2011 Rates – 2012 Limits

2011 Form 1099: Federal 1099 Information Forms must be completed by January 31, 2012 for certain payments of $600 or more made during 2011 to individuals or unincorporated businesses and for all legal fees paid, whether the law practice is incorporated or not. Backup withholding for payees that provide no taxpayer identification number or an incorrect number is 28.0%.

Employment Pay Rate: Minimum Wage remains the same for 2012:

  • Federal – effective 7/24/2009 $7.25 Per Hour
  • PA – effective 7/24/2009 $7.25 Per Hour
  • PA – effective 7/24/2009 $2.83 Per Hour with tips

New Hire Reporting: Employers continue to be required to report to Pennsylvania all employees hired within 20 days of the hiring date.

Tax Rates:  Employee: effective for 2012:

  • Social Security Tax 4.20% (.0420), [Currently through 2/29/12]
  • Medicare Tax – 1.45% (.0145)
  • PA State Income Tax – 3.07% (.0307)
  • PA State Unemployment Insurance – .08% (.0008)
  • Federal Withholding on Employee Bonuses & Supplemental Pays if Aggregation Method Not Used – 25.00% (.2500)

Tax Rates:  Employer: effective for 2012:

  • Social Security Tax – 6.20% (.0620)
  • Medicare Tax – 1.45% (.0145)
  • Federal Unemployment Tax – .90% (.0090) based on a tax rate of 6.00% less a credit of up to 5.10% [5.40% credit reduced by .30% for PA employers]  for unemployment tax paid to state unemployment funds

Taxable Wages: Employee: effective for 2012:

  • Social Security Tax – $110,100, up from $106,800 for 2011
  • Medicare Tax – No Limit

Taxable Wages: Employer: effective for 2012:

  • Social Security Tax – $110,100, up from $106,800 for 2011
  • Medicare Tax – No Limit
  • PA Unemployment Tax – $ 8,000
  • Federal Unemployment Tax – $ 7,000

Retirement Plans: When making final adjustments to retirement plan contributions, the maximum allowable wage reduction contribution to a 401(k) plan is $16,500 for 2011 and $17,000 for 2012 for a traditional plan and $11,500 for 2011 and 2012 for a simple plan. Employees age 50 or over may be eligible to make an additional contribution of up to $5,500 for 2011 and 2012 for a traditional plan and $2,500 for 2011 and 2012 for a simple plan. The maximum eligible compensation for qualified plans is $245,000 for 2011 and $250,000 for 2012. The maximum contribution to defined contribution plans is the lesser of 25% of W-2 compensation or $49,000 per participant for 2011 and $50,000 for 2012. The threshold amount for definition of Highly Compensated Employees is $110,000 for 2011 and $115,000 for 2012 and the threshold amount for definition of Key Employees in Top-Heavy Plans is $160,000 for 2011 and $165,000 for 2012.

Federal Standard Business Mileage Rate: From January 1, 2011 to June 30, 2011: $0.51 per mile; from July 1, 2011 to December 31, 2011: $0.555 per mile. From January 1, 2012: $0.555.

Unclaimed Property: Holders of unclaimed property (e.g. uncleared bank checks, unredeemed gift certificates, and accounts receivable credit balances which meet specific age requirements) are required to file an Annual Abandoned and Unclaimed Property Report to Pennsylvania by April 15, 2012.

Depreciation: Section 179 allows a $500,000 maximum deduction in 2011 for expense of newly acquired new or used tangible personal property for business use and eligible real property, with a deduction phase-out whenever the cost of section 179 property for the year exceeds $2,000,000. Special Bonus Depreciation for 2011 also allows an additional deduction of 100% of depreciable basis after section 179 depreciation and before regular depreciation for purchase of new equipment only.

Other Tax Changes: There are links to other federal and state tax law changes under the RESOURCES page of this information blog.

Please note that this list is not inclusive of all federal and Pennsylvania taxes to which any business may be subject, but only those certain selected taxes that are listed.  Readers are referred to their professional tax preparer to determine other taxes to which a particular business may be subject.

Do you need a professional tax consultant for your business? Our firm has provided tax preparation and consulting services to businesses in western Pennsylvania since 1942.  We specialize in small businesses and nonprofit organizations and provide services at all levels from bookkeeping and payroll to audits under GAAP or GAGAS guidelines to preparation of reviewed and compiled financial statements according to SSARS to annual income tax preparation.

Please feel free to refer to the CONTACTS information listed on this blog to speak to a firm representative of Roy & Associates, PC.  We welcome new business.

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Roy & Associates, PC serves clients in western Pennsylvania located predominantly in Westmoreland County, Allegheny County, and Fayette County.

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