2013 Rates – 2014 Limits

Form 1099-MISC and related backup withholding for 2013 & 2014: Federal 1099-MISC Information Forms must be completed by January 31, 2014 for certain payments of $600 or more made during 2013 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% for 2014, unchanged from 2013.

Employment Pay Rate Requirement For 2013 & 2014: Minimum Wage remains the same for 2014, unchanged from 2013:

  • 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 for 2013 & 2014: Employers continue to be required to report to Pennsylvania all employees hired within 20 days of the hiring date, unchanged from 2013.

Tax Rates:  Employee, effective for 2013 & 2014:

  • Social Security Tax 6.20% (.0620) for 2014, unchanged from 2013
  • Medicare Tax – 1.45% (.0145) for 2014, unchanged from 2013
  • Additional Medicare Tax – .90% (.0090) [Wages > $200,000] for 2014, unchanged from 2013
  • PA State Income Tax – 3.07% (.0307) for 2014, unchanged from 2013
  • PA State Unemployment Insurance – .07% (.0007) for 2014, unchanged from 2013
  • Federal Withholding on Employee Bonuses & Supplemental Pays if Aggregation Method Not Used – 28.00% (.2800) for 2014, unchanged from 2013

Tax Rates:  Employer: effective for 2013 & 2014:

  • Social Security Tax – 6.20% (.0620) for 2014, unchanged from 2013
  • Medicare Tax – 1.45% (.0145) for 2014, unchanged from 2013
  • Federal Unemployment Tax – 6.0% (.0600), less credit for contributions to state unemployment of up to 5.4% (.0540) if all state unemployment taxes paid in full and on time, for a net tax of .60% (.0060) for 2013; 2014 currently same rate as 2013 but proposed to increase to 6.2% (.0620), less potential credit of 5.4% (.0540), for a net tax of .80% (.0080) for 2014  [Please note potential change]
  • PA Unemployment Tax – Rates vary by employer based on experience rate and range from  2.801% to 10.8937% for 2013

Taxable Wages: Employee: effective for 2013 & 2014:

  • Social Security Tax – $117,000 for 2014, up from $113,700 for 2013 [Please note change]
  • Medicare Tax – No Limit for 2014, unchanged from 2013
  • PA State Unemployment Insurance – no Limit for 2014, unchanged from 2013

Taxable Wages: Employer: effective for 2013 & 2014:

  • Social Security Tax – $117,000 for 2014, up from $113,700 for 2013 [Please note change]
  • Medicare Tax – No Limit for 2014, unchanged from 2013
  • PA Unemployment Tax – $ 8,750 for 2014, up from $8,500 for 2013 [Please note change]
  • Federal Unemployment Tax – $ 7,000 for 2014, unchanged from 2013

Retirement Plans: 

  • The maximum allowable wage reduction contribution to a 401(k) plan is $17,500 for 2014, unchanged from 2013 for a traditional plan and $12,000 for 2014 for a simple plan, unchanged from 2013.
  • Employees age 50 or over may be eligible to make an additional “catch-up” contribution of up to $5,500 for 2014, unchanged from 2013 for a traditional plan, $2,500 for 2014, unchanged from 2013 for a simple plan and $1,000 for 2014 for an IRA, unchanged from 2013.
  • The maximum eligible compensation for qualified plans is $260,000 for 2014, up from $255,000 for 2013. [Please note change]
  • The maximum contribution to defined contribution plans is the lesser of 25% of W-2 compensation or $52,000 per participant for 2014, up from $51,000 for 2013. [Please note change]
  • The threshold amount for definition of Highly Compensated Employees is $115,000 for 2014, unchanged from 2013.
  • The threshold amount for definition of Key Employees in Top-Heavy Plans is $170,000 for 2014, up from $165,000 for 2013. [Please note change]

Federal Standard Business Mileage Rate for 2013 & 2014: $0.56 for 2014, down from $0.565 for 2013. [Please note change]

Unclaimed Property for 2013 & 2014: 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 of the following year, unchanged from 2013.

Depreciation for 2013 & 2014:

  • Section 179 allows a $500,000 maximum deduction in 2013, unchanged from 2012 but reduced to $25,000 beginning in 2014, for expense of newly acquired new or used tangible personal property for business use and certain eligible real property [eligible real property limitation is $250,000 of the total $500,000], with a deduction phase-out whenever the cost of section 179 property for the year exceeds $2,000,000 in 2013, unchanged from 2012 but reduced to $200,000 beginning in 2014. [Please note non-extension of this provision to 2014 as of 12/31/2013]  The Section 179 tax deduction is limited to the aggregate income from the active conduct of trade or business by the taxpayer for the year of the deduction, as in prior years.
  • Special Bonus Depreciation for 2013 also allows an additional deduction of 50% of depreciable basis after section 179 depreciation and before regular depreciation for purchase of new equipment only and through 2013 only (through 2014 for certain longer-lived and transportation property). [Please note change from 100% for 2012 and non-extension of this provision to 2014 as of 12/31/2013]

Same-sex marriage. For federal tax purposes, individuals of the same sex are considered married if they were lawfully married in a state (or foreign country) whose laws authorize the marriage of two individuals of the same sex, even if the state (or foreign country) in which they now live does not recognize same-sex marriage. For more information, see Revenue Ruling 2013-17, 2013-38 I.R.B. 201, available at www.irs.gov/irb/2013-38_IRB/ar07.html.

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 and its predecessor firms have 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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