IOI monitors changes in local, state, and federal laws that will impact our clients and businesses nationwide. We share these regulatory updates so organizations can stay informed about the most current legislation. If you are seeking financial or legal advice related to the tax alerts below, please contact your accountant or legal counsel. Click here for tax forms.
Federal Unemployment Tax (FUTA)
Reductions in the credit that employers have regularly applied to their federal unemployment tax rate are still in effect for 2015 for employers in some states. If a state federal unemployment loan is outstanding on November 10 of the current year, employers in the state would generally experience a Federal Unemployment Tax Act credit reduction for this year, which will increase your tax liability to the Federal government.
It is anticipated that the following states will be considered FUTA credit reduction states for 2015:
IOI is monitoring the latest news regarding this subject and will keep you updated about further developments.
Additional Medicare Tax
Beginning January 1, 2013, the Additional Medicare tax applies to an individual’s Medicare wages. Employers are responsible for withholding 0.9% additional Medicare Tax on an individual’s wages and compensation paid in excess of $200,000 in a calendar year. The employer is not required to match this Additional Medicare Tax. IOI is available to assist you with questions regarding this additional tax.
Work Opportunity Tax Credit (WOTC)
WOTC is a federal tax credit incentive program that motivates employers to hire and retain individuals who have faced barriers to employment because of limited training or skills, hiring biases, lack of work experience, or other specific employment obstacles. The credit applies to qualified first-year wages paid to “WOTC” employees. After starting work , the employee must meet the requirement for the minimum number of hours worked to qualify for the credit.
Employing qualified target group members can reduce a for-profit employer’s federal income tax liability. Non-profit 501(c)(3) employers can claim the credit against the employer’s share of Social Security tax. Employers normally must file Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit, with the state workforce agency within 28 days after an eligible worker begins work . The IRS traditionally grants employers extensions to make this request because of the late enactment of the legislation extending the WOTC. As of today, WOTC has not been extended for tax year 2015, but if legislation is passed extending the program, IOI will post an update.
IOI can assist clients in claiming the WOTC Tax Credits. If you are interested and would like additional information in regard to this service, please contact your Regional Service Manager.