BHT&D Certified Public Accountants Blog

To help trades and businesses retain employees and keep them employed during the COVID-19 crisis, the Coronavirus Aid, Relief, and Economic Security (CARES) Act created the Employee Retention Credit for 2020. As part of the Consolidated Appropriations Act, 2021 (CCA), the credit has been extended through December 2021.

The credit is actually a government-sponsored program to keep workers employed and is funded by providing qualifying employers with a refundable credit against certain employment taxes equal to 70% (up from 50% prior to 2021) of the qualified wages that an eligible employer pays to employees after March 12, 2020, and before January 1, 2022. (Before the extension, the credit ended on December 31, 2020.)

Tags: Payroll Tax, CARES ACT, Employee Retention Credit

S corporation compensation requirements are often misunderstood and abused by owner-shareholders. An S corporation is a type of business structure in which the business does not pay income tax at the corporate level and instead distributes (passes through) the income, gains, losses, and deductions to the shareholders for inclusion on their individual income tax returns. If there are gains, these distributions are considered return on investment and therefore are not subject to self-employment taxes.

However, if stockholders also work in the business, they are supposed to take reasonable compensation for their services in the form of wages, and of course, wages are subject to FICA (Social Security and Medicare) and other payroll taxes. This is where some owner-shareholders err by not paying themselves a reasonable compensation for the services they provide, some out of unfamiliarity with the requirements and some purposely to avoid the payroll taxes.

Tags: Small Business Accounting, Payroll Tax, Individual Tax, Business Entity, Tax Liability

One of the first trouble spots of the new tax reform is the W-2 withholding for 2018. Passage of the new law in late December hasn’t given the IRS much time to develop new withholding tables. This can be a big issue, as the recent Tax Cuts & Jobs Act (TCJA) substantially altered the tax rates and standard deductions, did away with exemption deductions, and increased the child tax credits—all elements of how the withholding allowances and tables have been structured in the past. 

Tags: Payroll Tax, Small Business, Tax Reform, Individual Tax, TCJA

This is the time of year when many employers give deserving employees a reward for a job well done.  For FICA and income tax withholding purposes, wages don’t include gifts that are classified as de minimis fringe benefits.  Tax-free de minimis fringes are benefits provided by employers that are offered infrequently and have a fair market value so small that it is impractical and unreasonable to account for them.  The following are treated as de minimis fringes: 

Tags: Business Tax, Payroll Tax, Small Business, Gifts

Small employers who have been filing Form 941 - Employer’s Quarterly Federal Tax Return - and expect that their employment taxes for the 2016 calendar year will be $1,000 or less may contact the IRS to request  to file annually on Form 944.  

Tags: Payroll Tax, Small Business, Employment Tax, Form 944

There are big payroll tax changes coming in 2017 as a result of the tax extenders bill, Protecting Americans from Tax Hikes (PATH) Act of 2015:

Tags: Payroll Tax, Tax Extenders Bill, Protecting Americans from Tax Hikes Acts of 2015,, PATH

Since 2004, the Department of Labor has not updated the regulations pertaining to white collar workers and the overtime pay provisions. 

Tags: Payroll Tax, Minimum Wage

The MTO (Michigan Treasury Online) is a new service available for filing and paying the SUW taxes.

Tags: Small Business Accounting, Business Tax, Payroll Tax