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July 2018  

Newsletter Edition

Central Iowa Chapter APA

July 2018 Newsletter

 

 

                  Volume 2018                                                                                                    P.O.Box 131

                  Issue 1                                                                                                               Des Moines, IA 50301

 

Our Mission Statement

 

The Central Iowa Chapter of the American Payroll Association is dedicated to providing information and education, support and networking opportunities to professionals involved in all aspects of payroll through our meetings, our newsletters, and our website.  The Chapter strives to be a respected, essential and effective partner in the business community and to provide support to the national American Payroll Association. 

 

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Our Mission

Share your ideas, experiences and knowledge with chapter members thru the newsletter.  Your knowledge is valuable - please email your articles to Newsletter Chair at newsletter@centraliowaapa.org anytime you learn something that would benefit your peers in payroll. 

 

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Government Liaison Corner

IRS urges ‘Paycheck Checkup’ for key groups; tax withholding may need adjustment (IR-2018-80) 

  • Following the recent tax law changes, it’s especially important for certain people to use the Withholding Calculator on IRS.gov to check if they are having the right amount of withholding.
  • Among the groups who should check their withholding are people who:
  • Belong to a two-income family.
  • Work two or more jobs or only work for part of the year.
  • Have children and claim credits such as the Child Tax Credit.
  • Have older dependents, including children age 17 or older.
  • Itemized deductions on their 2017 tax returns.
  • Earn high incomes and have more complex tax returns.
  • Received large tax refunds or had large tax bills for 2017.

 

 

IRS Announces Increased 2019 HSA Index Figures

On May 10, the IRS released the new Health Savings Account (HSA) index figures for 2019 (RP-2018-30). The 2019 index includes increases to most HSA amounts.

2019 Health Savings Account Index Figures

 

 

2018

2019

Minimum deductible amounts for the qualifying high-deductible health plan (HDHP)

Individual Coverage

$1,350

$1,350

Family Coverage

$2,700

$2,700

Maximum contribution levels

Individual Coverage

$3,450

$3,500

Family Coverage

$6,900

$7,000

Catch-up contribution allowed for those 55 and over

$1,000

$1,000

Maximums for HDHP out-of-pocket expenses

Individual Coverage

$6,650

$6,750

Family Coverage

$13,300

$13,500

 

Law change affects moving, mileage and travel expenses

On May 25, the IRS provided information to taxpayers and employers about changes from the Tax Cuts and Jobs Act that affect move related vehicle expenses, un-reimbursed employee expenses and vehicle expensing (IR-2018-127).

Changes to the deduction for move-related vehicle expenses

The Tax Cuts and Jobs Act suspends the deduction for moving expenses for tax years beginning after Dec. 31, 2017, and goes through Jan. 1, 2026. Thus, during the suspension no deduction is allowed for use of an automobile as part of a move using the mileage rate listed in Notice 2018-03. This suspension does not apply to members of the Armed Forces of the United States on active duty who move pursuant to a military order related to a permanent change of station.

Changes to the deduction for un-reimbursed employee expenses

The Tax Cuts and Jobs Act also suspends all miscellaneous itemized deductions that are subject to the 2 percent of adjusted gross income floor. This change affects un-reimbursed employee expenses such as uniforms, union dues and the deduction for business-related meals, entertainment and travel.

Thus, the business standard mileage rate listed in Notice 2018-03, which was issued before the Tax Cuts and Jobs Act passed, cannot be used to claim an itemized deduction for un-reimbursed employee travel expenses in taxable years beginning after Dec. 31, 2017, and before Jan. 1, 2026. The IRS issued revised guidance in Notice 2018-42.

Mileage Rates Increase in 2018

On December 14, The IRS announced an increase to mileage rates for 2018 [Notice 2018-03]. Beginning on Jan. 1, 2018, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

  • 54.5 cents for every mile of business travel driven, up 1 cent from the rate for 2017.
  • 18 cents per mile driven for medical purposes, up 1 cent from the rate for 2017.
  • 14 cents per mile driven in service of charitable organizations.

The charitable rate is set by statute and remains unchanged. The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical purposes is based on the variable costs. Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

 

 

Tax Reform Legislation Will Affect Payroll

On December 22, H.R. 1 (Tax Cuts and Jobs Act) was signed into law. The legislation, which marks the most sweeping tax changes in 30 years, will impact payroll professionals by changing the income tax withholding in 2018 and beyond.

Affordable Care Act (ACA)
This legislation does not change the obligation of applicable large employers to offer ACA-compliant insurance to their full-time employees and to report on the offer. However, it does eliminate the individual mandate by reducing the penalty for not purchasing insurance to zero beginning in tax years after December 31, 2018.

Supplemental and backup withholding rates
Supplemental rate for wages exceeding $1 million. For 2017, the mandatory withholding rate on supplemental wages exceeding $1 million is 39.6%. The legislation effectively lowers that rate to 37% for tax years 2018 through 2025.

Supplemental rate for wages up to $1 million. Because the tax rate on supplemental wages of up to $1 million is tied to a section of the Internal Revenue Code that is suspended for tax years 2018 through 2025 by the tax reform legislation (§1(i)(2)), it appears that the withholding rate will increase to 28% (from 25%) for those years, but the IRS has not yet confirmed the new rate.

Backup withholding rate. The backup withholding rate will be reduced from 28% (in effect for 2017) to 24% for tax years 2018 through 2025.

 

IRS Updates Instructions for Employee Forms to Figure Wage Levies

The IRS created new Notice 1439 on May 2018, that updates instructions for the three versions of Form 668-W, Notice of Levy on Wages, Salary, and Other Income. The updated instructions reflect changes made by the Tax Cuts and Jobs Act (Pub. L. 115-97).

To initiate a federal tax levy, the IRS sends an employer Form 668-W, which has six parts. Parts 3-5 require employees to inform the employer and the IRS about their tax filing status and any dependents they can claim. Employees indicate filing status by checking a block on the Statement of Dependents and Filing Status (formerly the Statement of Exemptions and Filing Status). Employees will list each person they can claim as a dependent on an income tax return who is not claimed on another 668-W.

Employees Who Do Not Return Forms

If the employee does not return Parts 3 and 4, the exempt amount is calculated as if the employee had returned them indicating married filing separate with no dependents (zero). Employers should not use the employee’s Form W-4 to determine the amount exempt from levy.

Next Year’s Payments

The amount that is exempt does not change merely because the amount that all taxpayers can deduct for dependents, filing status, and additional standard deductions changes for the new year. An employee may ask to have the exempt amount recalculated with the new year’s table by submitting a new Statement of Dependents and Filing Status. Also, if the employee’s number of dependents or filing status changes while the levy is in effect, the employee should file another Statement of Dependents and Filing Status with the employer.

Error on Tax Levy Form Publication 1494

In case any of you are required to levy from an employee’s paycheck, the table has a small error IRS has yet to correct. The numbers have been transposed on the MFJ table. The correct amount should be $92.31.

 

 

 

IRS Releases Draft 2019 Form W-4 and Instructions

The IRS has released a draft of the 2019 Form W-4, Employee’s Withholding Allowance Certificate, and a draft of the 2019 Instructions for Form W-4. The draft Form W-4 has been substantially revised to comply with the Tax Cuts and Jobs Act (TCJA). Both the way withholding amounts will be calculated and the form that employees will complete will be drastically different beginning in 2019. Employees will be strongly encouraged, but not required, to file a new Form W-4 for 2019.

Draft Form W-4

Filing status: Line 3 is used to indicate the employee’s tax filing status. The draft 2019 Form W-4 has checkboxes to indicate that the filer is single or married filing separately, married filing jointly, or head of household. Instead of claiming allowances based on filing status using a separate worksheet, the number of allowances will be calculated automatically based on the filing status that is checked – 2 if single or married filing separately, and 3 if married filing jointly or head of household.

Lines 5-8. Lines 5-8 are new and are optional, but completing them will provide more accurate withholding information. Line 5 is for nonwage income not subject to withholding; Line 6 is for itemized and other deductions (other than the standard deduction); Line 7 is for applicable tax credits; and Line 8 is for the total pay of lower paying jobs and is only used when employees have more than one job or are married filing jointly and both spouses work. Completing these lines requires information that employees may not want to share. Instead, employees may use the IRS Withholding Calculator or IRS Publication 505, Tax Withholding and Estimated Tax, to figure amounts to include on Line 7 (tax credits) or Line 9 (additional withholding per paycheck).

Draft Instructions for Calculating Withholding

Withholding when the 2019 Form W-4 has no entries on Lines 5-10 will be the amount from the 2019 withholding tables in IRS Publication 15, (Circular E), Employer’s Tax Guide, for the proper pay period with withholding allowances corresponding to the employee’s filing status. If amounts are reported on lines 5, 6, 7, 8, or 9, the employer will have to make additional withholding calculations. The instructions explain how employers should make prior year Form W-4 data conform to the new withholding method for 2019. The withholding tables and formulas are adjusted to take older Forms W-4 into account.

 

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CIAPA Chapter News

Education Board Position Opening

Kelsi Vander Meinden will be stepping down as Education Chair to spend more time with her family. Any one interested in filling the position please contact Cheri Klyn at cklyn@vermeer.com

A very detailed standard work has been written for the eduction chair functions.

 

Several postings for payroll positions can be found under the classified section on the CIAPA website.

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Upcoming Meetings & Education

 Central Iowa Chapter Meeting Schedule

Month

           Day/Date

Location

Topic/Speaker

September

TBD

TBD

National Payroll Week

 

 

 

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Board Members

  

PRESIDENT                                                                                       VICE PRESIDENT

         Tori Worley                                                                                Deanne O'Hollearn, CPP

         Kum & Go                                                                                  Principal Financial Group

         515-457-6205                                                                            515-235-1122

         president@centraliowaapa.org                                              vicepresident@centraliowaapa.org

 

SECRETARY                                                                                      TREASURER 

         Rachel Harken                                                                            Casie Lange

         Kinzler Construction Services                                                      UnityPoint Health

                                                                                                    

         secretary@centraliowaapa.org                                                treasurer@centraliowaapa.org

 

GOVERNMENT LIAISON OFFICER                                                MEMBERSHIP

         Carol Fisher                                                                               Samantha Skogerboe

         ChildServe Inc                                                                          Accumold

        515-727-1484                                                                             

         glo@centraliowaapa.org                                                          membership@centraliowaapa.org  

 

HOSPITALITY                                                                                    EDUCATION 

        Debby Haning, CPP                                                                 Kelsi Vander Meiden

        Vermeer                                                                                       Vermeer

         641-621-8825                                                                            641-621-8144

        hospitality@centraliowaapa.org                                              education@centraliowaapa.org

 

NEWSLETTER COMMUNICATIONS                                              NOMINATIONS 

         Angela Alsum, CPP                                                                  Cheri Klyn, CPP

         Vermeer                                                                                      Vermeer

         641-621-7828                                                                            641-621-7253

         newsletter@centraliowaapa.org                                             nominations@centraliowaapa.org

 

NPW/COMMUNITY DEVELOPMENT                                            PAST PRESIDENT 

         Gayla Nesbit                                                                             Debby Hauk

         EMC Insurance                                                                         UnityPoint Health    

         515-345-2077                                                                           515-241-3733

        communitydev@centraliowaapa.org

 

 

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