This week’s question comes from Beverly, a small-business owner. We pay health insurance costs for our employees. I heard there was a change in reporting health insurance costs under the new law. Are health insurance costs required to be reported on Form W-2? Answer: Under the Patient Protection and Affordable Care Act (PPACA), beginning in the 2011 tax year (reported to Social Security Administration (SSA) in 2012), employers will be required to start including the aggregate cost for “applicable employer-sponsored coverage” for each employee on that employee’s Form W-2, Wage and Tax Statement. There is no requirement to include this information on the 2010 Form W-2, to be reported to the SSA in 2011. Contact Vision Payroll if you have any further questions on Form W-2.
This week’s question comes from Paul, a business owner. I have an ex-employee who qualifies for payroll tax forgiveness under the HIRE Act. We haven’t been able to get the signed Form W-11 yet. What is the deadline for obtaining Form W-11? Under the HIRE Act, for otherwise qualifying employees, employers are not required to pay the matching portion of OASDI or social security tax. Qualified employees must sign Form W-11, Hiring Incentives to Restore Employment (HIRE) Act Employee Affidavit, to allow employers to claim the payroll tax forgiveness. Employers must obtain the signed Form W-11 before claiming any payroll tax forgiveness. Therefore, to claim the exemption for the second quarter of 2010, employers must obtain the signed Form W-11 before August 3, 2010 in order to file by the deadline of August 2, 2010. Employers that made timely deposits in full payment of their taxes for a quarter have ten more days after the due date to file Form 941, Employer’s QUARTERLY Federal Tax Return. Employers that do not receive signed Form W-11 until after they’ve filed Form 941 may not claim the payroll tax forgiveness on Form 941, but must file Form 941-X, Adjusted Employer’s QUARTERLY Federal Tax Return or Claim for Refund, to claim the exemption. Contact Vision Payroll if you have further questions on the deadline for obtaining Form W-11.
This week’s question comes from Lynn, a business owner. I recently hired my spouse to work in my sole proprietorship. My spouse qualifies using Form W-11, but I’m not sure if my spouse is considered my relative. Can my spouse’s wages qualify for payroll tax forgiveness? Answer: Under the Hiring Incentives to Restore Employment (HIRE) Act, employers may avoid paying social security tax on qualified employees and receive an income tax credit for retaining those employees. Employers are required to obtain a signed affidavit from qualified employees. Certain relatives of the taxpayer, as defined in §152 of the Internal Revenue Code of 1986 (IRC) are not eligible for the payroll tax forgiveness or the credit. They are:
- A child or a descendant of a child.
- A brother, sister, stepbrother, or stepsister.
- The father or mother, or an ancestor of either.
- A stepfather or stepmother.
- A son or daughter of a brother or sister of the taxpayer.
- A brother or sister of the father or mother of the taxpayer.
- A son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law.
- An individual (other than an individual who at any time during the taxable year was the spouse, determined without regard to [IRC] §7703, of the taxpayer) who, for the taxable year of the taxpayer, has the same principal place of abode as the taxpayer and is a member of the taxpayer’s household.
Since a spouse is not on the list of ineligible employees, wages paid to spouses of sole proprietors who otherwise qualify are eligible for payroll tax forgiveness and potentially the retention credit. Contact Vision Payroll if you have any further questions on HIRE Act.
This week’s question comes from Mike, a small-business owner. We have hired some employees whose native language is Spanish. They are better able to understand forms in Spanish than they are in English. We need them to complete Form W-11 in order to claim payroll tax forgiveness on Form 941. Is there a Spanish Form W-11 available? Form W-11, Hiring Incentives to Restore Employment (HIRE) Act Employee Affidavit, is used to certify worker eligibility for payroll tax forgiveness under the HIRE Act. At the present time, the Internal Revenue Service (IRS) has not released a Spanish version of Form W-11. Contact Vision Payroll if you have any further questions on Form W-11.
***Please see updated information regarding the release of the Spanish version of Form W-11.
This week’s question comes from Mark, a business owner. We read that the minimum wage in Nevada will increase on July 1, 2010. We know that we must pay weekly and daily overtime if the employee’s hourly wage is below a certain rate. What are the new daily overtime rates for Nevada? Employers must pay 1½ times an employee’s regular wage rate whenever an employee who is paid less than 1½ times the applicable minimum wage rate works more than forty hours in any workweek or more than eight hours in any workday. Michael Tanchek, Labor Commissioner for the Department of Business and Industry, State of Nevada, announced recently that new wage rates, below which daily overtime may be applicable, are effective as of July 1, 2010. The rates are $10.875 per hour for employees to whom qualifying health benefits have been made available by the employer and $12.375 for all other employees. Contact Vision Payroll if you have any further questions on the Nevada daily overtime rate.
This week’s question comes from Kate, a restaurant manager. We know that the Spanish W-4 doesn’t come out at the same time as the English W-4. Is the 2010 Spanish W-4 now available? Answer: The 2010 Form W-4, Employee’s Withholding Allowance Certificate was released last December. The Spanish equivalent, 2010 Formulario W-4(SP), Certificado de Exención de la Retención del Empleado, was not released until April, but is now available. Contact Vision Payroll if you have any further questions on 2010 Formulario W-4(SP).
This week’s question comes from Kim, an HR director. We have employees who maintain coverage on their health insurance policy for children, including some children who are not dependents. We have always included the cost of this coverage in our employees’ income. How does health care reform affect the taxation of children’s health insurance coverage? Answer: Generally, the Affordable Care Act allows the cost of coverage for children who are under age twenty-seven at the end of the year to be tax-free to employees. Additionally, employees may make pre-tax contributions to cafeteria or §125 plans for children who will be under age twenty-seven at the end of the tax year. These benefits are available even if the child qualifies as a dependent under the tax law. The Internal Revenue Service (IRS) recently issued Notice 2010-38, Tax Treatment of Health Care Benefits Provided With Respect to Children Under Age 27, to explain these changes and provide further guidance to employers, employees, health insurers and other interested taxpayers. Contact Vision Payroll if you have further questions on Notice 2010-38.
This week’s question comes from Lisa, an office manager. We may need to layoff a few employees. Some of them may elect COBRA continuation coverage. I know there was a subsidy for employees laid off through March 31, but I just heard that the subsidy period was extended. When does the COBRA subsidy period end? As noted by the Internal Revenue Service (IRS) in IR-2010-052, under The Continuing Extension Act of 2010, workers who are involuntarily terminated during April and May might be eligible for the sixty-five percent subsidy on COBRA continuation coverage. Eligible employees pay a reduced premium to their employer who then pays the difference. The employer may claim a credit on Form 941 for the amount paid. Contact Vision Payroll for further information on the COBRA subsidy period extension.
This week’s question comes from Aaron, a business owner. I just found out about the payroll tax forgiveness under the HIRE Act. We’ve hired several qualifying employees and already deposited the payroll taxes that should’ve been forgiven. Can we go back and claim payroll tax forgiveness under the HIRE Act? Answer: Under the HIRE Act, for otherwise qualifying employees, the OASDI tax, “Shall not apply to wages paid…with respect to employment during the period beginning [March 19, 2010]…and ending on December 31, 2010.” Employers may claim the credit for taxes paid related to these wages even if the taxes that are being forgiven have already been deposited. Simply reduce other payroll tax deposits in the current quarter or claim a refund with the filing of Form 941. Contact Vision Payroll if you have any further questions concerning payroll tax forgiveness under the HIRE Act.
This week’s question comes from Dan, a small-business owner. I have several employees that I hired who have signed Form W-11. What information do I need to provide to Vision Payroll to qualify for the HIRE Act Credit? Answer: Under the HIRE Act, employers may avoid paying social security tax on qualified employees and receive an income tax credit for retaining those employees. Employers are required to obtain a signed affidavit from qualified employees. The Internal Revenue Service (IRS) has released Form W-11, Hiring Incentives to Restore Employment (HIRE) Act Employee Affidavit that employers must have signed by eligible employees to claim the credit. Once an employer has obtained a signed form from an employee, contact Vision Payroll to inform us that the employee is eligible for the credit. Vision Payroll will work with employers to determine the eligible wages already paid in 2010 and ensure that future wages are not taxed. Contact Vision Payroll if you have further questions on the HIRE Act Credit.
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