David R. Lewis, CPA Estep*Doctor & Company, CPA 3737 West Bethel Avenue Muncie, IN 47304 765-289-5366 (Telephone) 765-289-3332 (Fax) www.edcpa.com davidl@edcpa.com Estep * Doctor & Company, P.C. website David R. Lewis, CPA Common Websites www.ssa.com www.irs.gov www.dhhs.gov www.sba.gov www.dol.gov www.state.in.us/dor/ www.state.in.us http://firstgov.gov www.in.gov/dwd/index.html www.in.gov/sboa www.socialsecurity.gov/employer/ssnv.htm www.dol.gov/shd/fact-sheets-index.htm http://www.dol.gov/ebsa/healthreform 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
Compensation Limits and Cost of Living Increases Applicable to Retirement Plans Limitation Type 2019* 2018 2017 2016 2015 2014 2013 2012 Maximum Annual Compensation 280,000 275,000 270,000 265,000 265,000 260,000 255,000 250,000 Elective Deferral Limit 19,000 18,500 18,000 18,000 18,000 17,500 17,500 17,000 Simple Elective Deferral Limit 12,500 12,500 12,500 12,500 12,500 12,000 12,000 11,500 HCE Compensation Threshhold 125,000 120,000 120,000 120,000 120,000 115,000 115,000 115,000 Catch-up Contribution 6,000 6,000 6,000 6,000 6,000 5,500 5,500 5,500 Simple Catch-up Contribution 3,000 3,000 3,000 3,000 3,000 2,500 2,500 2,500 IRA Contribution Limit 5,500 5,500 5,500 5,500 5,500 5,500 5,500 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 132,900 128,400 127,200 118,500 118,500 117,000 113,700 110,100 * These figures are projected figures. They have not been finalized by the Internal Revenue Service.
2018 Keystone/Komputrol Workshops Accounting Guidelines and Taxes By David R. Lewis, CPA 2018 / 2019 Limits 2018 2019 Social Security Wage Base $128,400 $132,900 Social Security Rate 6.2% 6.2% Maximum W-2 Employee Amount $7,960.80 $8,239.80 Medicare and Hospital Insurance (HI) No limit No Limit Medicare Rate - Income < $200,000 1.45% 1.45% Medicare Rate - Income > $200,000 2.35% 2.35% Health Savings Accounts (HSA) HSA Limits for 2017 1
Health Savings Accounts (HSA) Minimum Deductible Maximum Out of Pocket Contribution Limit 55+ Contribution 2018 Single $1,350 $6,650 $3,450 $1,000 Family $2,700 $13,300 $6,900 $1,000 2019 Single $1,350 $6,750 $3,500 $1,000 Family $2,700 $13,500 $7,000 $1,000 Affordable Care Act Timeline Affordable Care Act (ACA) The ACA requires employers report the amount paid for health insurance on employees W-2 s. The amounts are required to go in Box 12 of Form W-2 and a Code of DD. 2
Affordable Care Act (ACA) 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 250 2013 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 2012-9 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; Affordable Care Act (ACA) 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 the choice of declining the coverage or electing it and paying an additional premium (see Q&A-20 of Notice 2012-9 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. Affordable Care Act (ACA) 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 plans 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
Affordable Care Act (ACA) DD Cadillac Health Plan Tax Beginning January 2022, a new excise tax will be imposed on highcost employer sponsored health coverage, also known as Cadillac Plans Any monthly benefit which exceeds a certain threshold of1/12 of the annual limit ($10,200 Single and $27,500 Family) 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). Health Reimbursement Arrangements (HRA) An HRA allows an employer to reimburse an employee on a tax free basis for qualified medical expenses and non group plan health insurance premiums. Effective January 1, 2017, qualifying small businesses can offer a stand alone HRA to their employees, called a qualified small employer health reimbursement arrangement (QSEHRA). Qualified small employers are employers who have fewer than 50 full time equivalent employees. 4
HRA Limits Under a qualified small employer health reimbursement arrangement (QSEHRA), an employer can provide the following: Maximum reimbursement for single coverage of $4,950 per year. Maximum reimbursement for family coverage of $10,000 per year. Generally, an employer must make the same contributions for all eligible employees, but can vary based on the price of an insurance policy in the relevant individual health insurance market. Excludable employees include: Employees who have not completed 90 days of service. Employees who have not attained age 25. Part time(less than 30 hours a week) or seasonable employees. Employees subject to collective bargaining. QSEHRA Regulations If a QSEHRA is adopted, notice must be given to employees at least 90 days in advance of the start of the year. The cost of the benefit must be covered entirely by the employer, as salary reductions for these plans are not permitted. Large employers (those with 50 or more full time equivalent employees) are not eligible to participate. QSEHRA Regulations The plan must provide, after employee provided proof of minimum essential coverage, for the payment of, or the reimbursement of, qualified medical expenses of an eligible employee or employee s eligible family member. Plan payments cannot be in excess of $4,950 for an eligible employee and $10,000 if the plan provides reimbursement for family members. In the case an employee is not covered for the entire year, the reimbursement must be prorated. 5
Taxable Fringe Benefits Autos Personal use of an employer provided vehicle cannot be excluded and must be considered as taxable wages to the employee. The taxable amount is based on fair market value. The FMV is the amount the employee would have to pay a third party to lease the same or simi lar vehicle on the same or comparable terms in the geo graphic area where the employee uses the vehicle. Different methods can be used to calculate the taxable portion of the auto fringe benefit: General valuation Cents per mile rule Commuting rule Lease value rule General Valuation The general valuation method is determined by the cost an individual would incur to lease the same vehicle under the same terms in the same geographic area. Cents Per Mile Rule Under this rule, the personal use amount is calculated by multiplying the personal use miles by the federal standard mileage rate (54.5 cents for 2018) The cents per mile method can be used if either of the following requirements are met: You expect to use the vehicle regularly in your trade or business throughout the year. At least 50% of the vehicle's total annual mileage is for your trade or business. You sponsor a commuting pool that generally uses the vehicle each workday to drive at least three employees to and from work. The vehicle is regularly used in your trade or business on the basis of all of the facts and circumstances. 6
Cents per Mile Rule The vehicle meets the mileage test. The vehicle is actually driven at least 10,000 miles per year. If owned part of the year, prorate the 10,000 miles. The vehicle is used during the year primarily by employees. The cents per mile rule also has a maximum automobile value that needs to be considered. If the value of the vehicle exceeds a luxury car value, the cents per mile rule cannot be used. The 2018 :luxury amount for autos is $15,900 and trucks/suv s is $17,800. Commuting Rule The value is calculated by multiplying the number of trips by either $1.50 (one way) or $3 (round trip). However, there are a number of conditions that must be met in order to use this method: The vehicle is owned or leased by you and provided to your employee for use in conjunction with your business. You require your employee to commute to and/or from work. You have a written policy prohibiting your employee (and their family) from using the vehicle for personal use other than commuting to and from work. Further, you enforce this policy. Your employee is not a control employee. A control employee is someone who: Is a corporate officer earning at least $110,000 in 2018 Is a director Earned at least $215,000 in 2017 Owns 1percent or more equity, capital or profits interest in the business Annual Lease Value Method To use this method, multiply the annual lease value of the car (via the IRS Annual Lease Value table) by the percentage of personal miles driven. This will give you the Fair Market Value (FMV) of the employee s personal use of a company provided vehicle. As a note, the amount determined from the table includes the value of maintenance and insurance for the vehicle, but not the value of employer provided fuel. That has to be valued separately. The annual lease values in the table are based on a 4 year lease term. These values will gen erally stay the same for the period that begins with the first date you use this rule for the automobile and ends on December 31 of the fourth full calendar year following that date. 7
Taxable Fringe Benefits Autos Here are a few more helpful tips when you are determining which method to use to calculate the use of a personal vehicle: If you use the cents per mile or annual lease valuation method, you must use it for all subsequent years you provide a vehicle to an employee. The same special valuation method doesn t have to be used for all company provided vehicles or for all employees. If you have one company provided vehicle that is used by multiple employees, you must use the same valuation method for all employees using that vehicle. Other Items Department of Labor overtime rule. Can an employee be issued a W 2 and a 1099? Deceased employee wages. Employees who move to another county during the calendar year. Questions? 8
Thank You! 9