Archive for January, 2013

What is the Work Opportunity Tax Credit?

January 22nd, 2013

What is the Work Opportunity Tax CreditOn January 3, 2013, the President signed into law the American Tax Payer Relief Act of 2012, which authorizes an extension of the Work Opportunity Tax Credit (WOTC) program. But, what exactly is WOTC? Can your business take advantage of this opportunity for tax credits?

WOTC was passed to help select groups of workers move from economic dependency into self-sufficiency. Participating employers are able to reduce their income tax liability by hiring individuals from select target groups. The maximum tax credit for businesses can range from $2,400 to $9,600 depending on the employee hired.

Eligible new hires include the following, but there are certain specifications surrounding each group. PEO Advantage recommends visiting the US Department of Labor’s website for additional information.

  • Qualified Veterans
  • Qualified Long-term Temporary Assistance for Needy Families (TANF) Recipient
  • Qualified Short-term TANF Recipients
  • Qualified SNAP (Food Stamp) Recipients
  • Qualified Designated Community Residents
  • Qualified Vocational Rehabilitation Referrals
  • Qualified Ex-felons
  • Qualified Supplemental Security Income (SSI) Recipients
  • Qualified Summer Youth Employees

WOTC is designed to aid those who have consistently faced significant barriers to employment, and transform them into steady income-earning tax payers that contribute to an overall better economy. If your business is interested in hiring from any of these select target groups in 2013, contact your PEO. Your PEO will help attract the right employees, in addition to reducing turnover, sharing compliance expertise and streamlining the hiring process.

If your business does not yet work with a PEO, check out this article: 5 Signs That Your Company May Be Ready for a PEO.

Whether it’s a new PEO relationship or a new opportunity for tax credits, 2013 may be your year for significant savings! Contact PEO Advantage for additional information and support.

The Fiscal Cliff & 2013 Payroll Tax Compliance

January 16th, 2013

Lately the Fiscal Cliff is all we’ve heard about in the news. Families and individuals have anxiously awaited the decisions that would directly impact their taxes. But for HR professionals and employers, the uncertainties surrounding payroll tax changes throughout 2013 present an even larger challenge: COMPLIANCE.

The American Taxpayer Relief Act of 2012 was passed just a few weeks ago on January 1, 2013 and contains a number of provisions that are important to business owners and/or anyone in charge of payroll.

Did you know that the legislation no longer includes an extension of the 2 percent payroll tax cut of the Social Security (FICA) employee tax  and that the maximum taxable wage was increased from $110,100 in 2012 to $113,700 in 2013? And that the legislation reverses the $600 deduction in the $3,000 credit for child and dependent care that was originally set to take effect on Jan. 1, 2013?

Additionally, certain components of the legislation have been extended through 2013: the legislation extends federal emergency unemployment benefits for one year, and also reinstates and extends the Work Opportunity Tax Credit through 2013.

Are you keeping up? We know it’s difficult! There’s also fine print surrounding education assistance, tax exclusions for transit and vanpool benefits, 401(k)s, 403(b)s and similar defined contribution retirement plans, and more!

Things are always changing and staying up to date on compliance is a tedious full time job. Clients that work with a Professional Employer Organization (PEO)can expect the following certainties when it comes to payroll services:

  • Professional Employer Organizations manage and deliver payroll to your employees, in addition to accounting for the necessary Federal, State and Local taxes.
  • PEOs also manage Social Security, Medicare, Federal Unemployment Tax (FUTA), State Unemployment Insurance (SUI) and any other taxes that are applicable.
  • PEOs help decrease a client’s liability through the co-employment model of the PEO relationship.
  • By outsourcing payroll and other administrative tasks to a PEO, your business may be able to limit the number of employees within each office location, further reducing labor costs.

And, PEO clients get “big company perks.” Many PEOs have invested hundreds of thousands of dollars into their Payroll and Human Resource Information Systems (HRIS). Streamlined processes… and most importantly COMPLIANCE!

Do you want peace of mind surrounding compliance in the upcoming year?

Contact PEO Advantage today to learn more.

Missed the Jan 1 Deadline? PEO Contracts CAN Begin Feb 1!

January 4th, 2013

You may have just missed the boat for a January 1 PEO contract, but contrary to common misapprehensions, you CAN easily begin a new PEO contract on February 1 versus waiting until January of next year.

Here are some common reasons for February 1 apprehension that we hear at PEO Advantage:

“My State Unemployment Tax (SUTA) and Federal Unemployment Tax periods restarted on January 1”

“I have already made January SUTA contributions and don’t want to be double taxed.” 

SUTA liability is different based on what state your business operates in, or more specifically, what state(s) your business has employees in. In some states where employers are taxed on just the first $7000 or $8000 in wages per employee like California and Florida, you very well may have already contributed to the state required maximum level.

But did you know that PEOs may be able to offer credits for taxes already paid? If you were interested in engaging a PEO just a few short months ago, why wait until next year to reap the many benefits? PEO Advantage clients save up to 25% a year on custom-fit HR solutions and there are 11 months left in 2013 to take advantage of this!

PEO Advantage manages the entire PEO selection process of securing quotes, making sure your requirements are crystal clear, and making sure you’re getting the best possible pricing.

Our team can negotiate credits on your behalf so that your options are still attractive, even if you’ve already made January 2013 tax contributions.