New York Workers Compensation Rate Increase

November 9th, 2016

The Rating Board submitted the 2016 General Loss Cost Revision to the New York State Department of Financial Services on May 13, 2016 requesting an average change of +9.3% in the loss cost level to become effective on October 1, 2016.

The loss cost revision reflects the experience of the two most recent policy years, as well as projected trends, benefit level changes, and changes in loss adjustment expenses. The filing proposed no changes to the terrorism and catastrophe loss cost provisions.

The New York State Department of Financial Services (NYDFS) approved the recommendations by the industry’s New York Compensation Insurance Rating Board (NYCIRB) which will go into effect October 1, 2016.

 

FLSA Overtime Rule Change: Effective December 1, 2016

November 9th, 2016

FLSA Overtime Rule Change: Effective December 1, 2016

Defining and Delimiting the Exemption for Executive, Administrative and Professional Employees effective for December 1, 2016

In 2014, President Obama directed the Department of Labor to update and modernize the regulations governing the exemption of executive, administrative, and professional (“EAP”) employees from the minimum wage and overtime pay protections of the Fair Labor Standards Act (“FLSA” or “Act”). The Department published a notice of proposed rulemaking on July 6, 2015, and received more than 270,000 comments. On May 18, 2016, the Department announced that it will publish a Final Rule that will more than double the salary threshold that employees must meet to qualify for the overtime wage exemption.

Under this new rule the salary threshold will increase from $23,660 to $47,476 per year. It also increases the salary threshold for highly compensated individuals from $100,000 to $134,004 per year. The Salary threshold will be updated every three years. Employers will be able to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10% of the standard salary level.

Duties Tests: The Final Regulations do not change any of the existing job duty requirements to qualify for exemption for overtime eligible workers and those who may be exempt.

 

Basic Requirements for Claiming a White Collar Exemption under the Standard Duties Test

 

EXECUTIVE ADMINISTRATIVE PROFESSIONAL
Salary Basis Test Employee must be paid on a salary basis. Employee must be paid on a salary or fee basis. Employee must be paid on a salary or fee basis.
Standard Salary Level Test $913 per week   ($47,476 per year for a full-year worker). $913 per week   ($47,476 per year for a full-year worker). $913 per week ($47,476 per year for a full-year worker).
Special salary level for certain academic administrative personnel. Salary level test does not apply to doctors, lawyers, or teachers.
Standard Duties Test

The employee’s “primary duty” must  be managing the enterprise, or managing a customarily recognized department or subdivision of the enterprise ( and managing 2 full time employees as well).

There are additional requirements.

The employee’s “primary duty” must include the exercise of discretion and independent judgment with respect to matters of significance.

There are additional requirements.

The employee’s “primary duty” must be to primarily perform work that either requires advanced knowledge in a field of science or learning that requires invention, imagination, originality, or talent in a recognized field of artistic or creative endeavor.

There are additional requirements.

Employers have until December 1, 2016 to comply with this new rule.

Employers who fail to implement overtime changes could be subject to lawsuits, criminal charges, fines and restrictions in commerce.

For any questions or additional information, please visit Wage and Hour Division Website: www.wagehour.dol.gov or do not hesitate to contact our office.

This publication is for general information and is not to be considered in the same light as official statements of position contained in the regulations.

 

 

Tax Law Changes and Year End Memo to clients

November 9th, 2016

As the end of the year approaches ….

At this point in the year, it can become beneficial to start thinking of planning moves that will help lower your tax bill for this year and possibly the next. Factors that compound the planning challenges this year include political and economic uncertainty, and Congresses all too familiar failure to act on a number of important tax breaks that could potentially expire at the end of 2016. Some of these expiring tax breaks will likely be extended, but as illustrated in the past, Congress may not decide the fate of these tax breaks until the very end of 2016 (or later).

Higher-income earners have unique concerns when mapping out year-end plans. They must be wary of the 3.8% surtax on certain unearned income and the additional 0.9% Medicare (hospital insurance, or HI) tax.

We have compiled a checklist of additional actions based on current tax rules that may help you save tax dollars if you act before year-end. Not all actions could apply in your particular situation, but it is possible that you (or a family member) will likely benefit from many of them. We can narrow down the specific actions that you can take once we meet with you. In the meantime, please review the following list and contact us at your earliest convenience so that we can advise you on which tax-saving moves to make.

Year-End Tax Planning Moves for Individuals

• Realize losses on stock while substantially preserving your investment position. There are several ways this can be done. For example, you can sell the original holding, then buy back the same securities at least 31 days later.  It may be advisable for us to meet to discuss year-end trades you should consider making.

• Postpone income until 2017 and accelerate deductions into 2016 to lower your 2016 tax bill. This strategy may enable you to claim larger deductions, credits, and other tax breaks for 2016 that are phased out over varying levels of adjusted gross income (AGI). These include child tax credits, higher education tax credits, and deductions for student loan interest. Postponing income is also desirable for those taxpayers who anticipate being in a lower tax bracket next year due to changed financial circumstances. Note, however, that in some cases, it may pay to actually accelerate income into 2016. For example, this may be the case where a person’s marginal tax rate is much lower this year than it will be next year or where lower income in 2017 will result in a higher 2017 tax credit for an individual who plans to purchase health insurance on a health exchange and is eligible for a premium assistance credit.

• If you believe a Roth IRA is better than a traditional IRA and you are eligible to convert a traditional IRA to a Roth IRA, consider converting traditional-IRA money invested in beaten-down stocks (or mutual funds) into a Roth IRA. Keep in mind, however, that such a conversion will increase your AGI for 2016.

• If you converted assets in a traditional IRA to a Roth IRA earlier in the year and the assets in the Roth IRA account declined in value, you could wind up paying a higher tax than is necessary if you leave things as is. You can back out of the transaction by recharacterizing the conversion—that is, by transferring the converted amount (plus earnings, or minus losses) from the Roth IRA back to a traditional IRA via a trustee-to-trustee transfer. You can later reconvert to a Roth IRA.
• It may be advantageous to try to arrange with your employer to defer, until early 2017, a bonus that may be coming your way.

• Consider using a credit card to pay deductible expenses before the end of the year. Doing so will increase your 2016 deductions even if you don’t pay your credit card bill until after the end of the year.

• If you expect to owe state and local income taxes when you file your return next year, consider asking your employer to increase withholding of state and local taxes (or pay estimated tax payments of state and local taxes) before year-end to pull the deduction of those taxes into 2016 if you won’t be subject to alternative minimum tax (AMT) in 2016.

• Estimate the effect of any year-end planning moves on the AMT for 2016, keeping in mind that many tax breaks allowed for purposes of calculating regular taxes are disallowed for AMT purposes. These include the deduction for state and local property taxes on your residence, state income taxes, miscellaneous itemized deductions, and personal exemption deductions. Other deductions, such as medical expenses of a taxpayer who is at least age 65 or whose spouse is at least 65 as of the close of the tax year, are calculated in a more restrictive way for AMT purposes than for regular tax purposes. If you are subject to the AMT for 2016, or suspect you might be, these types of deductions should not be accelerated.

• You may be able to save taxes this year and next by applying a bunching strategy to “miscellaneous” itemized deductions, medical expenses and other itemized deductions.

• For 2016, the “floor” beneath medical expense deductions for those age 65 or older is 7.5% of adjusted gross income (AGI). Unless Congress changes the rules, this floor will rise to 10% of AGI next year. Taxpayers age 65 or older who can claim itemized deductions this year, but won’t be able to next year because of the higher floor, should consider accelerating discretionary or elective medical procedures or expenses (e.g., dental implants or expensive eyewear).

• You may want to pay contested taxes before the end of the year, so as to be able to deduct them this year while continuing to contest them next year.

• You may want to settle an insurance or damage claim in order to maximize your casualty loss deduction this year.

• Take required minimum distributions (RMDs) from your IRA or 401(k) plan (or other employer-sponsored retirement plan). RMDs from IRAs must begin by April 1 of the year following the year you reach age 70-½. That start date also applies to company plans, but non-5% company owners who continue working may defer RMDs until April 1 following the year they retire. Failure to take a required withdrawal can result in a penalty of 50% of the amount of the RMD not withdrawn. Although RMDs must begin no later than April 1 following the year in which the IRA owner attains age 70-½, the first distribution calendar year is the year in which the IRA owner attains age 70-½. Thus, if you turn age 70-½ in 2016, you can delay the first required distribution to 2017, but if you do, you will have to take a double distribution in 2017—the amount required for 2016 plus the amount required for 2017. Think twice before delaying 2016 distributions to 2017, as bunching income into 2017 might push you into a higher tax bracket or have a detrimental impact on various income tax deductions that are reduced at higher income levels. However, it could be beneficial to take both distributions in 2017 if you will be in a substantially lower bracket that year.

• Increase the amount you set aside for next year in your employer’s health flexible spending account (FSA) if you set aside too little for this year.

• If you become eligible on or before December of 2016 to make health savings account (HSA) contributions, you can make a full year’s worth of deductible HSA contributions for 2016.

• If you are thinking of installing energy saving improvements to your home, such as certain high-efficiency insulation materials, do so before the close of 2016. You may qualify for a “nonbusiness energy property credit” that won’t be available after this year, unless Congress reinstates it. You can still install solar energy on your residence for a tax credit of up to 30% of the total cost including installation. The State also has a credit of up to $5,000.

• Make gifts sheltered by the annual gift tax exclusion before the end of the year and thereby save gift and/or estate taxes. The exclusion applies to gifts of up to $14,000. made in 2016 and 2017 to each of an unlimited number of individuals. You can’t carry over unused exclusions from one year to the next. The transfers also may save family income taxes where income-earning property is given to family members in lower income tax brackets who are not subject to the kiddie tax.

 

Tax Figures to Note 2016 2017
Maximum Income Tax 39.60% 39.60%
Maximum Capital Gains Rate 20% 20%
Maximum Qualified Dividends Rate 20% 20%
Net Investment Income Tax 3.80% 3.80%
Medicare Payroll Tax Rate on Employees 2.35% 2.35%
Estate Tax Exemption $5.45 Million $5.49 Million
Maximum Estate Tax Rate 40% 40%
Gift Tax Exemption $5.45 Million $5.49 Million
Maximum Gift Tax Rate 40% 40%
Generation-Skipping Transfer (GST) Tax Exemption $5.45 Million $5.49 Million
Maximum GST Rate 40% 40%
Annual Gift Tax Exclusion $14,000. per donee $14,000. per donee
Annual Exclusion Gift to Non-Citizen Spouse $148,000.00 $149,000.00

 

Year-End Tax-Planning Moves for Businesses & Business Owners
• Businesses should consider making expenditures that qualify for the business property expensing option. For tax years beginning in 2016, the expensing limit is $500,000. and the investment ceiling limit is $2,010,000. Expensing is generally available for most depreciable property (other than buildings), off-the-shelf computer software, and qualified real property—qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property. The generous dollar ceilings that apply this year mean that many small and medium sized businesses that make purchases before the end of 2016 will be able to currently deduct most, if not all, of their outlays for machinery and equipment. The expensing deduction is not prorated for the time that the asset is in service during the year. This opens up significant year-end planning opportunities.
• Businesses also should consider making expenditures that qualify for 50% bonus first year depreciation if bought and placed in service this year. The bonus depreciation deduction is permitted without any proration based on the length of time that an asset is in service during the tax year. As a result, the full 50% first-year bonus write-off is available even if qualifying assets are in service for only a few days in 2016.
• A corporation should consider accelerating income from 2017 to 2016 if it will be in a higher bracket next year. Conversely, it should consider deferring income until 2017 if it will be in a higher bracket this year.
• A corporation (other than a “large” corporation) that anticipates a small net operating loss (NOL) for 2016 (and substantial net income in 2017) may find it worthwhile to accelerate just enough of its 2017 income (or to defer just enough of its 2016 deductions) to create a small amount of net income for 2016. This will permit the corporation to base its 2017 estimated tax installments on the relatively small amount of income shown on its 2016 return, rather than having to pay estimated taxes based on 100% of its much larger 2017 taxable income.
• To reduce 2016 taxable income, consider deferring a debt-cancellation event until 2017.
• To reduce 2016 taxable income, consider disposing of a passive activity in 2016 if doing so will allow you to deduct suspended passive activity losses.
• If you own an interest in a partnership or S corporation, consider whether you need to increase your basis in the entity so you can deduct a loss from it for this year.

Minimum Wage Increases

  Workers Employed in NYC by Businesses with 11 or More Employees Workers Employed in NYC by Businesses with 10 or Fewer Employees Workers Employed in Nassau, Suffolk and Westchester Counties Workers in the Remainder of NYS (“Upstate”)
Effective Date
31-Dec-16 $11.00/hour $10.50 $10.00 $9.70
31-Dec-17 $13.00/hour $12.00 $11.00 $10.40
31-Dec-18 $15.00/hour $13.50 $12.00 $11.10

Fast Food Workers

    New York State outside of New York City
Effective Date New York City
31-Dec-15 $10.50 $9.75
31-Dec-16 $12.00 $10.75
31-Dec-17 $13.50 $11.75

Call us about tax law changes, there are many for 2016

YEAR END MEMO – 2015

TO:         All Clients

DATE: January 2016

*****************

FICA Tax changes for 2016:

FICA Tax includes both Social Security coverage and Medicare coverage, and are both a deduction
from employee wages and matched by the employer.

Maximum Wages Subject to
Social Security Tax $ 118,500.00 (same as last year)

Maximum Social Security Tax – Employers $7,347.00
Maximum Social Security Tax – Employees $7,347.00

Maximum Wages Subject to  Medicare Tax                        Unlimited

Social Security Tax Rate:
Employees                                                    6.20%
Employers                                                    6.20%

Medicare Tax Rate:
Employees  1.45% (Employees earning over $200,000 are subject to additional 0.09 Medicare Tax)
Employers 1.45%

NYS Unemployment wage base $10,700.00

The  Federal  &  State  agencies  have  been  aggressively  looking  for  ways  to  assess  taxes  & penalties.

Forms  1099  are still  an  area  for  target.  All  payments  of  $600.  per  year  to  non-corporate entities for  services  will  need  a  signed  and  completed  Form  W-9  on  file  so  we  can complete  a  Form  1099  at  year  end.         For  all  sales  that  are  exempt  from  sales  tax,  you  must have  a  signed  resale  certificate  or  exemption  certificate  on  file  from  the  customer.

If  you  need any  forms  or  have  any  questions,  please  do  not  hesitate  to  contact  our  office.

Please  be  advised  that  it  is  a  misdemeanor  offense  to  be  collecting  Sales  Tax without  having, your  Certificate  of  Authority  on  display  at  your  place  of business  and,  if  you  have  employees,  you  must  also  have  your  Workers’ Compensation  and  Disability  Insurance  Certificates  displayed.

We  are  an  authorized  Quickbooks-Pro  Advisor  and,  as  such,  can  get  you  discounts  on  Quick-books,  Quickbooks  upgrades,  and  Quickbooks  supplies  directly  from  Quickbooks.   Our  contact  is Keith  Van  Order  and  his  direct  number  is  214-387-2840.   We  were  told  our  clients  would  receive a  30%  discount  when  they  mention  our  name.

We  now  have  a  Facebook  page  under  ” Michael J. Berger and Co. CPA’s, LLP ”

Brief summary of 2014 Tax Law changes:

Individuals with health insurance through a Federal or state exchange will receive Form 1095-A by 1/31/2015.  We will need that form in order to complete the 2014 personal income tax return. Individuals may receive a Form 1095-B from private insurance companies, but it is optional.  Individuals may receive Form 1095-C from their employer, but it is also optional.  Both optional forms will be required for next year (2015) tax returns.

Penalty will be calculated by us for 2014 if no health insurance coverage,  and included with individual income tax return.

2013 tax law provisions finally renewed by the Senate and signed by the President: Election to deduct sales tax instead of income tax, Higher education tuition and fees above the line; Teacher classroom expenses up to $250 above the line; PMI mortgage insurance premium deduction; $500 residential energy credit;  50% bonus depreciation; $500,000 first year depreciation write-off limit; Mortgage debt discharge credit; certain other provisions. These provisions were expected to be renewed by year end, and were. However, they now expire 12/31/2014 and we will have to wait and see about 2015.

The annual gift tax exclusion remains $14,000 per gift.

Federal Estate tax exclusion based on assets under $5,340,000 in 2014 and $5,430,000 for decedents dying in 2015.  NY State Estate tax exclusion based on assets under $2,062,500 until 3/31/15 and $3,125,000 for decedents dying between 4/1/15 and 3/31/16.

Portability of spousal Estate Tax exclusion only available if Form 706 Estate Tax return is filed after the first spouse to die.

If you received a $350 check from NY State in 2014 for the Family Tax Relief Credit, it is not taxable,  but we need to know. (Credit was for 2012 full year NY State residents who claimed a child dependent under age 17and had NY State adjusted gross income between $40,000 and $300,000.

Homeowners receiving a Star credit on their primary residence and having total household income under $500,000 should receive a Real Property Tax Freeze Credit check from NY State.  This check should be about 1.5% of the 2013 school tax bill.  This check is not taxable.

NY City residents may be entitled to a Real Property tax credit up to $500 for 2014 and 2015.  We will calculate this credit if it applies to you.

2014 and 2015 IRA and Roth IRA limits are the same as 2013. $5,500 plus $1,000 for individuals over age 50.

401 (k) increase from $17,500 with a catch-up for age 50 and over of $5,500 for 2014 to $18,000 with a catch-up of $6,000 for 2015

Simple IRA & Simple 401 (k) increase from $12,000 with a catch-up for age 50 and over of $2,500 for 2014 to $12,500 with a catch-up of $3,000 for 2015

This is a brief summary.  We will calculate these and many other Tax Law changes for you when we prepare your business and personal tax returns.

 

YEAR END MEMO – 2014

TO:         All Clients

DATE: January 2015

*****************

FICA Tax changes for 2015:

FICA Tax includes both Social Security coverage and Medicare coverage, and are both a deduction
from employee wages and matched by the employer.

Maximum Wages Subject to
Social Security Tax $ 118,500.00

Maximum Social Security Tax – Employers $7,347.00
Maximum Social Security Tax – Employees $7,347.00

Maximum Wages Subject to  Medicare Tax                        Unlimited

Social Security Tax Rate:
Employees                                                    6.20%
Employers                                                    6.20%

Medicare Tax Rate:
Employees  1.45% (Employees earning over $200,000 are subject to additional 0.09 Medicare Tax)
Employers 1.45%

NYS  minimum  wage  is  $8.75  per  hour and  NJ  minimum  wage  is  $8.38  per  hour

The  Federal  &  State  agencies  have  been  aggressively  looking  for  ways  to  assess  taxes  & penalties.

Forms  1099  are still  an  area  for  target.  All  payments  of  $600.  per  year  to  non-corporate entities for  services  will  need  a  signed  and  completed  Form  W-9  on  file  so  we  can complete  a  Form  1099  at  year  end.         For  all  sales  that  are  exempt  from  sales  tax,  you  must have  a  signed  resale  certificate  or  exemption  certificate  on  file  from  the  customer.

If  you  need any  forms  or  have  any  questions,  please  do  not  hesitate  to  contact  our  office.

Please  be  advised  that  it  is  a  misdemeanor  offense  to  be  collecting  Sales  Tax without  having, your  Certificate  of  Authority  on  display  at  your  place  of business  and,  if  you  have  employees,  you  must  also  have  your  Workers’ Compensation  and  Disability  Insurance  Certificates  displayed.

We  now  have  a  Facebook  page  under  ” Michael J. Berger and Co. CPA’s, LLP ”
** Additional  information  will  be  posted  to  our  website:  www.bergercpa.com.

 

YEAR END MEMO – 2013

TO:         All Clients

DATE: January 2014

*****************

FICA Tax changes for 2014:

FICA Tax includes both Social Security coverage and Medicare coverage, and are both a deduction
from employee wages and matched by the employer.

Maximum Wages Subject to
Social Security Tax $ 117,000.00

Maximum Social Security Tax – Employers $7,254.00
Maximum Social Security Tax – Employees $7,254.00

Maximum Wages Subject to  Medicare Tax                        Unlimited

Social Security Tax Rate:
Employees                                                    6.20%
Employers                                                    6.20%

Medicare Tax Rate:
Employees  1.45% (Employees earning over $200,000 are subject to additional 0.09 Medicare Tax)
Employers 1.45%

NYS  minimum  wage  is  $8.00  per  hourand  NJ  minimum  wage  is  $8.25  per  hour

The  MTA  Tax  has  been  repealed  as  of  04/01/2012,  for  most  employers.   Additional  information
will  be  posted  to  our  website:  www.bergercpa.com.

The  Federal  &  State  agencies  have  been  aggressively  looking  for  ways  to  assess  taxes  & penalties.

Forms  1099  have  become  an  area  for  target.  All  payments  of  $600.  per  year  to  non-corporate entities for  services  will  need  a  signed  and  completed  Form  W-9  on  file  so  we  can complete  a  Form  1099  at  year  end.         For  all  sales  that  are  exempt  from  sales  tax,  you  must have  a  signed  resale  certificate  or  exemption  certificate  on  file  from  the  customer.

If  you  need any  forms  or  have  any  questions,  please  do  not  hesitate  to  contact  our  office.

Please  be  advised  that  it  is  a  misdemeanor  offense  to  be  collecting  Sales  Tax without  having, your  Certificate  of  Authority  on  display  at  your  place  of business  and,  if  you  have  employees,  you  must  also  have  your  Workers’ Compensation  and  Disability  Insurance  Certificates  displayed.

We  now  have  a  Facebook  page  under  ” Michael J. Berger and Co. CPA’s, LLP ”
** Additional  information  will  be  posted  to  our  website:  www.bergercpa.com.