Compliance News
Updates from the industry to help you manage your workforce
Compliance News is Valiant's comprehensive resource for wage and labor regulations, reporting deadlines, and industry notifications to support your workforce management initiatives. This is your central repository for gathering critical information around tax opportunities, wage and labor reporting deadlines, pending actions, and policy updates for your business. Click on the items below to expand and learn more.
- The Internal Revenue Service today announced the tax year 2019 annual inflation adjustments for more than 60 tax provisions, including the tax rate schedules and other tax changes. Revenue Procedure 2018-57 provides details about these annual adjustments. The tax year 2019 adjustments generally are used on tax returns filed in 2020.
- The tax items for tax year 2019 of greatest interest to most taxpayers include the following dollar amounts:
- The standard deduction for married filing jointly rises to $24,400 for tax year 2019, up $400 from the prior year. For single taxpayers and married individuals filing separately, the standard deduction rises to $12,200 for 2019, up $200, and for heads of households, the standard deduction will be $18,350 for tax year 2019, up $350.
- The personal exemption for tax year 2019 remains at 0, as it was for 2018, this elimination of the personal exemption was a provision in the Tax Cuts and Jobs Act.
- For tax year 2019, the top rate is 37 % for individual single taxpayers with incomes greater than $510,300 ($612,350 for married filing jointly). The other rates are:
- 35%, for incomes over $204,100 ($408,200 for married filing jointly);
- 32 % for incomes over $160,725 ($321,450 for married filing jointly);
- 24 % for incomes over $84,200 ($168,400 for married filing jointly);
- 22 % for incomes over $39,475 ($78,950 for married filing jointly);
- 12 % for incomes over $9,700 ($19,400 for married filing jointly).
- The lowest rate is 10 % for incomes of single individuals with incomes of $9,700 or less ($19,400 for married filing jointly).
- For 2019, as in 2018, there is no limitation on itemized deductions, as that limitation was eliminated by the Tax Cuts and Jobs Act.
- The Alternative Minimum Tax exemption amount for tax year 2019 is $71,700 and begins to phase out at $510,300 ($111,700, for married filing jointly for whom the exemption begins to phase out at $1,020,600). The 2018 exemption amount was $70,300 and began to phase out at $500,000 ($109,400 for married filing jointly and began to phase out at $1 million).
- The tax year 2019 maximum Earned Income Credit amount is $6,557 for taxpayers filing jointly who have three or more qualifying children, up from a total of $6,431 for tax year 2018. The revenue procedure has a table providing maximum credit amounts for other categories, income thresholds and phase-outs.
- For tax year 2019, the monthly limitation for the qualified transportation fringe benefit is $265, as is the monthly limitation for qualified parking, up from $260 for tax year 2018.
- For calendar year 2019, the dollar amount used to determine the penalty for not maintaining minimum essential health coverage is 0, per the Tax Cuts and Jobs act; for 2018 the amount was $695.
- For the taxable years beginning in 2019, the dollar limitation for employee salary reductions for contributions to health flexible spending arrangements is $2,700, up $50 from the limit for 2018.
- For tax year 2019, participants who have self-only coverage in a Medical Savings Account, the plan must have an annual deductible that is not less than $2,350, an increase of $50 from tax year 2018; but not more than $3,500, an increase of $50 from tax year 2018. For self-only coverage, the maximum out-of-pocket expense amount is $4,650, up $100 from 2018. For tax year 2019, participants with family coverage, the floor for the annual deductible is $4,650, up from $4,550 in 2018; however, the deductible cannot be more than $7,000, up $150 from the limit for tax year 2018. For family coverage, the out-of-pocket expense limit is $8,550 for tax year 2019, an increase of $150 from tax year 2018.
- For tax year 2019, the adjusted gross income amount used by joint filers to determine the reduction in the Lifetime Learning Credit is $116,000, up from $114,000 for tax year 2018.
- For tax year 2019, the foreign earned income exclusion is $105,900 up from $103,900 for tax year 2018.
- Estates of decedents who die during 2019 have a basic exclusion amount of $11,400,000, up from a total of $11,180,000 for estates of decedents who died in 2018.
- The annual exclusion for gifts is $15,000 for calendar year 2019, as it was for calendar year 2018.
- The maximum credit allowed for adoptions is the amount of qualified adoption expenses up to $14,080, up from $13,810 for 2018.
The monthly limit for the qualified transportation fringe benefits and for qualified parking is to increase to $265 from $260 while other tax benefits are to increase slightly in 2019 because of inflation adjustments, the IRS said in Revenue Procedure 2018-57.
- The general rule is that an individual is an independent contractor if the payer (employer) has the right to control or direct only the result of the work and not what will be done and how it will be done. The earnings of a person who is working as an independent contractor are subject to Self-Employment Tax. An independent contractor is self-employed. To find out what the related tax obligations are, visit the Self-Employed Tax Center.
- An Individual is not an independent contractor if they perform services that can be controlled by an employer (what will be done and how it will be done). This applies even if given freedom of action. What matters is that the employer has the legal right to control the details of how the services are performed. Facts that provide evidence of the degree of control and independence fall into three categories:
- Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
- Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how workers are paid, whether expenses are reimbursed, who provides tools/supplies, etc.)
- Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?
- Businesses must weigh all these factors when determining whether a worker is an employee or independent contractor. Some factors may indicate that the worker is an employee, while other factors indicate that the worker is an independent contractor. The key is to look at the entire relationship, consider the degree or extent of the right to direct and control, and finally, to document each of the factors used in coming up with the determination.
- If an employer-employee relationship exists the individual is not an independent contractor and earnings may be subject to FICA (Social Security tax and Medicare) and federal/state income tax withholding. For more information on determining Independent Contractors or Employees status click on the link.
The IRS and Valiant Solutions Inc., would like to remind taxpayers to look into whether they need to adjust their paycheck withholding. Taxpayers who do need to adjust their withholding should submit a new Form W-4, Employee’s Withholding Allowance Certificate to their employers. Taxpayers can use the updated Withholding Calculator on IRS.gov to do a quick “paycheck checkup” to check that they’re not having too little or too much tax withheld at work.
Having a completed 2017 tax return and their most recent pay stub can help taxpayers work with the Withholding Calculator to determine their proper withholding for 2018 and avoid issues when they file next year. Taxpayers may also need to determine if they should adjust their state or local withholding. They can contact their state's department of revenue to learn more.
Having a completed 2017 tax return and their most recent pay stub can help taxpayers work with the Withholding Calculator to determine their proper withholding for 2018 and avoid issues when they file next year. Taxpayers may also need to determine if they should adjust their state or local withholding. They can contact their state's department of revenue to learn more.
The IRS and Valiant Solutions Inc., would like to remind taxpayers the 2017 Tax Cuts and Jobs Act (TCJA) made amounts for moving expenses reimbursed or paid by an employer for most employees taxable in 2018. Under Notice 2018-75 reimbursements paid to an employee in 2018 for qualified moving expenses incurred in a prior are not subject to federal income or unemployment taxes. Employers that have already treated reimbursements or payments as taxable can follow the normal employment tax adjustment and refund procedures. See Publication 15, section 13, or Form 941-X and its instructions for details. Updates on this and other TCJA provisions can be found at IRS.gov/taxreform.
Last year’s tax reform legislation replaced the graduated corporate tax structure with a flat 21 percent corporate tax rate. This new maximum tax rate for corporations is effective for tax years beginning after Dec. 31, 2017. A corporation with a fiscal year that includes Jan. 1, 2018, will pay federal income tax using what is called a blended tax rate. They will not use the flat 21 percent tax rate for their entire fiscal year. To calculate their blended tax rate, these corporations will:
The blended rate applies to all fiscal year corporations whose fiscal year includes Jan. 1, 2018. Fiscal year corporations that have already filed their federal income tax returns that do not reflect the blended rate may want to consider filing an amended return. This change will affect many tax forms and instructions that corporations use. For a complete list, see the 2017 Fiscal Tax Year Filers Must Use Blended Corporate Tax Rates page on IRS.gov. More information: Notice 2018-38
- First calculate their tax for the entire taxable year using the tax rates that were in effect prior to the Tax Cuts and Jobs Act.
- Then calculate their tax using the new 21 percent rate.
- Proportion each tax amount based on the number of days in the taxable year when the different rates were in effect.
- Take the sum of these two amounts, which is the corporation’s federal income tax for the fiscal year.
The blended rate applies to all fiscal year corporations whose fiscal year includes Jan. 1, 2018. Fiscal year corporations that have already filed their federal income tax returns that do not reflect the blended rate may want to consider filing an amended return. This change will affect many tax forms and instructions that corporations use. For a complete list, see the 2017 Fiscal Tax Year Filers Must Use Blended Corporate Tax Rates page on IRS.gov. More information: Notice 2018-38
Valiant Solutions Inc., would like to remind you that any employer in New York State is subject to the Spread of Hours regulation. Originally released in the Hospitality Wage Order in 2011. When and employee’s work day is spread over 10 or more hours in a day that employee is entitled to 1 hours pay at the basic minimum wage for your region and industry. The spread of hours for any day includes working time plus time off for meals plus intervals off duty. New York State answered a Frequently Asked Question (FAQ) as it relates to all other industries and confirmed that any non-exempt employee that works a split shift or a shift that exceeds 10 hours in one day is due the “extra” pay. these hours do not count towards hours worked for overtime.
Only the U.S. Virgin Islands employers will be faced with a FUTA tax credit reduction for 2018. How it Works Generally the FUTA tax rate is 6% of the first $7,000.00 an employee earns for the year. The IRS offers a credit on that tax of 5.4% making the actual tax rate 0.6% of the first $7,000.00 an individual earns in a year. If there is a high rate of unemployment in a particular state the state borrows funds from the FUTA to help pay unemployment premiums to unemployed individuals. The states are responsible for repaying these loans timely and completely. If these loans are not paid back timely or completely the IRS assess a reduction of the credit (5.4%) and then the businesses in that state must pay a higher rate on each employee’s first $7,000.00 earned annually. Last year, 2017, California and the U.S. Virgin Islands both had reductions to the tax credit and employers paid more in taxes in those states. For 2018 only U.S. Virgin Islands Employers will pay the elevated rate.
- The credit is available for wages paid in taxable years beginning after December 31, 2017, and before January 1, 2020.
- Some employers can claim the credit retroactively to the beginning of their first taxable year beginning after December 31, 2017, if they meet the terms of a transition rule on or before December 31, 2018.
- To be eligible for the credit, an employer must have a written policy in place that includes:
- At least two weeks of paid family and medical leave annually to full-time employees, prorated for part-time employees.
- Pay for family and medical leave that’s at least 50 percent of the wages normally paid to the employee.
- Generally, for tax year 2018, the employee’s 2017 compensation from the employer must be $72,000 or less.
- The credit ranges from 12.5 percent to 25 percent of wages paid during an employee’s leave.
- For purposes of this credit, family and medical leave includes leave for one or more of the following reasons:
- Birth of an employee’s child and to care for the child. Placement of a child with the employee for adoption or foster care.
- Care for the employee’s spouse, child or parent who has a serious health condition.
- A serious health condition that makes the employee unable to do the functions of their position.
- Any qualifying need due to an employee’s spouse, child or parent being on covered active duty in the Armed Forces. This includes notification of an impending call or order to covered active duty.
- To care for a service member who’s the employee’s spouse, child, parent or next of kin.
- Credit amount. The new law increases the child tax credit from $1,000 to $2,000. Eligibility for the credit has not changed. As in past years, the credit applies if all of these apply:
- the child is younger than 17 at the end of the tax year, December 31, 2018
- the taxpayer claims the child as a dependent
- the child lives with the taxpayer for at least six months of the year
- Credit refunds. The credit is refundable, now up to $1,400. If a taxpayer doesn’t owe any tax before claiming the credit, they will receive up to $1,400 as part of their refund.
- Earned income threshold. The income threshold to claim the credit has been lowered to $2,500 per family. This means a family must earn a minimum of $2,500 to claim the credit.
- Phaseout. The income threshold at which the child tax credit begins to phase out is increased to $200,000, or $400,000 if married filing jointly. This means that more families with children younger than 17 qualify for the larger credit.
- Dependents who can’t be claimed for the child tax credit may still qualify the taxpayer for the credit for other dependents. This is a non-refundable credit of up to $500 per qualifying person. These dependents may also be dependent children who are age 17 or older at the end of 2018. It also includes parents or other qualifying relatives supported by the taxpayer.
The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased from $18,500 to $19,000. The limit on annual contributions to an IRA, which last increased in 2013, is increased from $5,500 to $6,000. The additional catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000.
The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan remains unchanged at $6,000.
The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan remains unchanged at $6,000.
A recent article on collecting unions dues outlines a US Supreme Court ruling that prohibited unions from collecting fees from non-member public workers. Since dues are required deductions they do not fall into the heavily regulated category of permissible deductions and is usually calculated just after taxes and before garnishments. Is this particular case contract employers were taking the dues from employees in their weekly checks, both union and non-union, and not paying the benefits funds directly to the unions, this causes the unions to be short funded and may delay employees receiving benefits.
To circumvent this potential financial disaster unions have suggested using pay cards for member contract employees so when they are paid the benefits are loaded directly onto a pay card and the unions can take the payments from the pay cards for direct timely payment. While the pay card suggestion is viable, employers can also use direct deposit to send funds to a third party eliminating the additional cost of cobranded payment cards. Valiant offers many options for financial solutions including direct deposit, ACH transfers and third-party checks. Valiant can take any deduction and create a payment solution that fits your business and relieves some of the burden of reconciliation.
To circumvent this potential financial disaster unions have suggested using pay cards for member contract employees so when they are paid the benefits are loaded directly onto a pay card and the unions can take the payments from the pay cards for direct timely payment. While the pay card suggestion is viable, employers can also use direct deposit to send funds to a third party eliminating the additional cost of cobranded payment cards. Valiant offers many options for financial solutions including direct deposit, ACH transfers and third-party checks. Valiant can take any deduction and create a payment solution that fits your business and relieves some of the burden of reconciliation.
The IRS announced that eligible employer who provided paid family and medical leave to their employees may qualify for a new business credit for tax years 2018 and 2019. In Notice 2018-71 the IRS provides detailed guidance on the new credit in a question and answer format. The credit was enacted by the 2018 Tax Cuts and Jobs Act (TJCA). The notice clarifies how to calculate the credit including the application of special rules and limits. Only Paid family and medical leave provided to employees whose prior-year compensation was at or below a certain amount qualify for the credit. Generally for tax year 2018, the employees 2017 compensation from the employer must be $72,000.00 or less. Updates on this and other TCJA provisions can be found at IRS.gov/taxreform.
Valiant Solutions Inc., would like to remind you that your business may be eligible for a tax credit if you hire a qualified veteran. Both New York state and the IRS allows for a credit when your business hires qualified veterans.
For New York State:
For more information about taking advantage, visit Valiant's partner, Walton Management Services.
For New York State:
- The credit is available to employer for hiring and employing, for not less than 1 year and not less than 35 hours each week, qualified veterans, the be eligible, a qualified veteran must now begin employment prior to January 1, 2020.
- For more information on this credit, see: TSB-M-13(9)C, (8)I, Hire a Veteran Credit TSB-M-16(8)C, (6)I, Summary of Changes to Existing Tax Credits Enacted as Part of the 2016-2017 New York State Budget
- A member of a family receiving assistance under the Supplemental Nutrition Assistance Program (SNAP) (food stamps) for at least 3 months during the first year of employment.
- Unemployed for a period totaling at least 4 weeks (whether or not consecutive) but less than 6 months in the 1-year period ending on the hiring date.
- Unemployed for a period totaling at least 6 months (whether or not consecutive) in the 1-year period ending on the hiring date.
- A disabled veteran entitled to compensation for a service-connected disability hired not more than one year after being discharged or released from active duty in the U.S. Armed Forces.
- A disabled veteran entitled to compensation for a service-connected disability who is unemployed for a period totaling at least six months (whether or not they are consecutive) in the one-year period ending on the hiring date.
- See IRS Notice 2012-13 (PDF) for more detailed information.
For more information about taking advantage, visit Valiant's partner, Walton Management Services.
Many owners of sole proprietorships, partnerships, trusts and S corporations may deduct 20 percent of their qualified business income. The new deduction -- referred to as the Section 199A deduction or the qualified business income deduction -- is available for tax years beginning after Dec. 31, 2017. Eligible taxpayers can claim it for the first time on the 2018 federal income tax return they file next year.
The fair-market value amount that is used to qualify for cents-per-mile valuation of personal use is to increase for cars and remain the same for trucks in 2019, according to Bloomberg Tax calculations.
- The cents-per-mile rule may not be used for employer-owned passenger cars that are available for personal use by employees in 2019 with a fair-market value of more than $15,700, up from $15,600 in 2018, or for trucks and vans with fair-market values of more than $17,600, unchanged from 2018.
- The truck fleet value is $23,100 in 2019, unchanged from 2018, while the car fleet value is to increase $20,900 from $20,600.
- The amounts for 2019 were made using the consumer price index for October 2018, which was released Nov. 14 by the Labor Department’s Bureau of Labor Statistics. The calculations also were based on Internal Revenue Service regulations.
Reminder to Everyone. HSA allows for a $1,000.00 catch up for those participants over 55 years of age. Once the 2018 limit is reached of $6,900 Family and $3450 individual, those participants may contribute the catch-up amount. 2019 limits are going to be Family: $7,000.00, Individual: $3,500.00 Catch-up: $1,000.00.
A trending Human Resources initiative has led the way for many state and local municipalities to enact various Sick and Safe Leave policies. Puerto Rico was the first territory to enact a guaranteed leave policy in 1995 that is still in effect, currently each employee accrues 1 day of paid leave each month. Since then multiple jurisdictions have enacted similar policies. Sick and Safe Leave policies in general are for the benefit of the employee to ensure a work life balance is met. Employees can take requested time off for the care of themselves or an immediate family member’s illness or legal issue up to the locally allowed limit. Employees usually have an accrual limit and a maximum rollover amount for each year. Most policies even allow an employer to use an existing PTO policy providing it gives an equal or greater benefit to the employee. The following states have either a statewide policy or a local provision, links are included.
Some jurisdictions have more expansive provisions for Sick and Safe Leave requiring employers to complete additional steps to ensure compliance. New York City (NYC) recently changed some policies surrounding the Earned Sick and Safe Leave Act (ESSTA). Employers are now required to notify employees in their native language providing a notice has already been translated to that language and at least 5% of the work population speaks the same language or the employer is primarily communicating to the employee in that language. Employers are required to have a single written policy with specific wording outlining the time off requesting policies. If the employer uses an alternate PTO plan, such as vacation, to cover the ESSTA benefit the policy needs to adhere to the minimum requirements of the act. The general PTO policy must also expressly state that time taken off may be used for any of the law’s covered purposes and must also include all other required written policy provisions and cannot include any provisions inconsistent with or prohibited by the law.
Valiant is committed to quality processing platforms that allow employers to stay compliant in this everchanging regulation landscape. Both Vault and Vision are highly customizable, and the program features allow the end user to adjust PTO policies on the fly for maximum regulation compliance. PTO can accrue when you want and can roll over in adherence with your predetermined policies as well as jurisdictional regulations. Valiant also partners with a valuable resource in HR Support Center. HR Support Center has multiple features to help employers stay compliant like the Ask a Pro feature can give a researched answer in 24 hours on any topic. HR Support center also has a library to help in writing you policies or handbooks.
We are highly committed to delivering the best product and customer service experience possible. If you have more questions on PTO policies or HR Support Center, please reach out to your Customer Service Representative.
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Some jurisdictions have more expansive provisions for Sick and Safe Leave requiring employers to complete additional steps to ensure compliance. New York City (NYC) recently changed some policies surrounding the Earned Sick and Safe Leave Act (ESSTA). Employers are now required to notify employees in their native language providing a notice has already been translated to that language and at least 5% of the work population speaks the same language or the employer is primarily communicating to the employee in that language. Employers are required to have a single written policy with specific wording outlining the time off requesting policies. If the employer uses an alternate PTO plan, such as vacation, to cover the ESSTA benefit the policy needs to adhere to the minimum requirements of the act. The general PTO policy must also expressly state that time taken off may be used for any of the law’s covered purposes and must also include all other required written policy provisions and cannot include any provisions inconsistent with or prohibited by the law.
Valiant is committed to quality processing platforms that allow employers to stay compliant in this everchanging regulation landscape. Both Vault and Vision are highly customizable, and the program features allow the end user to adjust PTO policies on the fly for maximum regulation compliance. PTO can accrue when you want and can roll over in adherence with your predetermined policies as well as jurisdictional regulations. Valiant also partners with a valuable resource in HR Support Center. HR Support Center has multiple features to help employers stay compliant like the Ask a Pro feature can give a researched answer in 24 hours on any topic. HR Support center also has a library to help in writing you policies or handbooks.
We are highly committed to delivering the best product and customer service experience possible. If you have more questions on PTO policies or HR Support Center, please reach out to your Customer Service Representative.
Valiant Solutions Inc. and the IRS would like to remind you that Taxpayers don’t typically think about their filing status until they file their taxes. However, a taxpayer’s status could change during the year, so it’s always a good time for a taxpayer to learn about the different filing statuses and which one they should use.
It’s important a taxpayer uses the right filing status because it can affect the amount of tax they owe for the year. It may even determine if they must file a tax return at all. Taxpayers should keep in mind that their marital status on Dec. 31 is their status for the whole year. Sometimes more than one filing status may apply to taxpayers. When that happens, taxpayers should choose the one that allows them to pay the least amount of tax.
Here’s a list of the five filing statuses and a description of who claims them:
It’s important a taxpayer uses the right filing status because it can affect the amount of tax they owe for the year. It may even determine if they must file a tax return at all. Taxpayers should keep in mind that their marital status on Dec. 31 is their status for the whole year. Sometimes more than one filing status may apply to taxpayers. When that happens, taxpayers should choose the one that allows them to pay the least amount of tax.
Here’s a list of the five filing statuses and a description of who claims them:
- Single. Normally this status is for taxpayers who aren’t married, or who are divorced or legally separated under state law.
- Married Filing Jointly. If taxpayers are married, they can file a joint tax return. When a spouse passes away, the widowed spouse can usually file a joint return for that year.
- Married Filing Separately. A married couple can choose to file two separate tax returns. This may benefit them if it results in less tax owed than if they file a joint tax return. Taxpayers may want to prepare their taxes both ways before they choose. They can also use this status if each wants to be responsible only for their own tax.
- Head of Household. In most cases, this status applies to a taxpayer who is not married, but there are some special rules. For example, the taxpayer must have paid more than half the cost of keeping up a home for themselves and a qualifying person. Taxpayers should check all the rules and make sure they qualify to use this status.
- Qualifying Widow(er) with Dependent Child. This status may apply to a taxpayer if their spouse died during one of the previous two years and they have a dependent child. Other conditions also apply.
- Qualified Transportation
The new law also disallows deductions for expenses associated with qualified transportation fringe benefits or expenses incurred providing transportation for commuting. There is an exception when the transportation expenses are necessary for employee safety. - Bicycle Commuting Reimbursements
Under the new law, employers can deduct qualified bicycle commuting reimbursements as a business expense. The new tax law suspends the exclusion of qualified bicycle commuting reimbursements from an employee’s income. This means that employers must now include these reimbursements in the employee’s wages. - Qualified Moving Expenses Reimbursements
Employers must now include moving expense reimbursements in employees’ wages. The new tax law suspends the exclusion for qualified moving expense reimbursements. There is one exception as members of the U.S. Armed Forces can still exclude qualified moving expense reimbursements from their income if they meet certain requirements. - Employee Achievement Award
Special rules allow an employee to exclude achievement awards from their wages if the awards are tangible personal property. An employer also may deduct awards that are tangible personal property, subject to certain deduction limits. The new law clarifies the definition of tangible personal property.
