2017 Standard Mileage Rates Announced for Business, Charitable, Medical and Moving Purposes

BY Justin Koppa

The Internal Revenue Service recently issued the 2017 optional standard mileage rates to be used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

As of January 1, 2017, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) are:

  • 53.5 cents per mile for business miles driven (54 cents for 2016)
  • 14 cents per mile driven in service of charitable organizations (14 cents for 2016)
  • 17 cents per mile driven for medical or moving purposes (19 cents for 2016)

It is important to remember that a taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates. For more information, please contact one of our professionals today.

Penalty Eliminated for Employer Health Insurance Reimbursements

BY Brittany Gerth

Penalty Eliminated for Employer Health Insurance Reimbursements

Last year, the IRS began enforcing a penalty on employers who reimburse employees for the cost of health insurance premiums. The fine was up to $100 per day ($36,500 per year), per employee. On Wednesday, December 7th, legislation was passed eliminating that penalty. Employers can now reimburse employees for the cost of health insurance premiums without being penalized.

In order to qualify, small employers must set up a stand-alone health reimbursement arrangement.

Small Employers Able to Use Stand-Alone Health Reimbursement Arrangements

The legislation passed on December 7th allows employers to fund employee HRAs to pay for qualifying out-of-packet medical expenses and health insurance premiums (including plans purchased from the exchange). Reimbursements to the employee for medical expenses are tax-free only if the employee is enrolled in other health coverage that is minimum essential coverage. Employees that are covered by an HRA will not be eligible for subsidies for health insurance purchased on the exchange. The act takes effect for plan years beginning after December 31, 2016. To qualify for the funding of HRAs, the employer must have fewer than 50 full-time employees (or equivalents) and they must not sponsor a group health plan. The following are a list of additional requirements for the HRA’s:

  • The HRA’s must be funded solely by employer contributions
  • Must provide payment or reimbursement for medical care expenses or health insurance premiums. Employees must provide documentation/receipts for medical expenses or health insurance premiums paid.
  • The maximum reimbursement for health expenses through HRAs is $4,950 for single coverage and $10,000 for family coverage
  • If an employer chooses to offer HRA’s, they must be offered to all full-time employees, unless one of the following applies:
    • The employee has not yet completed 90 days of service
    • The employee is under 25 years old
    • The employee is covered by a collective bargaining agreement for accident/health benefits
    • The employee is a part-time or seasonal worker
  • An employer must make the same HRA contributions for all eligible employees, however the following items may cause the amount to vary:
    • Price of the insurance policy
    • Age of the employee/eligible family members
    • Number of family members covered

The professionals in our office can answer any questions you may have about the new legislation. Call us today.

 

 

Overtime Extension Blocked by Texas Judge

BY Bauman Associates

Just before Thanksgiving, Texas U.S. District Judge Amos Mazzant granted a nationwide injunction against the overtime extension rules that were set to go into effect on December 1. The blocked rules would have increased the maximum salary from $23,660 to $47,500 for a worker to be eligible for overtime pay, impacting an estimated 4.2 million working Americans. Mazzant issued the injunction following arguments against the rule from 21 states and the U.S. Chamber of Commerce, who argued that the extended overtime ruling was unlawful. While the injunction has put a halt to things for now, we expect the discussion is far from over. Let us know if you have any questions on how this could affect you. If you’d like to learn a bit more, check out these articles:

Preparing for the New Overtime Pay Rule

BY Bernie Hull

After much anticipation, the Department of Labor (DOL) recently released a new rule which will change how employers compensate employees. Effective December 1, 2016, workers who earn above the previous threshold but below the new one will qualify to receive time-and-a-half for each hour they work surpassing 40 hours a week. An estimated 4.2 million salaried workers will become eligible for overtime pay under the new rule.

According to the DOL, the new rule will:

  1. raise the salary threshold at which white-collar workers are exempt from overtime pay from $23,660 to $47,476 per year;
  2. automatically update the salary threshold every three years, based on wage growth over time;
  3. strengthen overtime protection for salaried workers already entitled to overtime; and
  4. provide greater clarity for workers and employers.

It should also be noted that, under the new rule, an employee’s nondiscretionary bonus/incentive payments can count toward up to 10% of the salary threshold, provided that the incentives are paid on a quarterly or more frequent basis.

Job titles do not determine exempt status. In order for an exemption for overtime to apply, an employee’s specific job duties and salary must meet all the requirements set by Department of Labor regulations. If you are unfamiliar with the criteria, more details are available on the Department of Labor website (www.dol.gov).

Many businesses will be affected and must comply with the new rule. According to the DOL, “employers may:

  1. increase the salary of an employee who meets the duties test to at least the new salary level to retain his or her exempt status;
  2. pay an overtime premium of one and a half times the employee’s regular rate of pay for any overtime hours worked;
  3. reduce or eliminate overtime hours;
  4. reduce the amount of pay allocated to base salary (provided that the employee still earns at least the applicable hourly minimum wage) and add pay to account for overtime hours worked over 40 in the workweek, to hold total weekly pay constant; or
  5. use some combination of these responses.”

Below are four steps you can implement which will help integrate the changes successfully into your workflow.

  1.  Review payroll and identify employees who are exempt. The first step is to review your payroll and identify who are currently classified as exempt employees whose salaries are below the new proposed thresholds for executive, professional and administrative white collar exemptions. You should also review the job duties of all employees who are currently classified as exempt to ensure that they meet the duties test under the Fair Labor Standards Act for their overtime exemption to be recognized.
  2. Consider which positions to transition to non-exempt status. Once you have reviewed your payroll and identified the employees who are exempt it will be essential to carefully consider which positions to transition to nonexempt status. Employers have two options: they can either increase the salary level to maintain an employee’s exempt status or transition the position to nonexempt status. When transitioning positions to a nonexempt status, ask yourself the following questions:
  • What will be the basis for pay: hourly or salaried?
  • Does this meet the minimum wage requirements?
  • Will overtime be permitted? Is it necessary?

3.  Evaluate timekeeping practices.

Anticipate more time to track for employees transitioning from exempt to nonexempt status. Establish a formal policy to help track and record time. The policy should define:

  • What is considered time worked?
  • How is overtime approved?
  • Who approves overtime?
  • What are the consequences for failing to follow the policy?

4.  Communicate changes internally.

The final step is to communicate and educate staff of any policy changes. Don’t forget to include employees who are already nonexempt; they will also need a refresher. Communications and training programs must be timely. Consider having supervisors regularly review employee time-keeping practices to ensure employees are properly reporting their time worked.

Employers have a few months to prepare for the new rule. Our firm’s professionals can help you develop a strategy to ensure your business is in compliance. Call us today.

Bauman Associates Announces Expansion of Hudson Office

BY Bauman Associates

Hudson, WI – November 23, 2015: Bauman Associates plans to expand its Hudson office by combining employees from its neighboring River Falls office. According to Managing Principal John Satre, this move will help the firm better serve clients in both the River Falls and Hudson markets.

By combining the River Falls and Hudson teams in one location, clients of both offices will benefit from larger client service teams and broader industry expertise. Additionally, consolidating the two offices into one will also help the firm to reduce overhead costs and allow the firm to maintain its competitive billing rates.

By December 1st, the firm plans to close its River Falls office and relocate all of these employees to its Hudson office. The address for the Bauman Associates expanded Hudson office will remain the same: 816 Dominion Drive, Suite 201, Hudson, WI 54016. The office main phone line is 715.386.8181.

About Bauman Associates, Ltd
Bauman Associates was founded in 1947 as a certified public accounting firm and has offices in Eau Claire and Hudson, Wisconsin. The firm provides multi-discipline professional services to businesses and individuals including business consulting; technology training; human resource consulting; tax strategy, planning and preparation; accounting and auditing services; and estate, trust and retirement planning. For more information, visit www.baumancpa.com or call 888-952-2866.

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