The Ins and Outs of Payroll, Taxes and Reporting

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1 The Ins and Outs of Payroll, Taxes and Reporting Presented by Lisa A. Waligorski, CLM FM25 5/4/2018 4:15 PM The handout(s) and presentation(s) attached are copyright and trademark protected and provided for individual use only.

2 FM 1 Course: Law Firm Accounting Payroll, Taxes & Reporting Speaker: Lisa Waligorski Payroll, Taxes & Reporting Payroll Taxes 401(k) Affordable Care Act (ACA) Owners Self-Employment Depository and Tax Return Deadlines 1

3 Payroll Taxes What taxes come out of my paycheck? Federal State Social Security Medicare Payroll Taxes What does my employer pay? Social Security Medicare FUTA SUTA 2

4 Federal Withholding Federal Deposit Schedule If total payroll was less than $50,000 in the lookback period (four quarters), you are a monthly depositor. If total payroll was more than $50,000 in the lookback period (four quarters), you are a semimonthly depositor. $100,000 rule: If you accumulate $100,000 or more in taxes on any day during a monthly or semiweekly deposit period, you must deposit the tax by the next business day. State Withholding Each state is different. You might have to file: Weekly Monthly Quarterly Annually based on amount withheld from employees. 3

5 Social Security and Medicare How are they calculated? SS: 6.2% up to the maximum for the year Medicare: 1.45%, no limit Beginning in 2013, under the Patient Protection and Affordable Care Act of 2010, employees will be subject to the 0.9% additional Medicare tax on FICA wages and selfemployment income to the extent that they exceed the following threshold amounts: $250,000 for joint filers, $125,000 for married taxpayers filing separately, and $200,000 for individuals, heads of household. FUTA and SUTA FUTA: 6% of the first $7,000 you pay any employee but receive a 5.4% credit reducing taxable amount to.06% $420 SUTA: Differs per state and per industry Examples Missouri - new law firms in % of first $12,500) California new law firms in 3.4% of first $7,000 4

6 Self-Employment The self-employed are responsible for both sides (employee and employer) of SS and Medicare The self-employed pay estimated taxes on a quarterly basis ERISA Over 100 employees: Transmit employee contributions to pension plans as soon as they can be segregated, but in no case later than the 15th business day of the month immediately following the month in which the contribution is either withheld or received by the employer. Under 100 employees: Amounts are deposited within seven business days of withholding or receipt. 5

7 W-4 vs. W-2 W-4 is what an employee fills out when they begin employment, or any time they want to change their withholding information. W-2 is what the employer gives their employees before January 31 of the following year, reporting their income and withholdings for the previous year. Medical Premium Costs on W-2 If the employer has more than 50 employees in 2018, they must report the total amount spent on the employees health insurance premiums (between the employee and employer) on the W-2. Why this information is important per the government? Knowing the real price makes smarter consumers Could explain why their raise was not larger 6

8 Pre- and Post-Tax Deductions Common Pre-Tax Deductions Health Dental Vision STD/LTD (know effects on employee) FSA (medical, dependent care, transit) Traditional 401(k) (not on SS/Medicare) Pre- and Post-Tax Deductions Common Post-Tax Deductions Voluntary Life AFLAC Union dues Charitable contribution Cell phone Other employee reimbursable expenses Roth 401(k) 7

9 Traditional and Roth 401(k) Plans Traditional deducted now and pay taxes when you receive the amounts in the future Roth deducted now and pay taxes now so the funds are tax-free in the future FSA Medical: $2,650 Dependent Care: $5,000 (married joint) and $2,500 (single or married separate) Transit: $260/month for transit passes and qualified parking 8

10 Any questions? 9

11 Your opinion matters! Please take a moment now to complete the evaluation. Thank You!

12 FM 1 Course Week 4: Worksheet of Terms 1. Federal Withholding Tax 2. State Withholding Tax 3. Social Security Tax 4. Medicare Tax 5. FUTA Tax 6. SUTA Tax 7. Self-Employment Tax 8. W-2 9. W-4 Copyright Association of Legal Administrators. All Rights Reserved.

No Benefits Gross Pay Federal Withholding State Withholding Social Security Medicare Net Pay FM 1 Course Week 4: How Am I Taxed On My Payroll Check Cafeteria Plan Deductions which include the

14 No Benefits Gross Pay Federal Withholding State Withholding Social Security Medicare Net Pay FM 1 Course Week 4: How Am I Taxed On My Payroll Check Cafeteria Plan Deductions which include the following: Accident and health benefits (but not Archer medical savings accounts or long-term care insurance) Adoption assistance Dependent care assistance Group-term life insurance coverage Health savings accounts, including distributions to pay long-term care services Gross Pay Cafeteria Plan Deductions (Subtotal Pay) Federal Withholding State Withholding Social Security Medicare Net Pay 401K Deduction Gross Pay Social Security Medicare (Subtotal Pay) Federal Withholding (from gross pay) State Withholding (from gross pay) 401(k) Deduction Net Pay Copyright Association of Legal Administrators. All Rights Reserved.

15 And the wages are- Wage Bracket Method Tables for Income Tax Withholding MARRIED Persons WEEKLY Payroll Period (For Wages Paid through December 31,2015) And the number of withholding allowances claimed is At least But less than The amount of income tax to be withheld is $ 0 $170 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $ Publication 15 (2015) Page 49

16 And the wages are- Wage Bracket Method Tables for Income Tax Withholding MARRIED Persons WEEKLY Payroll Period (For Wages Paid through December 31,2015) And the number of withholding allowances claimed is At least But less than The amount of income tax to be withheld is $800 $810 $78 $67 $55 $44 $33 $26 $18 $10 $2 $0 $ , ,000 1, ,010 1, ,020 1, ,030 1, ,040 1, ,050 1, ,060 1, ,070 1, ,080 1, ,090 1, ,100 1, ,110 1, ,120 1, ,130 1, ,140 1, ,150 1, ,160 1, ,170 1, ,180 1, ,190 1, ,200 1, ,210 1, ,220 1, ,230 1, ,240 1, ,250 1, ,260 1, ,270 1, ,280 1, ,290 1, ,300 1, ,310 1, ,320 1, ,330 1, ,340 1, ,350 1, ,360 1, ,370 1, ,380 1, ,390 1, ,400 1, ,410 1, ,420 1, ,430 1, ,440 1, ,450 1, ,460 1, ,470 1, ,480 1, $1,490 arid over Use Table 1 (b) for a MARRIED person on page 45. Also see the instructions on page 43. Page 50 Publication 15 (2015)

17 And the wages are- Wage Bracket Method Tables for Income Tax Withholding MARRIED Persons BIWEEKLY Payroll Period (For Wages Paid through December 31,2015) And the number of withholding allowances claimed is At least But less than The amount of income tax to be withheld is $ 0 $340 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $ , ,000 1, ,020 1, ,040 1, ,060 1, ,080 1, ,100 1, ,120 1, ,140 1, ,160 1, ,180 1, ,200 1, ,220 1, ,240 1, ,260 1, ,280 1, ,300 1, ,320 1, ,340 1, ,360 1, ,380 1, ,400 1, ,420 1, ,440 1, ,460 1, ,480 1, Publication 15 (2015) Page 53

18 And the wages are- Wage Bracket Method Tables for Income Tax Withholding MARRIED Persons BIWEEKLY Payroll Period (For Wages Paid through December 31,2015) And the number of withholding allowances claimed is At least But less than The amount of income tax to be withheld is $1,500 $1,520 $141 $118 $95 $72 $56 $41 $26 $10 $0 $0 $0 1,520 1, ,540 1, ,560 1, ,580 1, ,600 1, ,620 1, ,640 1, ,660 1, ,680 1, ,700 1, ,720 1, ,740 1, ,760 1, ,780 1, ,800 1, ,820 1, ,840 1, ,860 1, ,880 1, ,900 1, ,920 1, ,940 1, ,960 1, ,980 2, ,000 2, ,020 2, ,040 2, ,060 2, ,080 2, ,100 2, ,120 2, ,140 2, ,160 2, ,180 2, ,200 2, ,220 2, ,240 2, ,260 2, ,280 2, ,300 2, ,320 2, ,340 2, ,360 2, ,380 2, ,400 2, ,420 2, ,440 2, ,460 2, ,480 2, ,500 2, ,520 2, ,540 2, ,560 2, ,580 2, ,600 2, ,620 2, ,640 2, ,660 2, ,680 2, ,700 2, ,720 2, ,740 2, ,760 2, ,780 2, ,800 2, ,820 2, ,840 2, ,860 2, $2,880 and over Use Table 2(b) for a MARRIED person on page 45. Also see the instructions on page 43. Page 54 Publication 15 (2015)

19 And the wages are- Wage Bracket Method Tables for Income Tax Withholding SINGLE Persons SEMIMONTHLY Payroll Period (For Wages Paid through December 31,2015) And the number of withholding allowances claimed is At least But less than The amount of income tax to be withheld is $ 0 $115 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $ Publication 15 (2015) Page 55

20 And the wages are- Wage Bracket Method Tables for Income Tax Withholding SINGLE Persons SEMIMONTHLY Payroll Period (For Wages Paid through December 31,2015) And the number of withholding allowances claimed is At least But less than The amount of income tax to be withheld is $800 $820 $88 $63 $38 $21 $5 $0 $0 $0 $0 $0 $ , ,000 1, ,020 1, ,040 1, ,060 1, ,080 1, ,100 1, ,120 1, ,140 1, ,160 1, ,180 1, ,200 1, ,220 1, ,240 1, ,260 1, ,280 1, ,300 1, ,320 1, ,340 1, ,360 1, ,380 1, ,400 1, ,420 1, ,440 1, ,460 1, ,480 1, ,500 1, ,520 1, ,540 1, ,560 1, ,580 1, ,600 1, ,620 1, ,640 1, ,660 1, ,680 1, ,700 1, ,720 1, ,740 1, ,760 1, ,780 1, ,800 1, ,820 1, ,840 1, ,860 1, ,880 1, ,900 1, ,920 1, ,940 1, ,960 1, ,980 2, ,000 2, ,020 2, ,040 2, ,060 2, ,080 2, ,100 2, ,120 2, $2,140 and over Use Table 3(a) for a SINGLE person on page 45. Also see the instructions on page 43. Page 56 Publication 15 (2015)

APPENDIX IX-H COMBINED TAX WITHHOLDING TABLES FOR USE WITH THE SUPPORT GUIDELINES

APPENDIX IX-H COMBINED TAX WITHHOLDING TABLES FOR USE WITH THE SUPPORT GUIDELINES Includes Federal, State, Social Security and Medicare Income Tax Withholding Rates Weekly Payroll Period - Single Persons