March 2013 Newsletter

Welcome to the Four Point HR Newsletter

The New Year Means New Tax Hikes

Five new tax increases took place recently to help pay for the nation’s health care overhaul. The tax measures are in place to raise $24.2 billion next year and more than $258 billion through 2019. Here Is a look at the changes:

Cap On FSA Contributions
It’s been estimated that 30 million workers now place a portion of their pre-tax salary into health care flexible spending account offered by their employer. The accounts help pay for out-of-pocket medical costs such as co-pays and deductibles that are not covered by a traditional health insurance plan. The account requires participants to plan in advance the amount of money they want to contribute for the coming year. Most employers cap the employee’s contribution at $5,000. But, beginning in 2013, the Affordable Care Act will reduce the amount to $2,500.

Deductions For Medical Expenses
Currently, taxpayers who itemize their returns can deduct the medical expenses from their taxable income that exceed 7.5 percent of their adjust gross income. The health care act increases that threshold to 10 percent in 2013. The higher income threshold means many taxpayers with high medical bills will no longer qualify for the deduction. Seniors and older Americans and their spouses are exempt from the change until 2016.

Medicare Hospital Tax Hike
The Medicare Part A rate on wages which pays for hospital, hospice, nursing and home care services, will go to from 1.45 percent for individuals with income above $200,000 and families with income above $250,000. Married couples that file separately and earn more than $125,000 are also subject to the tax hike.

Investment Income Surtax
Tax rates on investment income will increase from 15 percent to 18.8 percent. The 3.8 percentage point “unearned income Medicare contribution tax” applies to interest, dividends, capital gains, annuities, royalties and other types of investment income. But it only applies on investments income above $200,000 and $250,000 thresholds.

Medical Device Excise Tax
The 2.3 percent excise tax on medical device sales will affect products from artificial hips and bedpans to stents and defibrillators. The tax is a tradeoff of sorts for the device industry, which, like insurers and pharmaceutical companies, will see substantial new revenue when the health care legislation, requiring millions of people to start buying insurance, goes into effect in 2014.

Did Your Business Catch The Flu?

We tell employees not to come to work when they are sick. We can remind them over and over again, but the bottom line is that many insist on coming to work, even when they are contagious, so that they can be paid.

Employers have a duty to maintain a healthy workplace for their employees. When a manager sees an employee who is obviously sick, they should take action and ask the employee to go home for the day.

For those small businesses that would like to reward employees who stay home when they are sick and do not spread their germs, consider the benefits of a Sick Leave Policy.

Four Point HR can help you develop a simple Sick Leave plan or Paid Time Off (PTO) plan for any number of days. One of the simplest plans allows up to 3 paid sick days if employees are contagious.

Policy Guidelines to consider include:

  • How many days will be paid?
  • Will a physician’s note be required? (If so, after how many days?)
  • What happens when the employee runs out of sick leave time?

Doctor notes should state:

  • Date the employee was seen
  • Fact the absence was “medically necessary”
  • Day/date the employee can return to work

A pro-active approach to the Flu season may also help to keep the number of sick employees to a minimum.

  • Be sure to keep a good supply of anti-bacterial soap in Restrooms and in Break Rooms.
  • Keep hand sanitizer out and available for employees and business guests.
  • Encourage flu vaccines for those who have had successful vaccinations in the past.
  • Announce in advance of flu season that “anyone with flu-like symptoms, not come into the workplace until they are well.”
  • Create a private workspace for those who are sick, may be contagious, and insist on staying at work.
  • Hold more meetings remotely using the telephone and Internet to keep illness outside of the workplace.
  • Evaluate any attendance policy with a “Perfect Attendance Award” to be sure it’s generating the kind of attendance you are seeking. (Sometimes these awards encourage those who are sick to come to work anyway—–especially when there are monetary benefits.)

Whether it’s a pro-active approach, revisiting current policy, or adding a carefully worded Sick Leave or PTO policy, be sure that you are taking the steps to keep your employees healthy in the work place.

Health Insurance Exchanges – The Beginning

As the New Year moves on, one of the health care reform provisions called the Health Insurance Exchange (HIE) will be enacted. The goal for these new marketplaces allow consumers and small business to comparison shop for health insurance, increasing coordination and simplifying access to affordable health care.

Last year, uncertainty surrounding the presidential elections and a lawsuit to challenge the legality of the Affordable Care Act slowed the progression of the HIE. This year, following the Supreme Court’s decision to uphold the ACA and the re-election of President Obama, the federal government must move quickly to complete a long and ever changing “to-do list” to get HIE functional. The pressure is definitely on for the exchanges to meet the October 1, 2013 deadline for open enrollment and the January 1, 2014 for full operation.

The ACA requires individuals to obtain health insurance and employers to offer it. Many of the newly insured will likely turn to these new HIE, the only way to get premium subsidies. As a side note the state of Georgia will not participate in the HIE in which the state will not qualify for the subsidy program. Its estimated that over 27 million individuals and employees of small firms are expected to use HIE for coverage by 2020 per the Congressional Budget Office.

Tax Season Is Upon Us

There are important dates and changes that will impact taxpayers for filing their taxes for 2012.

March 15, 2013 (Friday)

  • Is the filing deadline for Corporations filing 1020 tax returns with payment. An extension can be filed using form 7004.
  • S Corporations filing 1020S tax returns are due with payment. Also Schedule K-1 forms are due to stockholders. An extension can be filed using form 7004.

April 15, 2013 (Monday)

  • Is the filing deadline and due date for individual tax returns for 2012 such as Form 1040EZ, 1040, and 1040A.
  • Is the filing deadline for requesting 2012 Federal Tax Extensions (Form 4868). Payment of the tax is still due by April 15th and can be included with the extension form.
  • Is the FINAL deadline to file an original tax return for the tax year 2009 and still claim a tax refund.
  • Is the filing deadline to file Estate Income Tax or Trust Income Tax Returns (Form 1041)? A 5-month extension request can also be sent in on this date (Form 7004).
  • Is the filing deadline to file Partnership tax Returns (Form 1065)? A 5-month extension request can also be sent in on this date (Form 7004).
  • 1st Quarter 2013 estimated tax payments are due.

Tax forms and tax packages can be retrieved from www.IRS.gov, post offices, libraries and local IRS offices.

Did you know that the IRS is on Twitter and YouTube? Check those out if you have tax questions. For example, on YouTube, search for irs.gov or irsvideos to view some of the topics that are available. Scroll down and view the various tax topics or type in the specific tax topic you are interested in.

Please see IRS publication 509, Tax Calendars for Use in 2013. This gives you an in-depth look at the many different tax due dates that effect business and individuals during the year 2013.

Also, remember that FREE HELP is available for the taxpayer. Taxpayer Advocate – an individual organization within the IRS to assist taxpayers on -variety of issues. Please visit www.TaxpayerAdvocate.irs.gov or toll free at 1-877-777-4778.

Does Your Company Have A Checks And Balances System?

As the 2012 tax season is in full swing, there are a few items that are new this year to the W-2. The IRS has made the following changes for this years’ W-2’s:

  • Employee social security tax withholding. The 4.2% rate of social security tax withholding (for employees only) is extended for wage payments made in 2012. (This has increased for 6.2% for 2013. So, this is one of the reasons there has been a reduction in your take home pay)
  • Reporting the cost of group health insurance coverage. You must report the cost of employer-sponsored health coverage in box 12 using code DD.

The Affordable Care Act requires employers to report the cost of coverage under an employer-sponsored group health plan. Reporting the cost of health care coverage on the Form W-2 does not mean that the coverage is taxable. The value of the employer’s contribution for the employer’s health care coverage plan is reported along with the amount that the employee contributed for employer sponsored health care plan. This reporting is for informational purposes only and the hope is that this information will provide employees useful and comparable consumer information on the cost of their health care coverage.

Does Your Company Have A Checks And Balances System?

The term “checks and balances” refers to a system of quality control. No one person should have all the financial power or responsibility in your company. Creating checks and balances allows business to implement an accounting system that promotes separation of duties and help minimizes owners’ exposure to fraud and other misappropriations of funds. Here are some suggested tips to make sure your companies’ interests are protected.

Establish clearly defined roles for employees:
The most important thing to do is to separate duties as much as possible. The person in charge of handling the cash or point-of-sale, should not be the same person counting and recording sales.

Separate financial responsibility:
Companies do not want the person in charge of receiving payment to be the same person responsible for paying outgoing expenses.

Purchase an accounting software system:
Keeping accurate financial records is essential for small business success. Invoices and receipts can become hard to manage without a system to organize and manage the information. Try to purchase an accounting system that will expand as your business grows.

Limit security access:
Many companies control the areas to which employees have access. Keeping offices, storerooms, valuable goods, and even computer server rooms limited to key employees or manager helps safeguard assets.