Planning Ahead: 2017 Health Savings Account Limits

BY Chad Ryder

The Internal Revenue Service (IRS) has released the annual contribution limitations for health savings accounts (HSAs) and the minimum deductible amounts and maximum out-of-pocket expense amounts for high-deductible health plans. These limitations are updated annually to reflect cost-of-living adjustments. Business owners should inform employees of the HSA contribution limits increase for 2017.

Employers commonly offer employees HSA contributions as part of their healthcare benefit packages. HSAs are a popular option because of its dual purpose. Employees can utilize HSAs to save for the future or pay for qualified medical expenses tax free.

Under Sec. 223 of Rev. Proc. 2016-28, individuals who participate in a health plan with a high deductible are permitted a deduction for contributions to HSAs set up to help pay their medical expenses. To be eligible to contribute to an HSA you must participate in a high deductible health plan.

The following chart summarizes the contribution and out-of-pocket limits for HSAs and high-deductible health plans for 2017. There was only one minor change between 2016 and 2017.

  2016 2017 Change
HSA contribution limit Self: $3,350

Family: $6,750

Self: $3,400

Family: $6,750

Self: $50

Family: No Change

HSA catch up contribution (age 55+) $1,000 $1,000 No Change
HDHP minimum deductible Self: $1,300

Family: $2,600

Self: $1,300

Family: $2,600

No Change
HDHP maximum out of pocket Self: $6,550

Family: $13,100

Self: $6,550

Family: $13,100

No Change

Employers should remind employees who are contributing to or using their HSA:

  • They have until April 15, 2018 to make contributions for the 2017 tax year.
  • Withdrawing from their HSA for nonqualified purposes is subject to income tax.
  • Nonqualified withdrawals are also subject to a 20% tax penalty unless an exception applies.

The professionals in our office can clarify any questions you may have on HSAs. Call on us today.

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.

New Form I-9 for Employment Eligibility Verification, Effective 1/22/2017

BY Bernie Hull

Congress passed the IRCA (Immigration Reform and Control Act) in 1986, which required the use of the Form I-9 to verify identity and employment authorization for all new employees, including U.S. citizens hired after November 6, 1986. New hires are required to complete this form within three (3) business days of the date of hire. Employers are required to retain the completed Forms I-9 for all employees, as long as the individuals work for the employer and until one year after the date the employment is terminated or three years after date of hire, whichever is later.

On November 14, 2016, USCIS (U.S. Citizenship and Immigration Services), published a revised version of the Form I-9. Employers must begin using the new version by January 22, 2017.  The form has been modified to make it easier to complete on a computer, including prompts to ensure information is entered correctly and drop down lists and other enhancements.

You may obtain a copy of the new form (paper version and fillable PDF version) and a copy of the Handbook for Employers—Guidance for Completing Form I-9 (publication M-274) at the official website www.uscis.gov/i-9.  There is no fee to obtain these forms via this website.

Preparing Your Business for the New 2017 Filing Deadlines

BY Brittany Gerth

This is a reminder to employers and small businesses of the new January 31 filing deadline for Form W-2.  A new federal law, aimed at making it easier for the IRS to detect and prevent refund fraud, will accelerate by a month the W-2 filing deadline for employers from February 28 to January 31.

The Protecting Americans from Tax Hikes (PATH) Act, enacted last December, includes a new requirement for employers. They are now required to file their copies of Form W-2, submitted to the Social Security Administration, by January 31. The new January 31 filing deadline also applies to certain Forms 1099-MISC reporting non-employee compensation such as payments to independent contractors. As it relates to Form 1099-MISC, the new filing deadline will only impact filers that report nonemployee compensation payments in box 7.

In the past, employers typically had until the end of February, if filing on paper, or the end of March, if filing electronically, to submit their copies of these forms. Also, there are changes in requesting an extension to file the Form W-2. Only one 30-day extension to file Form W-2 is available, and this extension is not automatic. If an extension is needed, a Form 8809 Application for Extension of Time to File Information Returns must be completed as soon as you know an extension is necessary, but by no later than January 31.

The new accelerated deadline is intended to help the IRS improve its efforts to spot errors on taxpayer filed returns. Receiving W-2s and 1099s earlier will make it easier for the IRS to verify the legitimacy of tax returns and properly issue refunds to taxpayers eligible to receive them. According to, the IRS it will make it easier to release tax refunds more quickly.  The January 31 deadline remains unchanged and has long applied to employers furnishing copies of these forms to their employees.

We anticipate the new deadline will increase your businesses workload. To minimize stress, we recommend the following steps:

  • Verify your employee filing status and confirm their mailing addresses before December 31, 2016.
  • Verify form W-9 information (for your 1099-Misc contractors) is completely up-to-date and accurate.
  • Collect all the necessary information to ensure your forms are “good-to-go” on or about Monday, January 2, 2017.

The professionals in our office can answer any questions you may have about the new filing deadlines and how they will impact your business, call us today.

You’re Invited to Attend: Protecting Your Business 2016

BY Bauman Associates

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We work with entrepreneurs and business owners in all phases of the business life cycle, helping them get started on the right foot, navigate the inevitable growing pains and when the time is right, prepare for transition out of the business and into their next adventure. Whether you’re forming a brand new company, entering a growth phase or anticipating retirement or another opportunity, we’re here to help you Protect Your Business so that you can succeed and thrive.

On December 14th & 15th, our experienced professionals will speak to business owners and entrepreneurs in our community on the following subjects:

Business Valuations

Why are businesses appraised?  What are the steps that a business valuation expert uses to value a business?  What items affect the value of your business?  Businesses may need a valuation for a variety of reasons, including mergers or acquitions, internal succession, buy-sell agreements, financing, income tax reasons and more.

Topics we’ll cover include:

  • Overview of the business valuation process
  • Key items that affect the value of a business
  • How to improve the value of your business

We will review a sample valuation report, explain what factors go into determining the value of a business and show how owners can use this information to increase the value of their businesses.

Exit Strategies

It’s helpful to know what your business is worth.  But even more helpful is knowing what you’ll have left over after paying income taxes when you sell the business.  We’ll look at some of the exit strategies available when selling or transferring a business and how you can maximize the after tax cash flow from selling your business.

Topics we’ll cover include:

  • Importance of planning in advance – WELL in advance
  • Effect of business legal structure on income taxes – current and future
  • Non-taxable transfers of ownership vs. Taxable transfers of ownership
  • Income tax considerations of asset sales
  • Income tax considerations of stock sales
  • Financing the sale

Fraud

Fraud and cyber crimes are at an all-time high. Businesses of all kinds are susceptible to fraud in various forms. Business owners today need to be diligent in order to protect their business and their customers.

Topics we’ll cover include

  • The types of fraud
  • Discuss the cost of fraud to a business
  • Share various case studies on how fraud has been committed
  • Review the fraud risk factors and internal control assessments

During the event, attendees will also enjoy networking, lunch and an informative roundtable.

Presenters: Jay Grokowsky, CPA; Nathan Kalepp, CPA; Joshua Schroeder, CPA

 

Details:

Wednesday, December 14th

8:30 am – 2:00 pm

Holiday Inn, Eau Claire

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Thursday, December 15th

8:30 am – 2:00 pm

Hudson House, Hudson

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