IRS Announces 2012 Mileage Rates

The IRS announced that the 2012 business mileage rate remains 55.5 cents for business miles driven, the same as the adjusted midyear rate in 2011.

Starting Jan. 1, 2012, the rate for medical or moving purposes will be 23 cents and the rate for miles driven in service of charitable organizations will be 14 cents per mile.

The standard mileage rate for business is based on an annual study by independent contractor Runzheimer International of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs as determined by the same study. Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

EIC Requirements.

The IRS has released its notice that asks employers whether they have notified employees about the Earned Income Credit. The notice gives questions and answers related to notifying employees about the credit and how employees can claim it. This credit is for low income individuals who meet certain income level qualifications (depending on the number of dependents they have)  who may qualify for additional funds from the federal government. These funds are distributed by the IRS upon review of the indivdual’s tax return.

The notice of the EIC is usually printed on the back the the employee’s W-2.

Qualified employees used to be able to add the credit to their regular paycheck. However, employees can no longer claim the advance earned income credit, and Form W-5 is no longer in use.

States that have specific notification requirements related to the federal earned income credit include: California, Delaware, Illinois, Louisiana, Maryland, New Jersey, Texas, and Virginia.

Social Security Rates and Taxes:

As you know, currently in place is a 2% reduction of the employee’s share of the social security tax rate… a reduction from 6.2% to 4.2%. This reduction expires Dec 31, 2011.  The President and Congress are jockeying back and forth working on extending the credit through next year. There are even considerations of extending the 2% credit to the employer also.  Politic pundits predict that it will be extended but with the mess that is Washington, who knows! The Advi$or will keep you posted.

Remember that the taxable wage base for Social Security taxes was increased from $106,800 to $110,100 for 2012, a 3% increase This will add an addition a $138 in social security taxes to those high wage earners (provided the rate remains at 4.2%).

FUTA Rates

Congress is also considering a bill that would extend emergency unemployment benefits another year and allow employers in FUTA credit reduction states (those states being hit by a reduction in the FUTA credit due to funds borrowed from the Federal Government to cover shortfalls in state unemployment benefit funds) to avoid paying the extra FUTA tax required under current law.

Needless to say, payroll professionals are hoping the idiots in Washington, who have probably never done a payroll in their life,  make some decisions soon!

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New Bill Restricts Taxation of Multi-state Workers – Tennessee, Virginia Employers Affected

House Committee Bill Would Restrict Taxation, Withholding of Multi-state Workers

Thanksgiving may have been on the mind of legislators as legislation was approved by a voice vote of the House Judiciary Committee on Nov. 17 that would stop states from requiring nonresident workers to pay income tax for less than 30 days of work performed in the state .

The Mobile Workforce State Income Tax Simplification Act would require employees’ earnings to be subject to state income tax and withholding if the employee performs work in the state for more than 30 days during the calendar year. The bill would create a national framework on how to tax mobile workers as a way to clear up a lack of consistency in the states, according to lawmakers.

This has always been an area of confusion with employers particularly as states look to increase tax revenues with increased enforcement of withholding regulations on multi-state workers. This legislation would relieve a lot of the headaches employers suffer through in complying with the withholding regulations for short-term out of state jobs. Employers will be relieved if this legislation becomes law. Time will tell.

Speaking of the holiday, all the staff  here at Time & Pay wants to wish you and yours a Happy Thanksgiving! We all have much to be thankful for in this great country we live in.


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Tennessee Opens Small Business Advocate Office

Good news for small business in Tennessee! If you are having trouble with State unemployment taxes, business licences, who to contact to get your business going or who to deal with regarding business issues as they relate to the State of Tennessee, the State now has an Office of Small Business Advocate. Established by legislation in 2010, the Office of Small Business Advocate serves as a point of contact to state government for Tennesseans who are starting a business or who already own a business.

The Goals of the Small Business Advocate are to:

  • Serve as a guide for small business owners to state government
  • Advocate on behalf of small business owners to the Executive Branch
  • Become another voice for small business owners in the legislative process

The State defines small business as a business entity, including all affiliates, that employ 50 or fewer full time employees. The duties of the advocate include answering all questions and providing information to Tennesseans starting a small business or who already own a business. It duties also include informally acting as a mediator and assisting with the resolution of issues concerning small business owners and state departments and agencies. Duties also include working with each state agency and department to ensure that small business owners who receive enforcement related communications or contact by an agency or department are provided with a means to communicate or comment. The advocate will also receive comments from small business owners regarding actions by agency or department employees conducting compliance or enforcement activities. The advocate will also refer comments from small business owners to the affected agency or department.

The Advocates office noted that the identity of all small business owner communications with the Advocate will remain confidential until it becomes necessary to divulge their information to resolve their issue.  The Office also noted that it is responsible for rating each agency or department on their efforts to notify small business owners about the Advocate’s Office.

In order to assist the Advocate, each agency or department with regulatory authority over a business is required to appoint an individual to serve as a contact person for the Advocate’s office.

According to the small business Advocate, small business owners should not have to waste their valuable time figuring out the who, what, where, when and why of State government.

To contact the Office of Small Business Advocate, contact:

Lauren Plunk
505 Deaderick St, Suite 1700
James K Polk Building
Nashville, TN 37243-1402
615-401-7806  or  866-831-3750


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Employees Track Hours Worked On DOL App

The U.S. Department of Labor has launched its first application for smartphones. It is a time sheet to help employees independently track the hours they work and determine the wages they are owed. Available in English and Spanish, users conveniently can track regular work hours, break time and any overtime hours for one or more employers. Glossary, contact information and materials about wage laws are easily accessible through links to the Web pages of the department’s Wage and Hour Division. Both the app and the calendar can be downloaded from the Wage and Hour Division’s home Web page.

Additionally, through the app, users will be able to add comments on any information related to their work hours; view a summary of work hours in a daily, weekly and monthly format; and email the summary of work hours and gross pay as an attachment.

This new technology is significant because, instead of relying on their employers’ records, workers now can keep their own records. This information could prove invaluable during a Wage and Hour Division investigation when an employer has failed to maintain accurate employment records. “I am pleased that my department is able to leverage increasingly popular and available technology to ensure that workers receive the wages to which they are entitled,” said Secretary of Labor Hilda L. Solis. “This app will help empower workers to understand and stand up for their rights when employers have denied their hard-earned pay.”

The free app is currently compatible with the iPhone and iPod Touch. The Labor Department will explore updates that could enable similar versions for other smartphone platforms, such as Android and BlackBerry, and other pay features not currently provided for, such as tips, commissions, bonuses, deductions, holiday pay, pay for weekends, shift differentials and pay for regular days of rest.

For workers without a smartphone, the Wage and Hour Division has a printable work hours calendar in English and Spanish to track rate of pay, work start and stop times, and arrival and departure times. The calendar also includes easy-to-understand information about workers’ rights and how to file a wage violation complaint.

The Advi$or would just like to point out that if you do not have an accurate, quality system to track and clearly define your employees’ time at work, such as an automated timekeeping system, you had better consider using one. If you are not able to provide qualified information in answer to any employee’s claim that they are not being paid correctly because of information generated using this app, you will have a difficult time answering to the Dept of Labor. All employees should be paid what they earn according to the law. Our intent is to provide you with the information you need to help you make sure your business is in compliance.

Posted in News

Increase In Payroll Social Security Wage Base Announced for 2012

Payroll administrators should note that the Social Security Administration announced on Oct. 19 that the Social Security Old Age Survivor’s and Disability Insurance (OASDI) taxable wage base for 2012 will increase to $110,100 from $106,800. The maximum 2012 OASDI tax payable by each employee will be $6,826.20, (6.2% of the wage base) compared to $6,621.60 in 2011, an increase of $205.

Keep in mind that the 4.2% rate now in effect for employees is scheduled to expire Dec. 31 and will revert back to the 6.2% rate for 2012 unless the federal government acts to extend the current rate. There are indications that keeping the rate at 4.2% will be part of a finalized jobs stimulus program. However, some Congressional leaders are against such a reduction since the Social Security program is facing serious financial strain.

Normally the employer matches the amount of Social Security taxes paid by the employee with an equal contribution. Currently while employees are paying 4.2%, employers are still matching at 6.2%. A reduction in the employer match to 4.2% is also being considered in the jobs stimulus proposals.

The SSA also announced a 3.6% cost of living increase amount that affects several thresholds for benefits and coverage. The Social Security tax annual coverage threshold amount for domestic employees for 2012 increases to $1,800, and remains at $1,500 for election workers.

Remember the 1.45% Medicare tax portion of the Federal Insurance Contributions Act (FICA) taxes has no wage base and all wages earned are subject to Medicare taxes except where pre-tax benefit deductions are involved.

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