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  • The Internal Revenue Service (IRS) announced the annual adjustments to the standard deduction and tax brackets for the 2023 tax year. The IRS defines the standard deduction as a precise dollar amount that reduces the amount of income on which you’re taxed. A standard deduction consists of the sum of the basic standard deduction and any additional standard deduction amounts for age and blindness. The tax adjustments for 2023 are increased from 2022 in response to ongoing inflation. Continue reading to understand how the adjustments impact you and your employees.

    The Annual Adjustments For 2023

    The 2023 standard deductions for personal income taxes apply to the following:

    • Individuals: $13,850 in 2023, representing a $900 increase
    • Head of household: $20,800, a $1,400 increase
    • Married filing jointly: $27,700, a $1,800 increase

    In addition, the new tax brackets for personal income taxes apply as follows:

    • 10%: all income below $11,000 individual / $22,000 married
    • 12%: $11,000 individual / $22,000 married
    • 22%: $44,725 individual / $89,450 married
    • 24%: $95,375 individual / $190,750 married
    • 32%: $182,100 individual / $364,200 married
    • 35%: $231,250 individual / $462,500 married 
    • 37%: all income above $578,125 individual / $693,750 married

    Capital gains taxes have been adjusted as well. Capital gains are the profits you make when you sell a stock, real estate, or other taxable assets that increase in value while you own it. It’s based on profit and depends on the tax bracket. The capital gains brackets for 2023 are:

    • 0%: All earning below $44,625 individual / $89,250 married
    • 15%: $44,625 individual / $89,250 married
    • 20%: $492,300 individual / $553,850 married

    For in-depth details regarding the 2023 adjustments, click here. 

    What Your Employees Should Know

    The new tax brackets apply to all earnings starting January 1st, 2023. As an employee, you must be provided with the resources necessary to make the right decisions. The IRS provides a tax withholding estimator that assists individuals in determining if they have too much federal income tax withheld, which could reduce their take-home pay. Alternatively, it can help employees with additional income sources to decide whether to withhold more or make an estimated tax payment to avoid a tax bill. Employees can also submit the IRS Form W-4 to their HR or payroll department to ensure the correct federal income tax is being withheld.

    What This Means For Business Owners

    If you’re a business owner, it’s essential to understand the tax bracket adjustments and standard deductions. Paycheck withholding amounts and quarterly estimated tax payments can affect an employee’s income level subject to a higher tax bracket. In addition, the following could impact your employees’ decisions:

    • Determining how much salary to defer into a traditional 401(k) plan or a health savings account
    • Choosing if they want to participate in a nonqualified deferred income plan (if applicable)

    Utilize GMS’ Payroll Tax Management Services

    Tax planning can be complicated, and you shouldn’t do it alone. Payroll tax filing requirements are complex and ever-changing. Filing incorrectly can result in costly penalties. When outsourcing your payroll tax management to a company like GMS, your business will benefit in various ways. Do what’s best for you and your employees as we approach the new year. Contact us today to learn more.

  • The Internal Revenue Service (IRS) announced the new amount individuals can contribute to their 401(k) plans in 2023. In 2023, individuals can contribute $22,500 to their 401(k) plans, a $2,000 increase from 2022.

    Additional Information

    The new contribution limit in 2023 applies to all employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan. For more information regarding retirement plans, click here. The government enforces limits on how much money employers and employees can contribute to their retirement plans. There is a maximum limit for all retirement plan types. However, some limits change each year.

    Get The Support You Need!

    Are you a business owner considering offering your employees a 401(k) plan? Or perhaps you already do and are looking for ways to improve it. Offering retirement plans is essential to recruiting and retaining quality employees, but it’s a benefit with a lot of complexity and risk. Tom Smith, GMS’ Director of Retirement Services, explains, “Offering a retirement plan is a great benefit for business owners to be able to provide employees. From a cost standpoint, it’s typically one of the more economical benefits. A 401(k) gives business owners flexibility in terms of plan design options to meet their business needs.”

    In addition, a handful of retirement plans change the contribution limits each year. When you partner with GMS, we help you:

    • Cut costs and reduce stress
    • Save you time
    • Offer benefits your employees want the most

    Contact us to get started today!

  • Amidst the tragedies of Hurricane Ian in Florida, the Internal Revenue Service (IRS) has extended the tax filing deadline for those affected to February 15th, 2023. The original tax filing was due on October 17th, 2022, for individuals with a valid extension to file their 2021 taxes. In addition, the Federal Emergency Management Agency (FEMA) announced that these affected individuals in certain areas would receive tax relief. Any individual and household affected by Hurricane Ian who resides or has a business in Florida can qualify for this tax relief.

    The Effects On Individuals And Businesses In Florida

    The tax relief affects individuals and businesses in Florida in the following ways:

    • Individuals: If you’re an individual who had a valid extension to not file your 2021 taxes until October 17th, 2022, you now have until February 15th, 2023. In addition, the February 15th deadline applies to quarterly estimated income tax payments normally due on January 17th, 2023, and quarterly payroll and excise tax returns normally due on October 31st, 2022, and January 31st, 2023. 
    • Businesses: Any business in Florida with an original or extended due date after September 23rd, 2022, now has until February 15th, 2023, to file and pay. Additionally, tax-exempt organizations are eligible for the extended deadline. This includes 2021 calendar-year returns with extensions due to run out on November 15th, 2022. 

    It’s important to note that any payment initially due before September 23rd, 2022, is not eligible for this relief. Payroll and excise tax deposits due after September 23rd, 2022, but before October 10th, 2022, will be exempt from penalties if they are paid by then.

    What Florida Residents Should Know

    As a resident of Florida, you do not need to apply for filing, payment, or penalty relief as the IRS automatically extends it to individuals with an IRS address of record located within the disaster area. For individuals who live outside the disaster area but have records necessary to meet an IRS deadline located inside the area, the agency will work with you to ensure you are not penalized.

    Outsource Payroll Tax Management Services Today

    As a small business owner, filing taxes can be confusing and challenging. In addition, failing to comply can result in hefty penalty fees. Focusing your time on cutting checks, filling out forms, maintaining records, keeping up with regulations, and staying on top of tax deadlines doesn’t grow your business. On top of this, dealing with the effects of Hurricane Ian adds an additional layer of stress. Let GMS help you during these unprecedented times. Contact us today.

  • As a business owner, you’re going to have to deal with a seemingly endless number of payroll obligations. Managing payroll for a small business isn’t easy, especially when it comes to dealing with payroll taxes.

    Between calculating payroll taxes and filling out numerous forms, approximately 40% of small businesses spend more than 80 hours per year managing the payroll tax process. That’s a lot of time, especially when it’s not always clear whether an employer should use Form 941 or 944 to report their payroll taxes. Keep reading to learn the difference between these forms and which is right for your business.

    What Is Form 944?

    Form 944 is the annual federal tax return that certain small businesses use to report employment taxes. Employers use Form 944 to report:

    • Wages you have paid
    • Tips your employees reported to you
    • Federal income tax withheld
    • Both the employer and the employee share of social security and Medicare taxes
    • Additional Medicare Tax withheld from employees
    • Current year’s adjustments to social security and Medicare taxes for fractions of cents, sick pay, tips, and group-term life insurance
    • Qualified small business payroll tax credit for increasing research activities

    Note: While the Federal Unemployment Tax Act (FUTA) is also considered a payroll tax, employers should use Form 940 to report their federal unemployment tax contributions.

    However, the following employers can’t file Form 944:

    • Household employers
    • Agricultural employers
    • Employers who are notified by the Internal Revenue Service (IRS) to file quarterly Forms 941
    • Employers who aren’t notified to File form 944

    This form is generally used by small business employers with an estimated annual payroll tax liability of $1,000 or less.

    New employers can request to file 944 tax forms when they apply for an employer identification number (EIN). If a business has previously filed 941 forms, they can submit a request to the IRS to file Form 944 instead. For more info, check out IRS.gov for instructions on how to request a 944 form.

    What Is Form 941?

    Form 941 is a quarterly federal tax return used by most employers to report the same employment taxes. Most businesses file Form 941 unless the IRS has notified them that they qualify for the annual filing option via Form 944.

    Key Differences Between Form 941 And Form 944

    Below is a summary table outlining the key distinctions:

    Who should file?

    • Form 941: Employers with an estimated annual tax liability of more than $1,000
    • Form 944: Small business employers with an annual tax liability of $1,000 or less

    When to file:

    Form 941: Due quarterly on:

    • April 30
    • July 31
    • October 31
    • January 31

    Form 944: Due annually by January 31.

    Tax Deposit Requirements:

    Form 941:

    • If total taxes are less than $2,500 per quarter, deposit taxes when you file the form
    • If the tax liability is $50,000 or less, deposits are made monthly (due by the 15th of the following month)
    • If more than $50,000, deposits are made semiweekly based on your payday schedule

    Form 944:

    • If annual tax liability is less than $2,500, payment is made filing Form 944.
    • If annual liability exceeds $2,500 but each quarter remains under that threshold, payment is due by the last day of the month following the end of the quarter
    • If a quarter’s liability is $2,500 or more, deposits follow the monthly or semiweekly guidelines

    Note: Regardless of the deposit schedule, the IRS recommends using the Electronic Federal Tax Payment System (EFTPS).

    Should You Switch Your Filing Requirement?

    New guidance from the IRS provides flexibility for businesses whose estimated tax liability does not match their current filing requirement. Consider the following:

    • If you currently file Form 944 but estimate your annual tax liability will be more than $1,000, you may be eligible to switch to filing Form 941
    • If you currently file Form 941 but expect your annual tax liability to be $1,000 or less, you may be eligible to switch to Form 944

    To request a change:

    • Send a written request postmarked by March 15
    • Call the IRS at 800-829-0115 by April 1

    For more detailed instructions or to initiate a change, visit IRS.gov.

    What Information Do You Need To File Forms 941 And 944?

    Although the total tax thresholds are different, both 944 and 941 tax forms require businesses to provide the same types of information. Any business filing these tax forms must report the following information to the IRS.

    • Employer information (e.g., EIN, name, and address)
    • Total number of employees that were paid
    • Employee compensation (wages, tips, and anything else paid to employees)
    • The amount of federal income tax, Social Security tax, and Medicare tax paid by the business and withheld from employees
    • Total amount of tax liability
    • Paid sick or family leave wages, if applicable
    • Consolidated Omnibus Budget Reconciliation Act (COBRA) information, if applicable
    • Any necessary adjustments

    How To File Forms 941 And 944

    The IRS gives businesses two ways to file Forms 941 and 944:

    • By mail
    • E-filing

    There are different mailing addresses for businesses depending on their location, special exemptions, and whether the business is deciding to file and pay their payroll taxes at the same time. Fortunately, the IRS lists out every possible scenario on their website:

    Businesses that want to e-file payroll tax forms can also choose to do so online. This process is not only quicker, but also more secure. Employers can choose to e-file Forms 941 or 944 on their own or have a tax professional submit these forms on their behalf. The IRS provides guidelines for how to e-file Forms 941 and 944 on their website.

    Forms 941 and 944 ready to be filled out.

    Correcting Mistakes On Your Payroll Tax Forms

    At some point, you might discover an error on a filed Form 941 or Form 944. The IRS allows you to correct errors by filing:

    • Form 941-X: To correct mistakes on a previously filed Form 941
    • Form 944-X: To correct mistakes on a previously filed Form 944

    The deadlines for corrections depend on whether you underreported or overreported your taxes. Consult the IRS guidelines for detailed deadlines and procedures.

    Streamline Your Payroll Process

    Managing payroll taxes, and choosing the right form, can be complex and time-consuming. At Group Management Services (GMS), we help you navigate these complexities by:

    • Ensuring you use the correct form based on your tax liability
    • Keeping you up-to-date on IRS deadlines and filing requirements
    • Assisting with electronic filing and tax deposit scheduling

    By streamlining your payroll processes, you can save valuable time and reduce the risk of IRS penalties, leaving you free to focus on growing your business.

    How GMS Can Help

    At GMS, we understand that payroll and tax compliance can be overwhelming. Our comprehensive solutions include:

    • Payroll & tax compliance: We handle all of your payroll processing and tax filing needs accurately and on time
    • Expert human resources (HR) support: Our team stays current on federal requirements so that your business is always compliant
    • Customized service: We work with businesses of all sizes nationwide, ensuring you have the support you need to simplify your operations

    Contact GMS here and let us help you take control of your payroll and focus on what really matters, growing your business.

  • The Internal Revenue Service (IRS) has recently announced a 90-day pre-audit window to correct retirement plan errors. The program will allow for plan sponsors to be notified that the IRS has selected them for an upcoming examination and to allow them to correct errors they may have made.

    The 90-day window will allow plan sponsors to fix errors, so they do not have to pay a penalty fee or pay a lower fee for voluntarily correcting any errors. If the plan sponsor doesn’t respond, the IRS will commence with an examination.

    If a business makes changes and the documents support those changes, the IRS will issue a closing letter ending the investigation. The IRS could conduct a limited or full-scope examination if they still have reason to believe there are issues. Some mistakes are not eligible to be self-corrected, but a closing agreement can be requested. The Voluntary Correction Program fee structure will be used to determine the amount a business will pay under an agreement.

    Before this program, the ability to fix errors prior to an IRS judgment was typically not available. Errors found by the IRS resulted in much higher fees and were less predictable than they are under this new pilot program.

    The IRS states that the “goal with this program is to reduce taxpayer burden and reduce the amount of time spent on retirement plan examinations.” Once the pilot is over, the IRS will determine if it should become a new policy as part of its overall compliance strategy.

    How GMS Can Help

    While this policy helps businesses by giving them a window to correct errors, a professional employer organization (PEO), like GMS, can help eliminate these errors in the first place. That way, you don’t have to spend more money working with attorneys and advisors to conduct the self-audit after receiving a notification. Not only will it save you money to partner with GMS, but it will also save you valuable time that you can focus on operating the key facets of your business. Contact GMS today.

  • The IRS Form 941, also known as Employer’s Quarterly Federal Tax Return, was scheduled to change in June 2022. Previously, Form 941 was only updated in March for the first quarter reports. Now, the IRS has extended it to the second, third, and fourth quarters.

    Employers use Form 941 from the IRS to report income taxes, social security tax, or Medicare tax withheld from employee’s paychecks. Without this report, the IRS would not know if you deposited your employment taxes on time.

    Changes To Form 941-X

    The new report, Form 941-X, only has two worksheets that must be turned in versus several forms needed to be submitted for Form 941. The IRS also updated changes to Form 941-X to match the changes from Form 941.

    How GMS Can Help

    Dealing with taxes can be complicated and can take away focus from your business. Outsourcing payroll administration will provide you with a team of experts by your side to give you dedicated support, proprietary technology, and operational efficiencies. Contact us today to learn how you can benefit from partnering with a PEO for your payroll needs. 

  • Beginning July 1, 2022, the business standard mileage rate for transportation expenses paid or incurred will be 62.5 cents per mile. The IRS recognizes the gasoline price increases which has caused this midyear change. A new rate for deductible medical or moving expenses will be in effect starting July 1, 2022. The price will be changed to 22 cents per mile as opposed to 18 cents in the first half of 2022.

    The business standard mileage rate is used to calculate the deductible costs of operating a vehicle for business purposes. In addition, the federal government and many businesses use this rate as a benchmark for reimbursing their employees’ mileage.

    IRS Commissioner Chuck Rettig stated, “We are aware a number of unusual factors have come into play involving fuel costs, and we are taking this special step to help taxpayers, businesses, and others who use this rate.”

    Simplify Your Payroll Administration

    Business owners can utilize the IRS mileage rate through the support of GMS. Our team of payroll experts will be able to answer any questions you may have regarding the changing rates. Consider offering mileage reimbursement at the IRS rate so that your employees feel valued during these unprecedented times. Contact us today. 

  • For the 2023 calendar year, the Internal Revenue Service (IRS) raised the contribution limit to a health savings account (HSA) to $3,850 for an individual and $7,750 for a family. Currently, the HSA limit is $3,650 for individuals and $7,300 for a family. These higher limits allow individuals and families to save more money on qualified expenses.

    An HSA is a savings account that allows you to set aside money on a pre-tax basis to pay for qualified medical expenses. With an HSA, you can use untaxed dollars to pay for deductibles, co-payments, and coinsurance which may lower your health care costs. HSAs are available only to individuals with a high deductible health plan (HDHP) which the IRS defines as a plan with an annual deductible that is no less than $1,500 for self-only coverage or $3,000 for family coverages for 2023. It also articulated that annual out-of-pocket expenses including deductibles and co-payments for an HDHP cannot exceed $7,500 for individuals and $15,000 for family coverage.

    There will be no change to the age 55+ HSA catch-up limit rules for 2023 so it remains at $1,000 per year. This allows any individual ages 55 and older to put away an additional “catch-up” contribution up to that amount annually. All adjusted limits will go into effect starting January 1, 2023.

    GMS Is Here To Help!

    Are you a business owner that doesn’t offer any health care benefits, but you think now might be a good time to introduce them? You’ve come to the right place. We understand that health coverage can be confusing. At GMS, our team of experts sits with your employees to explain the different health coverages available to them and determine the right fit. Learn more! 

  • The IRS recently released guidance for employers on the early termination of employee retention credit (ERC) if an employer received an advance payment or reduced deposits in anticipation of the credit. The Infrastructure Investment and Jobs Act, which was enacted on November 15th, 2021, amended the law so that the ERC applies only to wages paid before October 1st, 2021, unless the employer is a recovery startup business.  

    Notice 2021-65 applies to employers that paid wages after September 30th, 2021, and received an advance payment of the ERC for those wages or reduced employment tax deposits in anticipation of the credit for the fourth quarter of this year but are not ineligible for the credit due to this legislation change.  

    If an employer received advance payments for fourth-quarter wages, they will avoid failure to pay penalties so long as they repay those amounts by the due date of their applicable employment tax returns.   

    Employers that reduced deposits on or before December 20th, 2021, for wages paid during the fourth quarter 2021 in anticipation of the ERC, will not be subject to a failure to deposit penalty if: 

    1. The employer reduced deposed in anticipation of the ERC, consistent with the rules in Notice 2021-24 
    2. The employer deposits the amounts initially retained in anticipation of the ERC on or before the relevant due date for wages paid on December 31st, 2021 – regardless of whether the employer actually pays wages on said date. Deposit due dates will vary based on the deposit schedule or the employer.  
    3. The employer reports the tax liability resulting from the termination of the employer’s ERC on the applicable employment tax return or schedule that includes the period from October 1st, 2021, through December 31, 2021.  

    Penalties for failing to deposit will not be waived for employers if they reduce deposits after December 20th, 2021. If your business needs assistance on how to manage these new IRS guidelines, GMS can help you with a plan that fits your business model. 

  • Recently, the IRS issued a proposed regulation that would permanently and automatically allow a 30-day extension for furnishing Affordable Care Act (ACA) reporting forms to individuals – eliminating transitional good-faith relief for inaccurate and incomplete Forms 1094 and 1095.  

    These forms clarify that minimum essential coverage (MEC) does not include Medicaid coverage that is limited to COVID-19 testing and diagnostic services provided under the 2020’s Family First Coronavirus Response Act (FFCRA). While these regulations would apply and be effective at the beginning of 2022, entities should rely on the current regulations for 2021 reporting submissions. 

    The ACA requires applicable large employers (ALEs) – employers that during the prior year had 50 or more full-time employees or the equivalent when part-time employees’ hours are combined. Deadlines to these forms are as follows: 

    ACA Requirement 

    Deadline 
    • 1095 forms delivered to employees 
    • Jan. 31st, 2022 
      (proposed automatic extension to March 2nd  
    • Paper filing with IRS* 
    • Feb. 28th, 2022 
    • Electronic filing with IRS 
    • March 31st, 2022 

    The proposed regulation includes the following aspects:  

    1. A permanent and automatic extension of time for providing statements to individuals to no more than 30 days after January 31st, or the next business day if this day falls on a weekend or a holiday. Note, however, the proposed regulation has not changed the deadline for filing with the IRS (February 28th if on paper and March 31st if electronically). 
    2. The IRS will no longer accommodate employers filing incomplete or inaccurate information on Forms 1094 and 1095 (as previously permitted under Notice 2020-76). 
    3. As long as the ACA individual mandate (otherwise known as “shared responsibility”) penalty remains zero, a small, self-insured employer may simply post a clear and conspicuous notice on the entity’s website stating that responsible individuals may receive a copy of their Form 1095-B upon request, an alternative from mailing out individual forms to each enrolled individual.  

    Of particular note, five states (California, Massachusetts, New Jersey, Rhode Island, and Vermont – along with Washington D.C.) have enacted individual health coverage mandates that mirror the former federal requirement that individuals obtain ACA-compliant health coverage or pay a penalty tax. These states could require taxpayers to show proof of coverage or face fines.  

    GMS is devoted to helping businesses stay up to date on deadlines and regulations. If you are looking to spend more time focusing on the core of your business and minimize your administrative burden, contact us today.