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HomeArchived E-NewslettersDeluxe Payroll Newsletter – May 2014

Deluxe Payroll Newsletter – May 2014

August 24, 2017

Did You Know?

BITCOIN, a Virtual form of Currency and wage payments:
Digital currencies like Bitcoin can be used to pay wages owed to employees. Digital payments made to employees are considered taxable and must be reported on form W2 (annual Wage and Tax Statement). According to the IRS, the wages are subject to payroll taxes and federal income withholding covering past and future payment transactions as of March, 2014.

Payments using virtual currency made to independent contractors would also be taxable and self-employment tax rules would apply. Deluxe Payroll has not seen any requests for this type of payment to date.

Tax News & Notes

As each New Year begins, employer tax frequencies can change as well. The frequency of your federal 941 payments sent to the IRS are determined by a lookback period of tax liabilities paid in the previous years from July 2012 through June 2013. For the 2014 Monthly payment schedule, your 941 tax deposit should not have exceeded $50,000. Any amounts over the $50,000 would require your company to file on the most accelerated method of Semi-weekly depositor. The lookback period allows the IRS to see the annual amount of taxes paid and if the employer tax frequency should be adjusted in frequency to meet their deposit requirements.

The IRS will always communicate by mail and will notify your business before the new year begins. Notices will arrive only if the frequency changed. Please forward your change notifications immediately to our Deluxe Payroll Tax Department for any federal or state changes.

The easiest way to monitor your company tax payments is to use the IRS Electronic Federal Tax Payment System (EFTPS) at EFTPS will reflect all payments made by your company or by your third party provider. Recently the IRS began mailing notices to small businesses announcing the benefits of using EFTPS and included a unique PIN # for each business to enroll immediately. The IRS wants to encourage tax payment awareness and the employer responsibility to monitor the tax payments. Deluxe Payroll encourages all businesses to look for your letter and enroll!

Payroll Help Desk

Many states are either in the process or have already approved minimum wage increases for low wage earners. Maryland has elected to gradually increase wages over a period of time in order to ease the effect on employers beginning at $8 in January 2015 and ending at $10.10 per hour effective July 18, 2018.

Employers should be mindful of wage garnishments in payroll where deduction amounts will change as wage rates increase. Consider the possible issues of paying the same employee(s) whose minimum wage has now been increased:

  • Under current federal law, to garnish wages, an individual’s minimum disposable earnings must be 30 times the federal hourly minimum wage of $7.25, or $217.50 a week. Now, an employee making the higher hourly wage will change the amount of minimum take home per week.
  • Several states apply 40 times the federal minimum wage, two states apply 50 times the federal minimum wage and a few years ago, Washington changed its statutory exemption formula to 35 times the federal minimum wage, from 30. States may substitute the federal minimum wage for the state minimum wage, however, when the state wage rate increases, it is important to ensure systems are updated for the first pay day on or after the change.
  • If the federal government were to increase the minimum wage then a statutory exemption based on the federal minimum wage would possibly be greater than that of a state minimum wage. In referencing statutory exemption, whatever provides the higher rate of pay to the employee is what the employer must use.
  • As minimum wage rates change, employees may want to complete a new W4 form or applicable state withholding form to increase withholding on larger net incomes.

Seasonal Items

It’s time for vacation and summer holidays! Do you know the rules regarding vacation and holiday pay outs?

  • Fair Labor Standards Act (FLSA – US Department of Labor) does not require payment for time not worked such as vacation, sick time, holiday etc. However, each employer should refer to their handbook for the company rules regarding leave payouts surrounding a holiday and/or vacation time.
  • In order to avoid confusion, review your handbook with all employees so they are aware of the company policies regarding leave payouts.
  • Pay periods for an employer can include a combination of regular hours worked and holiday or leave pay (vacation, sick, PTO time off). If the number of regular hours worked does not exceed 40/week, FLSA states that any leave pay hours during the pay period issued in conjunction with regular hours will not require overtime payment.