Important Year End Updates for Staffing Company Owners

Important Year End Updates for Staffing Company Owners

As 2016 quickly winds down and 2017 is merely weeks away, important tax and wage changes are on the horizon.

We’ve put together a list of the top changes that you’ll need to prepare your staffing / consulting business for 2017. From minimum wage increases, to states with changing tax tables, to Earned Income tax credit notice requirements, we’ve collected the information you need to face the tax changes coming in 2017 with confidence.

Earned Income Tax Credit Notice Information
For 2016, you are encouraged to notify the following employees that they may be able to claim EIC on their 2016 tax returns:

  • Employees with one qualifying child and wages less than $44,846.  The employee’s copy of Form W-2 Tricom prepares has the required statement about the EIC on the back of the form.  


There are seven states that require employers to provide some additional notification to their employees about their possible eligibility for earned income credit. The following states allow employers to use Federal Notice 797:

  • California
  • Illinois
  • Louisiana
  • Texas


The following states require the use of a state-specified form:

  • New Jersey
  • Virginia
  • Maryland


Once these documents are updated for the current year, they will be available on Tricom’s website under: http://tricom.com/resources/tax-tools. Please contact your Tricom Accounting representatives if you have any questions.

 

  • BOLDED Numbers indicate those that have changed.
  • Highlighted areas indicate those states that have not yet released their wage bases. This information will also be available on TRICOM.com and updated as information becomes available.
  • 14 States increased their wage limit for 2017.
  • 1 State decreased their wage limit for 2017 (Wyoming).


FUTA Reduction States
For tax year 2016 only California and the Virgin Islands have not repaid their Federal Unemployment Tax loans. Their FUTA Credit reduction rate for 2016 will be 1.8% for each. Connecticut and Ohio paid off their loans in 2016, and therefore will no longer have a rate reduction.

State Tax Table Changes:
The following states have made changes to their state withholding table for 2017. If you have employees in these states, they may notice a change in their state tax withheld:

  • Kentucky
  • Minnesota
  • South Carolina
  • North Dakota
  • Washington DC


Federal Tax Changes
The following are changes that are being implemented at the Federal level:

  • Social Security Wage Limit has increased from 118,500 to $127,200. This is an increase for both the employee and the employer of $539.40. The additional .9% Medicare tax on employee wages over $200,000 is still in place for 2017.
  • 401K Limit for 2017 is still at $18,000 (no change)
  • SIMPLE Retirement Plan still at $12,500 (no change)


Standard Deduction Changes:
The following are additional standard deduction changes:

  • Single & Married Filing Separately: $6,350 (up $50 from 2016)
  • Married Filing Jointly: $12,700 (up $100 from 2016)
  • Head of Household: $9,350 ($50 up from 2016)

Additional State & Federal Tax Topics:

  • Indiana Department of Revenue has recently made some tax reforms that affect local tax withholding. January 1, 2017 nonresident employees working in Indiana will be taxed at the same local income tax rate as residents. In addition, currently there are three types of county tax (1) the County Adjusted Gross Income Tax (CAGIT);(2) the County Option Income Tax (COIT); and (3) the County Economic Development Income Tax (CEDIT). The reform legislation will combine the three taxes into one local income tax. It will simply be called the Local Income Tax.  Effective January 1, there will be one local income tax for each county.
  • The Ohio Department of Taxation (DOT) has requested payroll professionals to include the four digit school district number in combination with an abbreviation of the school district name or the letters “SD for “school district”. The DOT has requested this change due to the fact that some employees were having difficulty determining on their W-2 which amounts represented local withholding tax and which represented school district tax.
  • For 2017, Oregon’s workers’ compensation premium assessment rate will increase to 6.8% from 6.2%.
  • As of January 22, 2017 employers are required to use the New (dated November 14, 2016) I-9 form for all their new hires.  Employers can either use the computer version or the hard copy or both when completing an I-9. However, the form available on the USCIS website may not be electronically signed. The form must be printed, signed and dated by hand where required.
  • The Social Security Administration (SSA) had moved the usual deadline to submit the 2016 W-2’s from March 31 (if filed electronically) to January 31 for all forms of filing. (Electronic and paper). This makes it very important to verify employees’ social security numbers prior to year-end. Tricom’s Accounting Department is contacting owners to ask them if they would like an employee listing with SSN and address to assist in the process. If there is a change to a social security number after January 31, it will require a W-2C form to be filed and the employee copy will take longer to process.


For more legislative and year-end updates, please refer to TRICOM.com. We’ll post the latest legislative and tax updates, as well as tax tools and other resources for 2017 as they become available. For specific questions, please contact Mary Jo Heim in the Tricom Accounting Department at 262-509-6214 or your Tricom Accounting representative.


 

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