January Tax Alert

We are happy to report that "falling off of the fiscal cliff" appears to have been avoided, or at least postponed. Therefore, we can now report on the tax issues with a reasonable degree of certainty. Please check our website regularly which will be updated as soon as new legislation occurs.

2013 Payroll Tax Rates and Other Matters
The Herbein + Company 2013 payroll tax rate schedule is now available.
Download the 2013 Payroll Tax Rates and Other Matters

Additional Medicare Tax to apply to "High" wages and self-employment income
Beginning in 2013, a new 0.9% Medicare tax will apply to wages and self-employment income which are in excess of certain threshold amounts. The tax is required to be withheld by employers on wages paid in excess of $200,000. The threshold for the actual application of the tax is as follows: MFJ = $250,000; Single and HOH = $200,000; and MFS = $125,000. A new tax form or schedule will need to be completed to determine the correct application of this new tax.

First time 1099 form filing requirement for PA
Beginning with the filing of 1099 forms for 2012, PA will require the filing of certain 1099 forms to be filed with the PA Dept. of Revenue. The new PA filing requirement will apply to form 1099-MISC for PA source payments of "non-employee compensation" and "oil and gas lease payments". No other 1099 forms are required to be filed with PA. If the payor is required to use electronic filing for PA tax withholding, then the PA copy of the 1099 forms must also be filed electronically. An update to the E-Tides system will be implemented to accommodate electronic filing of PA 1099 forms. PA will not require the filing of a form 1096 to accompany the PA 1099 forms.

PA "Corporate Box" number to be replaced
Beginning in May 2013, the PA Dept. of Revenue will be notifying all current holders of PA Corporate Box numbers of a newly assigned "Revenue ID" number. The new Revenue ID number will consist of 10 digits and are being issued as part of the DOR's "Revenue Modernization Project". Upon receipt of your notification letter, please forward a copy to Herbein + Company as soon as possible.

Health Insurance costs to be reported on W-2 forms
For 2012: employers who issued more than 250 W-2 forms in 2011 must report the amount of employer paid health insurance in 2012 on the employees' W-2 forms.
For 2013: all employers must report the amount of employer paid health insurance on the employees' W-2 forms.

For additional information please contact your Herbein advisor or Ken Seidel at or 610.378.1175.

Related information can be located on Herbein's year-end planning page.