OS1 Newsletters


OutsourceOne News - February 2012

Payroll Tax Cut is Extended through 2012

February 22, 2012 - Five days after Congress gave the $143 billion measure overwhelming approval, President Obama signed an extension of the Social Security payroll tax cut through the end of 2012. 

 

The extension renews a 2 percentage point cut in the employee portion of the tax that funds Social Security. The initial cut began last year to aid the nation's struggling economic recovery. 

 

It is estimated that for an employee earning $50,000 per year, the tax holiday means an extra $80 per month on their paychecks.  

 

The deal also extended benefits for the long-term unemployed that average about $300 per week and prevents big cuts in payments to doctors who treat Medicare patients.


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IRS Issues New Guidance for Health Plan Reporting on W-2 Forms


The IRS recently released Notice 2012-9 which modifies and provides additional guidance regarding employers' responsibility to report health coverage costs on 2012 W-2 forms that will be issued in 2013. Notice 2012-9 is in a question-and-answer format and replaces the previously issued Notice 2011-28. While this updated notice provides clarification and additional guidance on certain topics, it does not change the reporting requirements for employers. Some highlights include:


  • Employers may include the cost of coverage for benefit programs, such as Health Reimbursement Accounts, that are excluded from the reporting requirement and clarification on how to calculate the cost.  
  • The cost of coverage for wellness programs, on-site medical clinics, or employee assistance programs (EAP) are not required to be reported unless the program is subject to COBRA and the employer passes coverage costs to the employee.
  • Clarification of the interim relief reporting requirement for employers that file fewer than 250 W-2 forms for the 2011 tax year.
  • Clarification on other unique situations such as if a composite rate is charged for active employees but not for COBRA qualified beneficiaries or if a pay period extends over the end of the tax year on December 31st.

Please note: OutsourceOne warehouses health coverage costs in our systems for many of our clients.  We are creating specific reporting solutions to assist our clients with this new IRS requirement.

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Non Discrimination Testing


In order to qualify for tax-favored status, the IRS requires that cafeteria plans pass discrimination tests on a regular basis.

 

OutsourceOne offers non-discrimination testing for our Pre-Tax Plan Administration clients upon request.


It is important to perform this testing towards the beginning of the Plan year so that you have time to make adjustments if necessary.  If you are interested in this service please contact your Account Manager for more information.

 


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This newsletter is intended for informational purposes only, it is not intended to be used as legal, tax, accounting or other professional advice.