• 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.

Registration for the Employer Compensation Expense Program (ECEP) is now open. If you choose to enroll for calendar year 2019, you must do so by December 1, 2018. Visit Employer Compensation Expense Program Employer Election to enroll online through your Business Online Services account. For more information on this optional program and the associated tax, visit Employer Compensation Expense Program.

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.

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:

• 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

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.

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.

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.

Notice 2018-84 provides interim guidance clarifying how the suspension of the personal exemption deduction is to be treated and to issue temporary guidance until further guidance is issued.

• Current process: For tax years prior to 2018 a taxpayer claimed a personal exemption for an individual by putting their name and ID number on the taxpayers income tax return and calculating the exemption amount. For tax years 2018 – 2026 the terms “exemption amount” means zero. Even though the amount of the personal exemption deduction is reduced to zero, taxpayers are still allowed personal exemption deductions under S151 for purposes of other provisions of the code. This should not alter the provision which allows the taxpayer to claim the credit. S36B allows a premium tax credit to eligible individuals who enroll themselves, their spouse, or any dependent in a qualified health plan through an exchange. These rules effect the eligibility for the premium tax credit the computation, reconciliation, and filing requirements. If a taxpayer or dependent is without minimum essential coverage for one or more months during the calendar year the taxpayer must include an individual shared responsibility payment when filing their income tax returns.
• Provided temporary guidance: Because the Act reduces the exemption amount to zero, tax payers will no longer claim a personal exemption deduction on their individual income tax return by listing the dependent on the return.
• A taxpayer is considered to have claimed a personal exemption deduction for themselves if they do not qualify as someone else’s dependent.
• A taxpayer is considered to have claimed a personal exemption deduction for an individual other than the taxpayer if the taxpayer is allowed a personal exemption deduction for the individual.

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:

1. 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.
2. 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

For the IRS:

1. 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.
2. 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.
3. Unemployed for a period totaling at least 6 months (whether or not consecutive) in the 1-year period ending on the hiring date.
4. 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.
5. 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.
6. 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.

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.

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.

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Arizona: AZ Paid Sick Leave Caifornia: CA Paid Sick leave FAQs Connecticut: CT Sick Leave Guidance Illinois: Cook County, IL Paid Sick Leave Law Maryland: MD Paid Sick Leave FAQ Massachusetts: MA Paid Sick Leave

Minnesota: Minneapolis, MN Paid Sick Leave, St. Paul, MN Paid Sick Leave, Duluth, MN Paid Sick Leave New Jersey: NJ Paid Sick Leave New York: New York City, NY Paid Sick Leave FAQ/a> Oregon: OR Paid Sick Leave, Portland, OR Paid Sick Leave Pennsylvania: Philadelphia, PA Paid Sick Leave

Puerto Rico: PR Paid Sick Leave Catastrophic leave: PR DOL Rhode Island: RI Sick and Safe Leave Texas: Austin, TX Paid Sick Leave Vermont: VT Paid Sick Leave Washington: WA Paid Sick Leave Washington DC: DC Sick Leave

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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:

• 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.

The Internal Revenue Service issued guidance today on the business expense deduction for meals and entertainment following law changes in the Tax Cuts and Jobs Act (TCJA). The 2017 TCJA eliminated the deduction for any expenses related to activities generally considered entertainment, amusement or recreation.

Taxpayers may continue to deduct 50 percent of the cost of business meals if the taxpayer (or an employee of the taxpayer) is present and the food or beverages are not considered lavish or extravagant. The meals may be provided to a current or potential business customer, client, consultant or similar business contact. Food and beverages that are provided during entertainment events will not be considered entertainment if purchased separately from the event.

Prior to 2018, a business could deduct up to 50 percent of entertainment expenses directly related to the active conduct of a trade or business or, if incurred immediately before or after a bona fide business discussion, associated with the active conduct of a trade or business. The Department of the Treasury and the IRS expect to publish proposed regulations clarifying when business meal expenses are deductible and what constitutes entertainment. Until the proposed regulations are effective, taxpayers can rely on guidance in Notice 2018-76.