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Foster City, CA 94404
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(650) 349-5678

Payroll Tax and Information


 

Return Type

Original and Extended Due Dates

Comments

Partnership (calendar year)

Form 1065

March 15

Extended: September 15

For fiscal year partnerships, returns will be due on the 15th day of the 3rd month after the year-end. A six-month extension is allowed from that date.

S Corporation (calendar year)

Form 1120S

March 15

Extended: September 15

Same rules as Partnerships above.

C Corporation (calendar year)

Form 1120

April 15

Extended: September 15

Corporations will be allowed a six-month extension, except calendar-year corporations will get a five-month extension until 2026 and corporations with a June 30 year-end would get a seven-month extension until 2026.

C Corporation Fiscal Year End

(other than Dec. 31 or June 30)

15th day of the 4th month after year-end

Extended: 15th day of 10th month after year-end

 

Exempt Organization

(calendar year)

Form 990

May 15

Extended: November 15

Extension will be a single, automatic six-month extension, eliminating the need to process the current first 90-day extension.

Individual

Form 1040

April 15

Extended: October 15

No change

Trust and Estate

Form 1041

April 15

Extended: September 30

No change

FinCen

Report 114

April 15

Extended: October 15

Foreign Bank and Financial Accounts Report (FBAR) usually included with tax return.

Information Returns

(i.e., W-2 and 1099s)

Forms W-2 and certain 1099-Misc due to IRS/SSA

January 31

No change.

 

 

Other items of note:

 

 

Please be informed that Form 1099 Misc. informational reports for 2020 must be filed with the federal government no later than January 31, 2020.  These informational returns are also due to the recipients by January 31, 2020. However, if you need additional time; a one-month extension is available by submitting form 8809 before January 31, 2020. Please let us know if you would need our office to do so. Further, if you would like our office to prepare the required government reporting documents, please let us know as soon as possible.  These are the following forms due:

 

1)       Common Information Returns:   

 

Form 1099-MISC:  For 2020, non-employee compensation will be reported on form 1099-NEC. All others will use 1099-Misc payers for each person who is paid at least $10 in gross royalty payments, or $600 in rents, services (including parts and materials), prizes and awards, other income payments, medical and health care payments, crop insurance proceeds, fishing boat proceeds or gross proceeds to an attorney.  Please note that persons receiving rental income will have new reporting requirements and should consider issuing a 1099-MISC to service providers who have earned more than $600 in the course of earning rental income, especially if your activity is a non-passive activity (an indicator that you will not be subject to the additional net investment income tax under the ACA [Obamcare])  under current filing requirements. Further issuance of 1099-Misc forms to vendors indicate a viable business for purposes of a qualified business deduction under the new sec 199A law (TCJA)

 

Form 1098:  Filed by recipients of $600 or more in mortgage interest and points. 

 

Form 1099-A:  Filed to report foreclosures or abandonment of real property by lender. 

 

Form 1099-INT:  Filed by payers who pay $10 or more in interest.

 

Form 1099-DIV:  Filed by payers who pay $10 or more in corporate dividends, capital gain distributions, 404(k) dividends and corporate liquidation distributions. 

 

Form 1099-B:  Filed by brokers, barter exchange transactions, commodities and security transactions.

 

Form: 1099-C:  Filed by lenders who cancel or discharge debt for $600 or more.

 

Form 1099-K:  Filed by credit card companies and merchant banks to report $20,000 or more in network transactions and 200 or more transactions

 

Form 1099-G:  Filed by federal and state government authorities to report tax refunds, state tuition payments, grants,  and unemployment benefits paid.

 

Form 1098-E:  Filed to report educational interest paid.

 

Form 1098-T:  Filed to report tuition payments paid.

 

Form 1099-R:  Filed by payers of charitable gift annuities, death benefits, retirement plan rollovers, education IRA distributions, excess deferrals and contributions to retirement plans, regular IRA distributions, life insurance distributions, loans distributed from pension plans, military retirement benefits, non-qualified retirement plan distributions, all retirement plan distributions, Roth IRA distributions, IRC Sec 1035 life insurance trade in transactions and SIMPLE distributions.

 Form 1099-S:  Filed to report real estate transactions.

 

Form 1099-LTC:  Filed to report long-term care benefits received.

 

Form 5498:  IRA rollovers, Education IRA contributions, IRA contributions, Roth IRA contributions and distributions and SEP/SIMPLE contributions.

 

Form 5498-SA:  Filed to report contributions to, and FMV of an HSA, Archer MSA, or Medicare Advantage MSA

 

Form 1099-SA:  Filed to report distributions made from an HSA, Archer MSA or, Medicare Advantage MSA.

 

Form DE 542:  Filed by payers to independent contractors who receive more than $600 within 20 days of making such a payment. This form must be filed with the Employment Development Department.

 

 

The following rates are now effective in 2020 for payroll and income tax deductions.

 

        2)  Social Security/Medicare Tax & Self-Employment Tax:

 

Employer: Social Security Rate: 6.2% of earned income up to $137,700 (max $8,537.40).

Employee: Social Security Rate: 6.2% of earned income up to $137,700 (max $8,537.40). For wages greater than $200,000, an additional 0.9% will be withheld under the ACA.

Medicare Rate: 1.45% of earnings up to $200,000 and 2.3% for earnings greater than $200,000 without employee limitation

For self-employed individuals, 50% of self-employment tax will continue to be an adjustment to gross income on Schedule 1, line 27 of the Form 1040.

 

        3)  State Disability Insurance (SDI):

 

            Employee: 1% of earned income up to $122,909 (max $1,229.09).

 

       4)  Federal Unemployment Tax Act (FUTA):

 

            Employer:  6% of earned income up to $7,000, less your assigned state unemployment rate.

 

        5)  State Unemployment Insurance (SUI) & Employment Training Tax (ETT):

 

            Employer:  SUI Rate from 1.5% to 6.2% of $7,000 depending on experience rate.

 

            Employer:  ETT rate of .1% of earnings up to $7,000 (Maximum $7).

 

        6)  Standard Mileage Rates for 2020:

 

            Business:     $ .57.5 per mile driven.

            Charitable:   $ .14 per mile driven.

            Medical:      $ .17per mile driven.

 

 

         7)  Retirement Plan Limits:                                                                   2020

 

          Individual Retirement Account limit under 50 years of age                            $ 6,000

           Individual Retirement Account 50 years and older                                       $ 7,000

SIMPLE limit under 50 years of age                                                             $ 13,500

SIMPLE limit 50 years and older                                                                  $ 16,500

401(k), 403(b), 457 limits under 50 years of age                                          $ 19,500

401(k), 403(b), 457 limits age 50 years and older                                        $ 26,000

Defined contribution limits under 50 years of age                                          $ 57,000

Maximum compensation for defined contribution                                           $285,000

Highly compensated individual                                                                    $130,000

Top Heavy Key Employee                                                                          $185,000

Social Security Taxable Wage Base                                                              $137,700

Defined benefit annual benefit limit                                                             $223,000

Federal minimum wage                                                                              $7.25/hour

California minimum wage                                                                           $15.00/hour

 

        8)  Estate and Gift Tax Limits:                                                              2020

 

Estate Tax                                                                                                   $11,580,000 per individual before reduction for taxable gifts, plus unused

                                        deceased spousal exclusion with election

          Generation Skipping Tax Exclusion                                                               $11,580,000

          Gift Tax Exclusion                                                                                           $11,580,000

Annual Gift Tax Exclusion                                                                                $15,000 ($155,000 for non citizen spouses)

Top Tax Rate                                                                                                     40%

 

Further, please update your corporate minutes at the end of your corporate year to fully disclose your compensation, your retirement assumptions and commitments, your fringe benefit policies, the terms of use of company vehicles, and loan and rental agreements between corporate officers and the corporation, additions/subtractions of corporate owners/officers, relationships with any other entities, changes in office location, including new lease commitments, long-term plans to retain working capital to be used for growth, and other legal commitments and any other relationships transactions.

It is very important to disclose these relationships in the corporate minutes to ratify all decisions made by the corporation during the year and to codify these relationships in case of audit and/or legal action.

 

Please pay your estimated tax to both Federal and State authorities. The penalties are being asserted at greater rates without waiver capabilities.

 

Please call me if you have any further questions.  Happy New Year!