of NYS Dept of State, 1-212-417-5800
NYS Dept of State - Division of Corporations, 1-518-473-2492
NYS Disability Benefits Bureau, 1-800-353-3092
NYS Workmen’s Compensation Board, 1-866-632-4996

NYS New Hire Notification- Fax   1-518-320-1080

Most forms and publications can be downloaded off the internet by going to the websites as shown below.

Internal Revenue Service www.irs.gov
IRS - Forms and Publications www.irs.gov
U.S. Department of Labor www.dol.gov
Social Security Administration www.ssa.gov
U.S. Citizenship and Immigration Services www.uscis.gov
EFTPS (Electronic Federal Tax Payment System) www.eftps.gov/eftps/
NYS Department of Taxation & Finance www.tax.ny.gov
NYS Forms and Instructions www.tax.ny.gov/forms/
NYS Department of Labor www.labor.ny.gov/home/
NYS New Hire Online www.nynewhire.com

NOTE:  If any questions arise, do not hesitate to call our office for assistance at (607) 432-8700.

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