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Payroll Taxes

Budgeting for 2013 FUTA Payments

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The “standard” current FUTA tax rate is 0.6%. However, the rate could be higher under certain circumstances. When a state lacks the funds to pay UI benefits, as was the case for New Jersey in 2011 and 2012, it may obtain loans from the federal government. If the loan is not repaid within a certain time period, wages paid in that state are subject to higher FUTA tax rates.

In 2011, as a result of the federal loan, the FUTA rate on New Jersey wages was 0.9% instead of 0.6% on wages up to $7,000. Since New Jersey has not repaid its loan from Uncle Sam in 2012; the rate increases from 0.9% to 1.2% retroactively as of January 1, 2012.

The important issue here is that payments so far in the first three quarters of 2012 were only required at the “standard” rate of 0.6%. The difference between 1.2% and the 0.6% that was actually paid plus the fourth quarter at 1.2% is due January 31, 2013 for all of 2012. If you remember getting hit with a large FUTA deposit requirement in January 2012, the 2013 hit will be double since last year you paid for a 0.3% increase over the “standard” rate and in 2012 you are paying a 0.6% increase over the “standard” rate.

This increase should be taken into consideration by businesses in which labor is a major component of cost of goods sold, such as staffing agencies and construction companies, when doing year end budgeting. Make sure you account for this tax payment in your January 2013 cash flow considerations.

 Unless NJ repays the loan in 2013, the penalty tax will increase again to 0.9% for 2013. You might want to budget for this in your April, July and October 2013 FUTA payments.

 

 

 

 

 

IRS Offers Relief to Victims of Hurricane Sandy

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In the aftermath of Hurricane Sandy, the IRS have taken action to aid those affected by the storm. It has postponed various tax filing and payment deadlines that occurred starting in late October to February 1, 2013. These include:

  • Fourth quarter individual estimated tax payment
  • Payroll and excise tax returns
  • Tax-exempt organizations required to file Form 990 with a deadline between October 31, 2012 and January 31, 2013

In addition, the IRS is waiving failure-to-deposit penalties for federal payroll and excise tax deposits normally due on or after the disaster area start date. Taxpayers now have until November 26, 2012 to remit and avoid penalties.

Thus far, IRS filing and payment relief applies to Atlantic, Bergen, Cape May, Essex, Hudson, Middlesex, Monmouth, Ocean, Somerset, and Union counties in New Jersey. To view included counties in New York and Connecticut or for more information click here: IRS Tax Relief for NJ, NY & CT Hurricane Sandy Victims

NJ Court Rules: Non-Immigrant Workers Ineligible for Unemployment Benefits

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Under N.J.S.A. 43:21-4(c), to be eligible for unemployment benefits one must be “available for work”. An interesting question arose in Mukatoff v Board of Review with regard to non-immigrant workers.

 In order to work as a non-immigrant one must obtain a written work authorization from the Department of Homeland Security (DHS). To obtain this authorization one must present appropriate documentation by the prospective employer. Once authorized by the DHS, he or she may only work for that identified employer. This poses a question. If that non-immigrant is subsequently laid off, does the lack of authorization to work for another employer exclude one from being considered “available for work” and therefore disqualify them from receiving unemployment benefits? [Read more…] about NJ Court Rules: Non-Immigrant Workers Ineligible for Unemployment Benefits

NJ DOL Employer Contribution Deadline -Aug 22nd!

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 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. The new rates were posted as early as July 23, and there’s a 30 day deadline (from the date of “mailing”) to make a voluntary contribution. In many circumstances a voluntary contribution represents an excellent opportunity to reduce labor costs.  For more information regarding TWES check out our blog at: http://uandacpas.com/blog/2012/01/nj-unemployment-rate-notice/ [Read more…] about NJ DOL Employer Contribution Deadline -Aug 22nd!