NJ Employers can Reduce their NJ Unemployment Rates by making a Voluntary Payment- the Deadline is August 19, 2014
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In an S-Corporation, a popular choice of tax entity among businesses, an owner who works for the company is required to take wages. How much of the company’s income is classified as wages versus S Corp. income (reported to the owner on Form K-1) is up to the owner. The net income will be taxed regardless of how it’s classified. The big difference lies in federal employment taxes, which are not paid on K-1 income.
New Jersey employers can breathe a sigh of relief, as Governor Christie has announced that new fiscal management practices have brought New Jersey’s Unemployment Insurance Trust Fund into solvency for the first time since 2009. This spares businesses from a drastic tax surcharge, as Federal Unemployment Tax (FUTA) was set to increase from the base rate of 0.6% ($42 maximum per employee) to 1.5% ($105 maximum per employee). The surcharge is imposed when a state has borrowed from the Federal Unemployment Trust Fund and increases each year. In 2012, NJ employers paid 1.2% due to the surcharge ($84 maximum per employee). By repaying the loan to the Feds, employers will not be subject to this surcharge on their 2013 FUTA wages and will only pay the base rate of 0.6% ($42 maximum per employee).
With a new 3.8% tax on “unearned” income kicking in in 2013, it’s very difficult to limit your tax to just “ordinary” income tax. If your income is earned, you pay 15.3% Self-Employment (Social Security) tax. If your income is un-earned, you now have the new 3.8% Net Investment Income (NII) tax to pay.
Many NJ businesses have recently received a solicitation concerning “Annual Corporate Records Form”. The mailing, which has an official appearance, solicits a fee of $125 in return for the recording of corporate shareholders, directors and officers. The Division of Revenue is alerting all New Jersey businesses that there is no requirementto file this form State of New Jersey, and the sender isn’t affiliated with the State.
Jeff Urbach will be speaking at the Jewish Business Network’s (JBN) Biz Expo. In his speech entitled “What is the value of your business?” Jeff will cover the various elements and factors that affect the value of your business and will clarify how to maintain and increase its value.
The New Jersey Supreme Court has agreed to rule on a case that will have a broad impact on NJ businesses and workers. In Hargrove v. Sleepy’s, Plaintiffs Sam Hargrove, Andre Hall and Marco Eusebio accused Sleepy’s of using an “Independent Driver Agreement” as a ruse to avoid paying them employee benefits. The case was initially dismissed by U.S. District Judge Peter Sheridan in March 2012, as he applied the common-law “right to control” test. This test focuses on how much control the employer has of the workers. In this case, the plaintiffs drove for several other companies in addition to Sleepy’s, and maintained their own trucks, paying for gas, tolls, tickets and repairs. This bolstered the argument that they were in fact independent contractors.
On appeal, the National Employment Law Project, a New York non-profit workers advocacy group, contended that the “right to control” test shouldn’t be a determining factor. They reasoned that the New Jersey statutes at issue- the Wage Payment Law and the Wage and Hour Law- define “employee” more broadly than common law.
Beginning 2012, employers no longer receive an annual paper Notice of Employer Contribution Rates. Instead, the notice is now accessible through the Tax Web Enabled System (TWES). As a result of this change, it’s urgent that you check your TWES account as soon as possible.
New York Attorney General Eric Schneiderman has launched an investigation into companies that pay hourly employees by depositing payroll onto pre-paid cards. Why the concern? Payroll cards, like debit cards, typically have fees associated with inquiries, card replacement, ATM withdrawals, or inactivity. Schneiderman’s concern is that the fees associated with these cards may be insufficiently disclosed or excessive and that the fees reduce employees’ take home pay. Payroll cards can raise a host of legal issues for the employer as well.
The Obama administration has announced that the employer mandate, a key component of Obamacare, has been postponed until January 2015. This would have fined businesses with more than 50 employees up to $3,000 per uninsured worker.