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Do You Live or Work in Kansas?

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If so, the recent changes WILL AFFECT YOU!

WHAT YOU NEED TO KNOW:

  • These changes are retroactive and apply starting January 1, 2017.
  • Business and rental income (Sole Proprietors, S Corporation and Partnership owners) which was previously exempt from Kansas tax is once again taxable.
  • Increase in tax rates for 2017.  The highest rate will be 5.2% for those with Kansas income in excess of $60,000.  These rates will increase again in 2018 to a high of 5.7%.
  • No taxpayer penalties or interest will be charged for underpayment of taxes due to this change in law as long as the underpayment is paid by April 17, 2018.
  • Limitations on itemized deductions will ease but not in 2017.  Starting in 2018 a portion of medical expense will be allowed and mortgage interest and property tax deductions will phase back in.
  • For W-2 employees, Kansas withholding tax rates were updated on July 1, 2017.  These rates have been updated for the remainder of 2017 at the higher 2018 rates to compensate for the first 6 months of withholding at lower rates.   However, some employees may still not have enough tax withheld for the year.

WHAT STEPS TO TAKE:

  • Consider making higher KS estimated tax payments to avoid a large Kansas tax bill at April 17, 2018.
  • Consider having extra Kansas tax withheld from your paycheck.
  • Contact us to prepare a projection of the Kansas tax you may owe for 2017.

Please contact us if you have any questions or concerns about these changes!

Find the Best Employees to Contribute to Your Company

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Turnover is an often overlooked cost of doing business. Sometimes it can run as high as 25% of salary and benefits. One way to reduce this cost is to hire wisely. It’s an oft-quoted cliché that employees are a company’s most valuable assets. Try generating revenue with unmotivated or unskilled employees, and you’ll soon discover that the cliché rings true.

How do you locate the best employees?

Know what you’re looking for. Before you publish a job announcement or talk to potential candidates, consider the type of skills that would fit best with your company. This may involve clarifying the types of skills that are essential to your company, as well as skills that are specific to the position being filled. For example, if the business prides itself on written communications, you don’t want to hire a candidate who struggles with grammar or balks at the prospect of writing a report.

Look in the right places. Once you’re clear about the type of employee you’re hoping to hire, focus on discovering the best candidates and drawing them to your company. You might post the position on job boards of specific trade organizations, network with local colleges and technical schools, or ask for recommendations from your current employees. In general, the more specific skills you hope to find, the wider net you’ll have to cast.

Make the interview count. Potential candidates are often counseled to conduct mock interviews, and wise employers will hone their interviewing skills too. You want to identify candidates who will be eager to contribute to your company. Asking focused questions and listening with a purpose are key to the interview process. A good interviewer will also attempt to identify “red flags” that indicate potential problems. For example, the candidate may provide vague or rambling answers to simple questions. This could indicate normal interview anxiety, or he or she might be hiding key facts from you – information that could directly affect your hiring decision.

Finding quality employees that will mesh well with your company culture is not an exact science. But, thoughtful preparation and careful interviewing can pay dividends for years to come.

Start Preparing Now for New Overtime Rules

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In May, the U.S. Department of Labor updated the rules for paying overtime.

Under the new rules, salaried employees who earn less than $913 per week ($47,476 per year) will be eligible for overtime pay. That’s double the annual exempt amount of $23,660 under current rules.

The changes take effect December 1, 2016, which means you need to begin reviewing your payroll now, as penalties and fines can be assessed for noncompliance.

One important step is to begin tracking hours for your salaried employees.

Contact us if you need assistance in this area.

Improve Productivity With Happy Employees

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Happy employees can have a positive impact on your operations, customer support, and profit level. Here are suggestions for keeping your workforce upbeat.

Lead by example. Demonstrate the personal discipline and commitment you hope to instill in your workers by showing up every day with a positive attitude.

Emphasize the link between attendance and productivity. Absenteeism is a symptom of unhappy employees. Help your employees understand the importance of the role they play in the success of the business.

Learn what motivates your employees. Conduct an online survey to learn if money, recognition, promotion, or time off drives your employees.

Enrich skill sets. Cross-training and job rotation can improve appreciation for overall business operations and mitigate boredom and dissatisfaction.

Create a time-off bank. Modify the traditional offering of vacation, personal, and sick days. Give your employees the responsibility and ability to balance work and home obligations by empowering them to manage total available paid time off.

Other suggestions for a healthy working environment and happy employees include celebrations and team building. While these “soft” methods may seem a distraction from everyday business, your employees will appreciate the effort and your business will profit from the resulting improvements in performance.

What You Need to Know About Hiring Seasonal Workers

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If summertime is a busy time for your business, you may be ready to hire seasonal workers. Here are tax rules to keep in mind.

  • Affordable Care Act exception. When you employ 50 or more full-time employees, you’re considered a “large employer” and are generally required to provide health insurance coverage or pay a penalty. However, the law provides an exception for seasonal workers, defined as those you employ for not more than 120 days during the prior calendar year. In general, your answer to two questions determines if you qualify for the exception. Did your workforce exceed 50 full-time employees for 120 days or fewer during the year? Were the employees in excess of 50 who were employed during that period seasonal workers? If both answers are yes, you’re generally not considered a large employer.
  • Employment taxes. Temporary workers are typically subject to the same employment tax rules as regular employees. You’ll generally have to withhold social security and Medicare taxes, as well as federal income tax from wages. You’ll also have to follow payroll tax deposit rules and employment return filing requirements.
  • Employment tax returns. Special filing rules may apply when you only hire employees at a specific season of the year, such as summertime. For each quarter that you pay wages, you can check the box for “seasonal employer” on Form 941, Employer’s Quarterly Federal Tax Return. By notifying the IRS of your seasonal status, you’re not required to file returns for quarters when you have no wages or tax liability.
  • Please contact us for more information about payroll tax rules, recordkeeping requirements, and documentation for seasonal employees. We’re here to make sure that your busy summer season goes smoothly.

Update Your W-4 to Adjust Your Withholding

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Did you receive a big tax refund or owe the IRS a lot of money for 2015? Then it’s time to update the form that tells your employer how to calculate your federal income tax withholding. That’s Form W-4, Employee’s Withholding Allowance Certificate, and here’s what you need to know.

Filing a new Form W-4 with your employer allows you to adjust your income tax withholding to avoid overpaying or underpaying tax for 2016. The form comes with a worksheet to figure out how many allowances you should claim. These allowances are similar to dependency exemptions on your income tax return. However, the total allowances on your W-4 don’t have to agree with the exemptions you claim on your return. For example, say you’re single and you want to have the maximum amount withheld from your paycheck. You can claim zero allowances on Form W-4. You’ll still claim your personal exemption on the federal income tax return you file next April.

One caution: You should not claim more exemptions than you’re entitled to on Form W-4.

Updating Form W-4 can help adjust your withholding to match the tax you expect to owe. If you need assistance completing the form, give us a call at 913-338-3500.

Form 1099 Filing Requirements – What You Need to Know

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Forms 1099 are “information returns” that businesses are required to file annually with the IRS. The forms are used to report amounts a business paid out that should be reported by the recipients as income.

Form 1099-MISC, Miscellaneous Income, is probably the most familiar to business owners. But Form 1099-MISC is just one of a group of more than fifteen different forms used to report other types of income to the IRS.

To increase compliance of Form 1099 filing, business income tax forms include questions about whether the business made payments that require issuing the form and whether the business actually did issue it. This scrutiny, coupled with steep penalties, make it important for every business to check Form 1099 filing requirements each year.

Here’s what you need to know about Form 1099.

COMMON 1099s – A variety pack

Under current tax law, every person engaged in a trade or business, including nonprofit organizations, must file Forms 1099 for certain payments made during the year in the course of the payer’s trade or business. Here are some of the most common forms and filing requirements.

  • Form 1099-INT
    Used to report interest payments of $10 or more by financial entities; $600 or more by certain trades or businesses.
  • Form 1099-DIV
    Used to report dividend payments of $10 or more; $600 or more for liquidations.
  • Form 1099-B
    Used to report any proceeds from broker and barter transactions.
  • Form 1099-R
    Used to report distributions of $10 or more from retirement or profit-sharing plans, IRAs, SEPs, annuities, or insurance contracts.
  • Form 1099-S
    Used to report the sale or exchange of present or future ownership interests in real estate.
  • Form 1099-C
    Used to report cancellation of debt of $600 or more.
  • Form 1099-MISC
    Used to report miscellaneous payments generally of $600 or more; $10 or more for royalties; any amount for fishing crews.

1099-MISC – The major business form

Form 1099-MISC is used to report payments for services provided to your business by unincorporated vendors when those payments total $600 or more for the year. Typical payments include rents, royalties, and compensation to independent contractors, such as consultants, web designers, accountants, lawyers, and cleaning services.

Here are five conditions for payments that must be reported using Form 1099-MISC.

  1. The payment was made to a nonemployee.
  2. The payment was made for services (not goods) provided to the trade or business.
  3. The payment was made to an unincorporated entity (except for payments to attorneys and medical and health care payments).
  4. The payment or payments generally totaled $600 or more for the year.
  5. The payment was not made electronically (e.g., with a credit or debit card or with PayPal).

DEADLINES – When to file

January 31 – Give one copy of Form 1099 to the recipient of the payment by this date of the year following payment.

February 28 – Send one copy of Form 1099 to the IRS by this date of the year following payment unless the form is filed electronically.

March 31 – If Form 1099 is filed electronically, this is the deadline for providing a copy to the IRS.

NOTE: Electronic filing is required for businesses filing 250 or more information returns and optional, though encouraged, for businesses filing fewer than 250 information returns.

PENALTIES – A matter of intent

The penalties for failing to file Forms 1099 range from $50 to $250 per form, depending on how late your filing is and whether or not the failure to file was intentional. Total penalties can go as high as $1 million for businesses with gross receipts under $5 million or $3 million for those with gross receipts over $5 million.

To increase compliance of Form 1099 filing, federal income tax returns for businesses include the following questions:

  1. Did your business make any payments during the year that would require it to file Form(s) 1099?
  2. If “yes,” did or will the business file required Forms 1099?

MORE HELPFUL FACTS

  1. If you receive a Form 1099 with an incorrect dollar amount, request a corrected copy from the payer before tax filing time.
  2. Only trades and businesses are required to report payments made in the course of business on Form 1099. No reporting is required for personal payments. For example, a business owner who pays a dentist $1,500 for a child’s dental work does not need to report that payment on Form 1099.
  3. Payments of $600 or more to attorneys in the course of business must be reported on Form 1099-MISC, whether the attorney is incorporated or not. Medical and health care payments made to corporations must also be reported.
  4. Payments to vendors by credit or debit card, or by services like PayPal, should not be reported on Form 1099-MISC. The bank or third-party payment provider is required to report those transactions on Form 1099-K.
  5. Nonprofit organizations are subject to Form 1099 filing requirements because they are considered to be “engaged in a trade or business.”
  6. The fact that payments may not have to be reported on Form 1099 does not mean that the payments are exempt from income tax. All income must be reported on the income tax return of the recipient.
  7. To properly complete Forms 1099 and avoid penalties, a business needs the recipient’s name, taxpayer identification number, and a mailing address. Obtain this information by sending the recipient Form W-9, Request for Taxpayer Identification Number and Certification. If the recipient fails to provide the necessary information, the business may have to withhold taxes from payments and remit these amounts to the IRS.

AN ACTION LIST – Staying compliant

  1. Review accounts payable and cash disbursements to capture reportable payments.
  2. Verify that the information on Form W-9 is current for each vendor.
  3. Initiate a policy that no vendor will be paid unless Form W-9 is completed.

For additional information about the Form 1099 filing requirements that apply to your business, please contact our office.

Tax Tips for Students with Summer Jobs

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WASHINGTON – IRS Special Edition Tax Tip 2015-13 – Students often get a job in the summer. If it’s your first job it gives you a chance to learn about work and paying tax. The tax you pay supports your home town, your state and our nation. Here are some tips students should know about summer jobs and taxes: Read more

Money

New Withholding Obligation for Employers

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The Medicare tax on earned income increases this year for individuals earning more than $200,000 and married couples earning more than $250,000. The tax on earnings above these thresholds will increase from 1.45% to 2.35%. This tax increase will also apply to self-employment income exceeding the threshold amounts. Read more

1040 W-2 W-9 forms

Even Small Companies Can Be Hit With Payroll Fraud

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Unless the owner handles all aspects of computing and paying payroll, there is room for fraud in every small business. The fact that your company has only a few employees does not guarantee that you will be safe. Read more