2016 Rates – 2017 Limits

TAX RELATED INFORMATION FOR CERTAIN 2016 ADJUSTMENTS AND 2017 TRANSACTIONS

Form 1099-MISC and related backup withholding for 2016 & 2017: Federal 1099-MISC Information Forms must be completed by January 31, 2017 for certain payments of $600 or more made during 2016 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 2017, unchanged from 2016.

Employment Pay Rate Requirement For 2016 & 2017: Minimum Wage remains the same for 2017, unchanged from 2016:

  • 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 2016 & 2017: Employers continue to be required to report to Pennsylvania all employees hired within 20 days of the hiring date, unchanged from 2016.

Tax Rates:  Employee: effective for 2016 & 2017:

  • Social Security Tax 6.20% (.0620) for 2017, unchanged from 2016
  • Medicare Tax – 1.45% (.0145) for 2017, unchanged from 2016
  • Additional Medicare Tax – .90% (.0090) [Wages > $200,000] for 2017, unchanged from 2016
  • PA State Income Tax – 3.07% (.0307) for 2017, unchanged from 2016
  • PA State Unemployment Insurance – .07% (.0007) for 2017, unchanged from 2016
  • Federal Withholding on Employee Bonuses & Supplemental Pays if Aggregation Method Not Used – 28.00% (.2800) for 2017, unchanged from 2016

Tax Rates:  Employer: effective for 2016 & 2017:

  • Social Security Tax – 6.20% (.0620) for 2017, unchanged from 2016
  • Medicare Tax – 1.45% (.0145) for 2017, unchanged from 2016
  • 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 2017, unchanged from 2016
  • PA Unemployment Tax – Rates vary by employer based on experience rate and range from  2.6434% to 11.2616% for 2017

Taxable Wages: Employee: effective for 2016 & 2017:

  • Social Security Tax – $127,200 for 2017, up from $118,500 for 2016 [Please note change]
  • Medicare Tax – No Limit for 2017, unchanged from 2016
  • PA State Unemployment Insurance – No Limit for 2017, unchanged from 2016

Taxable Wages: Employer: effective for 2016 & 2017:

  • Social Security Tax – $127,200 for 2017, up from $118,500 for 2016 [Please note change]
  • Medicare Tax – No Limit for 2017, unchanged from 2016
  • PA Unemployment Tax – $ 9,750 for 2017, up from $9,500 for 2016 [Please note change]
  • Federal Unemployment Tax – $ 7,000 for 2017, unchanged from 2016 

Retirement Plans: 

  • The maximum allowable wage reduction contribution to a 401(k) plan is $18,000 for 2017, unchanged from 2016 for a traditional plan and $12,500 for 2017 for a simple plan, unchanged from 2016.
  • Employees age 50 or over may be eligible to make an additional “catch-up” contribution of up to $6,000 for 2017, unchanged from 2016 for a traditional plan, $3,000 for 2017, unchanged from 2016 for a simple plan and $1,000 for 2017 for an IRA, unchanged from 2016.
  • The maximum eligible compensation for qualified plans is $270,000 for 2017, up from $265,000 for 2016.
  • The maximum contribution to defined contribution plans is the lesser of 25% of W-2 compensation or $54,000 per participant for 2017, up from $53,000 for 2016.
  • The threshold amount for definition of Highly Compensated Employees is $120,000 for 2017, unchanged from 2016.
  • The threshold amount for definition of Key Employees in Top-Heavy Plans is $175,000 for 2017, up from $170,000 for 2016.

Federal Standard Business Mileage Rate for 2016 & 2017: $0.535 for 2017, down from $0.54 for 2016. [Please note change]

Unclaimed Property for 2016 & 2017: 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 2016.

Depreciation for 2015 & 2016:

  • Section 179 allows a $500,000 maximum deduction in 2016, unchanged from 2015, indexed for inflation in 2017, for expense of newly acquired new or used tangible personal property for business use and certain eligible real property, with a deduction phase-out whenever the cost of section 179 property for the year exceeds $2,000,000 in 2016, unchanged from 2015, indexed for inflation in 2017. 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 2016 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 2017.

Minutes: When concluding 2016, be sure to update your company’s corporate minutes. If we can help you in this regard, please call.

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 GAAS 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.

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

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