David R. Lewis, CPA Estep*Doctor & Company, CPA 3737 West Bethel Avenue Muncie, IN (Telephone) (Fax)

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1 David R. Lewis, CPA Estep*Doctor & Company, CPA 3737 West Bethel Avenue Muncie, IN (Telephone) (Fax) Estep * Doctor & Company, P.C. website David R. Lewis, CPA Common Websites Social Security Administration Internal Revenue Service US Department of Health & Human Services Small Business Administration Department of Labor Indiana Department of Revenue State of Indiana U.S. Government Indiana Department of Workforce Development Indiana State Board of Accounts Social Security Number Verification Service Department of Labor Fact Sheets Index Examples of model notices due to the ACA

2 Compensation Limits and Cost of Living Increases Applicable to Retirement Plans Limitation Type 2017* Maximum Annual Compensation 270, , , , , , , ,000 Elective Deferral Limit 18,000 18,000 18,000 17,500 17,500 17,000 16,500 15,500 Simple Elective Deferral Limit 12,500 12,500 12,500 12,000 12,000 11,500 11,500 10,500 HCE Compensation Threshhold 120, , , , , , , ,000 Catch-up Contribution 6,000 6,000 6,000 5,500 5,500 5,500 5,500 5,000 Simple Catch-up Contribution 3,000 3,000 3,000 2,500 2,500 2,500 2,500 2,500 IRA Contribution Limit 5,500 5,500 5,500 5,500 5,500 5,000 5,000 5,000 IRA Catch-up Contribution 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 Social Security Taxable Wage Base 126, , , , , , , ,000 * These figures are projected figures. They have not been finalized by the Internal Revenue Service.

3 Social Security Wage Base $118,500 $126,000 Social Security Rate 6.2% 6.2% Maximum W-2 Employee Amount $7, $7, Medicare and Hospital Insurance (HI) No limit No Limit Medicare Rate - Income < $200, % 1.45% Medicare Rate - Income > $200, % 2.35% HSA Limits for

4 Minimum Deductible Maximum Out-of-Pocket 2016 Contribution Limit 55+ Contribution Single $1,300 $6,550 $3,350 $1,000 Family $2,600 $13,100 $6,750 $1, Single $1,300 $6,550 $3,400 $1,000 Family $2,600 $13,100 $6,750 $1,000 The ACA requires employers report the amount paid for health insurance on employees 2015 W-2 s. The amounts are required to go in Box 12 of Form W-2 and a Code of DD. 2

5 Transition Relief The transition relief applies to the following: (1) employers filing fewer than 250 W-2 forms for the previous calendar year (for example, employers filing fewer than W-2 forms (meaning Forms W-2 for the calendar year 2013, which generally are filed with the SSA in early 2014) will not be required to report the cost of coverage on the 2014 W-2 forms (which generally are filed with the SSA in early 2015). For purposes of this relief, the number of W-2 forms the employer files includes any forms it files itself and any filed on its behalf by an agent under 3504 (see Q&A-3 of Notice for more information). In addition, for purposes of this relief, the employer is determined without the application of any aggregation rules; (2) multi-employer plans; The transition relief applies to the following: (3) Health Reimbursement Arrangement (HRA) contributions; (4) dental and vision plans that either 1. are not integrated into another group health plan or 2. give participants p the choice of declining the coverage or electing it and paying an additional premium (see Q&A-20 of Notice for more information); (5) self-insured plans of employers not subject to COBRA continuation coverage or similar requirements; (6) employee assistance programs, on-site medical clinics, or wellness programs for which the employer does not charge a premium under COBRA continuation coverage or similar requirements; and (7) employers furnishing W-2 forms to employees who terminate before the end of a calendar year and request a Form W-2 before the end of that year. Costs to be included in the calculation The ACA didn t specify the costs to be included in the W-2 calculation. Instead, it stated that the rules will be similar to those of Internal Revenue Code section 4980B(f) the method for calculating applicable premiums for COBRA continuation coverage. Based on that description, IRS guidance states that the following types of coverage will be included in the W-2 calculation: Medical plans, including limited benefit plans Prescription drug gplans Dental and vision coverage provided as part of the medical plan Hospital indemnity or specified illness (insured or self-funded) paid pre-tax or by employer Health Flexible Spending Arrangement (FSA) for the plan year in excess of employee s cafeteria plan salary reductions for all qualified benefits Employee physicals Domestic partner coverage Employee assistant programs (required if employer charges a COBRA premium) On-site health clinics (required if employer charges a COBRA premium) Wellness programs(required if employer charges a COBRA premium) Medicare supplement insurance 3

6 DD Beginning with the 2015 tax year, large employers are required to offer minimum essential coverage to all of its full-time employees Large employers are those who employ 50 or more full time and full time equivalent employees during a calendar year is the first year that employers who employ 50 or more full time employees are required to offer them health coverage and to report it to the IRS. Full-time employees are those who work an average of 30 hours or more per week. Employees who are not full time employees must be aggregated to determine the number of full time equivalent employees. This can be done by taking the total number of part-time employee hours and dividing by 120. If the number of full time employees plus fulltime equivalents is greater than 50, you are considered a large employer under the ACA, and must offer minimum essential coverage to all full-time employees. 4

7 10/17/2016 Reporting under the ACA was required beginning in early 2016 for the 2015 tax year. Those considered large employers will file IRS Forms1094-C and 1095-C, regardless of the health coverage offered. Employers who offer self-insured coverage and are not considered large employers will be required to file IRS Forms 1094-B and 1095-B These forms will be used to communicate several pieces of information to the IRS, including: Employer information Lowest cost employee monthly premium for self-only coverage. Information regarding each full time employee and their dependents. Employers who are not considered large employers (greater than 50 full-time employees) do not need to file with the IRS unless they offer a self-funded insurance plan. For more information on the reporting requirements of the ACA, visit the IRS website. Beginning January 2018, a new excise tax will be imposed on high-cost employer sponsored health coverage, also known as Cadillac Plans Any monthly benefit which exceeds a certain threshold (1/12 of the annual limit for coverage benefits) will be taxed at a 40% rate. The liability for this tax will fall on the coverage provider, which could be the health insurance carrier(if a group health plan), the employer (if a self-funded plan), or the benefits administrator (all other plans). 5

8 On May 18, 2016, the U.S. Department of Labor released the final rule that raises the overtime exemption threshold under the Fair Labor Standards Act. The final rule increases the salary threshold for the overtime exemption from $455 per week, or $23,600 annually, to $913 per week, or $47,476 annually. The changes will take effect on December 1, 2016 Full-time salaried employees who earn less than $47,476 annually and may work overtime hours are affected. Notable exceptions to the DOL rule are: Teachers Doctors Lawyers Outside Sales Personnel Hourly Workers Workers with regular workweeks of 40 or fewer hours Highly compensated individuals Elected officials 6

9 Comp Time Public sector employees may receive comp-time at a rate of 1.5 hours for each overtime worked in lieu of overtime pay, given that an agreement is already in place Small Agency Exception Police and fire protection agencies of five or fewer employees are exempt from overtime requirements Police and fire protection agencies also have the right to use a work period rather than the traditional work week. There are several ways to handle staffing and compensation as a result of this rule change: Increase salaries for those who work overtime hours Convert salaried employees to hourly compensation Eliminate overtime without authorization Pay overtime over a set salary IRS Form W-4 gives an employee the opportunity to dictate how much federal withholding should be taken from their paycheck. The employee is asked to claim allowances, which will determine how much is withheld. The more allowances are claimed, the less withholding on that employee s pay. The inverse is also true. Employees are entitled to an allowance for themselves, their spouse, and any dependents who are claimed on their tax return. New employees should always be required to fill out Form W-4. 7

10 IRS Form 1099 should be issued to any person or business who has been paid over $600 and is not affiliated with a corporation and is not considered an employee. Amounts paid to attorneys exceeding $600 should be reported regardless of whether the attorney has been established as a corporation. NEW: Due dates for Form 1099-MISC have changed. These forms are now due to the recipient and to the IRS by January 31. Per IRS guidance, the value of the business use of an employer provided cell phone is excludable from an employee s income. There must be substantial reasons for an employer provided d phone, including: The employer needs to contact the employee at all time for emergencies. The employer requires employees to be available to speak with clients outside of working hours. The employee speaks with clients in different time zones. Recently, the IRS has provided further guidance regarding employer provided workclothing. The value of work clothing provided by the employer is not taxable to the employee if: The employee must wear the clothing as a condition of employment The clothes are not suitable for everyday wear If the clothing does not meet the criteria listed above, the value of the clothing or reimbursement for the clothing must be treated as a taxable fringe benefit and is subject to income, social security, and Medicare taxes. 8

11 Questions? Thank You! 9