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Searching for Articles by Mary Ellen Schill
Mary Ellen Schill
Wausau Office
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IRS Issues Changes to Gas Reimbursement in 2015

Posted on December 10, 2014, Authored by Mary Ellen Schill, Filed under Tax Deductions

Attorney Mary Ellen Schill recently authored an update detailing the changes.  2015 Standard Mileage Rates

IRS Encourages Self-Assessment to Identify Fringe Benefit Errors

Posted on August 3, 2017, Authored by Mary Ellen Schill, Filed under Employment

As much as I love tax law, filling out another tax form isn’t high on my list of fun things to do.  So when the IRS issues a form that isn’t legally required to complete, should you?  If you are an employer that provides one or more fringe benefits to your employees, you may want to put IRS Form 14581-A on your bucket list.  Here’s a link to the Form. Form 14581-A is titled “Fringe Benefits Compliance Self-Assessment for Public Employers,” and the purpose of it is to help governmental entities test their compliance with income tax laws with respect to fringe benefits provided to employees.  Through a series of eleven yes or no questions, the Form seeks to identify whether the employer is correctly withholding from, and reporting on, employee reimbursements relating to things like employer-provided meals, lodging, and gift certificates.  The Form includes a discussion of the IRS rules on such reimbursements and when they are (or are not) includable in wages subject to withholding.  For example, one question asks whether the employer includes the taxable amount of employer-provided meals as wages when applicable, and notes that meals may be excludable from income in two cases, “de minimis meals” and meals for the convenience of the employer provided on the business premises. While the form specifically references public employers, the vast majority of the rules referenced in the Form are also applicable to private sector employers.  So, everyone jump in the pool and take the Form 14581-A self-assessment today!

IRS Issues 2015 Limits for Qualified Plans

Posted on October 23, 2014, Authored by Mary Ellen Schill, Filed under Employment

Autumn brings two things, at least in Wisconsin. Lots of leaves on your lawn, and the IRS announcement of the contribution and benefit limits applicable to qualified retirement plans for next year. Lets ignore the leaves for now, but the IRS limits we can help you with. Keep this chart with your important papers. Adjusted annually for cost of living, the IRS limits on contributions and benefits for retirement plans can have a significant impact on both personal and corporate tax planning. Unlike for 2014, 2015 will bring some welcome increases in the limits. Along with the IRS announcement, the Social Security Administration has also announced the taxable wage base for 2015, $118,500. Please feel free to share our handy chart with your payroll department, and get back to raking those leaves!

IRS Announces HSA Cost of Living Adjustments

Posted on May 4, 2015, Authored by Mary Ellen Schill, Filed under Employment

Each spring (or late winter for those of us lucky enough to be living in Wisconsin), the IRS adjusts the various maximums (and minimums) for health savings accounts for the upcoming calendar year. The tax code (Code Section 223 if you want to play along at home) provides for annual “cost of living” adjustments for some of the HSA limits. Interesting, one limit that isn’t adjusted for cost of living is the catch-up contribution limit, which is set by statute at $1,000. The limits for 2015 and 2016 can be found here. Note that some limits are unchanged from 2015. How can that be, you are probably asking, don’t increases in the cost of living affect single health plan coverage as much as family coverage? The answer is found in the rules about cost of living adjustments, where the Code provides that adjustments can only be made in $50 increments, and adjustments are rounded to the “nearest multiple of $50.” So, as we revisit our grade school math classes, if the adjustment would otherwise be less than $25.00, then there is no adjustment. While January 2016 is a long ways away, it doesn’t hurt to start planning now. As they say, the early bird does get the worm!

Recognition of Same-Sex Marriage Officially the Tax Law of the Land

Posted on September 1, 2016, Authored by Mary Ellen Schill, Filed under Employment

Effective tomorrow, September 2, 2016, new IRS final regulations will take effect which provide that for federal tax purposes, the terms “spouse,” “husband,” and “wife” mean an individual lawfully married to another individual.  The terms “husband and wife” mean two individuals lawfully married to each other.  Lawful marriage means the marriage is recognized by the state, possession, or territory of the United States in which the marriage is entered into, regardless of the domicile of the individuals.  For foreign marriages, the foreign marriage is considered lawful for federal tax purposes if the foreign marriage would be recognized as marriage under the laws of at least one state, possession, or territory of the United States. Wasn’t this already the law of the land?  Is the IRS just now catching up?  No, the IRS was already on board with the recognition of same-sex marriages back in 2013 after the United States Supreme Court decision in Windsor.  But then came the Obergefell decision in 2015, followed by proposed IRS regulations issued in October 2015.  Now, the IRS has finalized those October 2015 proposed regulations with a couple of tweaks in response to comments submitted on the proposed regulations.  One of which was to make clear that only couples that actually entered into a lawful marriage would be treated as married, as opposed to couples whose relationship might be lawful marriage in a state, possession, or territory of the United States.  The best example of this is a couple living in a state which does not recognize common law marriage.  There are some states that do recognize common law marriage, however.  The proposed regulations would arguably have treated that couple as legally married for federal tax purposes just because there was a state that would have recognized their relationship as lawful. Whew!  Good thing there are astute tax people out there pointing out nuances that rival only the upcoming college football season for excitement (Go Irish!). Anyway, tomorrow’s final regulations should serve as a reminder to review both personal tax situations, as well as employee benefit plan documents maintained by employers.

What Keeps Me up at Night About the Affordable Care Act?

Posted on February 3, 2015, Authored by Mary Ellen Schill, Filed under Employment

Expert? Guru? While I’d like to think that I merit those descriptions when it relates to the Affordable Care Act, I know for a fact that there is a lot about the ACA that, as they say, “keeps me up at night.” The practice of law is just that, practice, and practicing in the area of employee benefits after the passage of the ACA brings back Section 89 memories. For those of you who were blissfully unaware (or unalive) back in the mid to late 1980’s, there was one pre-ACA attempt to make employer-sponsored group health plans (and other welfare benefit plans) look more like qualified retirement plans as far as complexity and regulation. Section 89 of the tax code was enacted back in 1986, and it rivaled the ACA as far as its impact on group health plans. It imposed nondiscrimination and coverage requirements, and enhanced disclosure obligations. For benefits attorneys, it was non-stop seminars and presentations and CLIENTS WHO PROCRASTINATED! Then it was repealed before it ever became effective in 1989. And those who procrastinated slept better at night I’m sure. The ACA is different of course. It has survived court challenges and legislative action. It is well over half way to full implementation. And there still is lots to learn and master. My recent Guest Column in the Eau Claire Business Leader [link] brings you into my world of ACA and counting sheep.

IRS Issues Standard Mileage Rates for 2016

Posted on December 21, 2015, Authored by Mary Ellen Schill, Filed under Employment

Falling gasoline prices have finally gotten the attention of the IRS!  Late last week the IRS issued the standard mileage rates for determining the deductible cost for operating automobiles for various purposes (business, medical, charitable) beginning January 1, 2016. Details can be found here.  Of most interest to employers, the mileage rate for business mileage has been reduced from 57.5 cents per mile, to 54 cents.  What this all means is that employers that base employee reimbursements on the standard mileage rate will save a little money next year per mile. Make sure your payroll department is updated with the new rate!

IRS Finalizes Same-Sex Marriage Recognition Regulations

Posted on September 1, 2016, Authored by Mary Ellen Schill, Filed under Tax Deductions

It took almost eleven months, and minimal comments from the public, but the IRS has now finalized its October 2015 regulations which recognized same-sex marriages as lawful marriages for purposes of the tax code.  More information on that found here Recognition of Same-Sex Marriage Officially the Tax Law of the Land.  No need to go through your Code book and cross out all those references to husband and wife!

IRS Announces 2017 Qualified Plan Limits; Pumpkin Spice Inexplicably Lacking

Posted on October 27, 2016, Authored by Mary Ellen Schill, Filed under Employment

Late each October, the IRS gets around to announcing the cost of living adjustments for qualified plans for the upcoming year.  This year was no exception, and here they are [Plan Limits].   Unlike last year, 2017 brings some increases to the limits, like the increase in the compensation limit (the maximum amount of compensation a plan can take into account) from $265,000 to $270,000.  For those looking to defer more, unfortunately the limit on elective deferrals (and the catch-up contribution limit) remains the same at $18,000 and $6,000, respectively. The Social Security Administration earlier announced the new taxable wage base for 2017, and it has increased also, to $127,200. So, enjoy these increases even without the usual pumpkin spice that everything seems to include this time of year!  

IRS Announces HSA Cost of Living Adjustments for 2017

Posted on May 2, 2016, Authored by Mary Ellen Schill, Filed under Employment

Late last week the IRS announced its adjustments to the health savings account limits for 2017.  These limits are adjusted annually by the IRS for “cost of living.”  Since the IRS rules for cost of living adjustments provide that adjustments are only made in $50 increments, and even then only if rounding to the nearest multiple of $50 results in an adjustment, the fact of the matter is there weren’t a lot of adjustments made! Take a look for yourself here.  2017 looks a lot like 2016, doesn’t it?  Only one limit changes, and that’s the limit on HSA contributions for someone with self-only coverage (going from $3,350 to $3,400).  I will point out that the “catch-up” contribution limit has not changed because it is a statutory limit with no built-in cost of living adjustment. Even though it’s only the beginning of May, it’s never too early to plan for 2017.

2017 IRS Standard Mileage Rates Reflect Steady Gasoline Prices

Posted on December 13, 2016, Authored by Mary Ellen Schill, Filed under Employment

On December 13, 2016 the IRS issued its standard mileage rates for 2017.  Details can be found here.  Each year (sometimes more frequently than that in times of price volatility) the IRS announces the standard mileage rates for determining the deductible cost for operating automobiles for various purposes, including business, medical, and charitable purposes.  Employers often base their employee reimbursements on the IRS standard mileage rate, which will go from 54 cents per mile in 2016 to 53.5 cents per mile in 2017. Please share this information with your payroll department!

Get Your 2015 Health Savings Account Limits Here!

Posted on June 10, 2014, Authored by Mary Ellen Schill, Filed under Tax Deductions

Sorry to be a little late to the Ruder Ware tax blog party, but I have arrived bringing a nice housewarming present. Let's just say I'm re-gifting an earlier article I posted on our website back in April. Health savings accounts (HSAs) are tax creatures too, and those who love tax law like our Tax Deductions followers will definitely be interested in the HSA limits announced by the IRS to be effective in 2015. For a handy chart showing those limits, read our 2015 Health Savings Account Cost of Living Adjustments legal update. Follow Mary Ellen on Twitter @wausauesq

2018 Qualified Plan Cost of Living Increases, 2018 Social Security Taxable Wage Base - Updated for New Taxable Wage Base

Posted on November 29, 2017, Authored by Mary Ellen Schill, Filed under Employment

The Social Security Administration has revised its earlier pronouncement on the Taxable Wage Base for 2018.  The Taxable Wage Base will now be $128,400, not $128,700.  We have updated this blog post post accordingly (original publish date October 27, 2017.) The Internal Revenue Service has announced the cost-of-living adjustments for the various qualified retirement plan limits. A few of the limits shown below remain unchanged from last year, but others have increased. Qualified Plan Limit Cost-of-Living Adjustments 401(k) and 403(b) elective deferral limit 2017-$18,000 2018-$18,500 $200,000 compensation limit 2017-$270,000 2018-$275,000 $160,000 defined benefit limit 2017-$215,000 2018-$220,000 $40,000 defined contribution limit 2017-$54,000 2018-$55,000 $80,000 definition of highly compensated employee 2017-$120,000 2018-$120,000 SIMPLE IRA deferral limit 2017-$12,500 2018-$12,500 Code Section 457 deferred compensation plan deferral limit 2017-$18,000 2018-$18,500 Code Section 414(v) catch-up contribution limit for employee deferrals 2017-$6,000 2018-$6,000   All of the above are plan year limits (i.e., for the plan year which begins in 2018), with the exception of the Code Section 401(k) and Code Section 403(b) elective deferral limit, which is a calendar year limitation. In addition, the Department of Health and Human Services has set the maximum taxable wages for the OASDI portion of the social security tax at $128,400 for 2018, which is an increase from the 2017 limit of $127,200.

U.S. Supreme Court Rules in King v. Burwell – Subsidies Available in All States

Posted on June 25, 2015, Authored by Mary Ellen Schill, Filed under Employment

The United States Supreme Court just held in the King v. Burwell case that taxpayers in states that have not established their own exchange are still entitled to the premium assistance subsidies. Read more about the decision here.

Gas Goes Down, IRS Mileage Reimbursement Rate Goes Up?

Posted on December 10, 2014, Authored by Mary Ellen Schill, Filed under Employment

This afternoon the IRS issued the standard mileage rates for determining the deductible cost for operating automobiles for various purposes (business, medical, charitable) beginning January 1, 2015. Details can be found here. Even with declining gasoline prices, the reimbursement rate for business purposes actually will increase from 56 cents per mile to 57.5 cents. The standard reimbursement rate takes into account not just gasoline prices, but also insurance and wear and tear. Maybe the cars themselves are getting more expensive to purchase and expensive to maintain? Anyway, employers that base employee reimbursements on the standard mileage rate will have to shell out more money next year per mile. In prior years with fuel price volatility the IRS has issued mid-year adjustments in reimbursement rates, so stay tuned.

Your Mileage May Vary - IRS Issues 2014 Mileage Rates

Posted on December 6, 2013, Authored by Mary Ellen Schill, Filed under Employment

This afternoon the IRS issued the standard mileage rates for determining the deductible cost for operating automobiles for various purposes (business, medical, charitable) for 2014. Specifics can be found here. Clearly the IRS has noticed the decline in the cost of gasoline at the pump, as the mileage rates for business and medical purposes have decreased slightly from 2013 (a half-cent decrease for business mileage to 56 cents per mile). The IRS's annual announcement of the standard mileage rate is a reminder that while employers are not required to reimburse employees for business travel expenses, many do, and when doing so any reimbursement above the IRS rate is taxable compensation. So, fill 'er up!

Treasury Department Delays Employer Mandate for Small Employers; Lower Threshold for Avoiding Penalties

Posted on February 10, 2014, Authored by Mary Ellen Schill, Filed under Employment

This afternoon the Treasury Department announced that employers with 50 or more full-time equivalent employees (FTEs), but less than 100 FTEs, will not have to comply with the employer mandate of the Affordable Care Act until 2016. The determination of whether an employer meets the small employer requirements for this purpose would be based on 2014 headcounts. So, if an employer employed on average 50 or more FTEs during 2014, but less than 100 FTEs, that employer will not be subject to penalties for 2015. However, this small employer will have to report what coverage is offered to employees for 2015, that obligation will not change. For employers with 100+ FTEs in 2014, the mandate will still apply in 2015. However, these larger employers will have a lower threshold in determining whether the penalty can be avoided. For 2015 only, an employer can avoid the no coverage penalty if coverage is offered to at least 70% of full time employees, rather than 95%. For 2016, the threshold will revert to 95%. The Treasury Department estimates that the carve out for smaller employers (50 but less than 100 FTEs) will affect 50% of all employers subject to the pay or play mandate. It is important to note that the delay discussed above is found in final regulations with respect to the employer mandate which were issued today, February 10, 2014. These final regulations were much anticipated and provide final guidance on, among other things, how to determine full time employees, whether an employer is an applicable large employer for purposes of the mandate, and whether offered coverage is affordable coverage. We will provide updates to our clients and friends with an analysis of today's final regulations shortly.

2016 Qualified Plan Cost of Living Increases, 2016 Social Security Taxable Wage Base

Posted on October 21, 2015, Authored by Mary Ellen Schill, Filed under Employment

Well, if you were hoping for a cost of living adjustment in the employee benefits part of your life, you aren’t going to get it from the 2016 qualified plan limits just issued by the IRS.  Here are the new limits.  Same as the old limits as you can see.  According to the IRS, “the pension plan limitations will not change for 2016 because the increase in the cost-of-living index did not meet the statutory thresholds that trigger their adjustment.”  You see, to prevent having limits that aren’t in round numbers that benefits geeks have a hard time remembering, the cost of living adjustment provisions in the various tax code sections governing qualified plans include specified increments of adjustment, and more importantly provide for adjustment only when the cost of living adjustment would exceed the statutory threshold. I agree, the IRS explained it better than I did!   So, let your payroll department (and your plan participants) know that the limits important to payroll will not increase for 2016.

Simple IRA Retirement-saving Solution

Posted on December 4, 2017, Authored by Mary Ellen Schill, Filed under Ag-Visor

Workplace retirement programs play an important role in attracting and retaining employees, helping workers (and owners!) save, and provide significant tax advantages.  Employer contributions to “qualified” plans (like 401(k) plans) or IRA-based plans are deductible by the business when made, and taxes on the recipients (your employees or even you!) are not imposed until the benefits are actually received.  Even better, the contributions are invested in tax-exempt trusts, and so they grow tax-free. Over the years the tax laws have made it easier for smaller employers like farms to sponsor qualified retirement programs (the safe harbor 401(k) plan is one such plan) and IRA-based plans such as a SIMPLE IRA plan.  “Safe harbor” 401(k) plans and “SIMPLE” IRA programs provide the same tax advantages as their big brothers (immediate deductions for contributions and deferred taxation for participants), but have the added benefit of avoiding some of the nondiscrimination rules that apply to traditional qualified plans.  Unfortunately, the lack of nondiscrimination rules means rather rigid rules about who must be able to participate and how often contributions must be made.  For this article, we’ll focus on the SIMPLE IRA. Any employer with 100 or fewer employees that does not sponsor any other retirement program can sponsor a SIMPLE IRA for its employees.  There is a relatively “simple” tax form that is used to establish the program—the Form 5304-SIMPLE or the Form 5305-SIMPLE.  A bank or other financial institution must be used as the depository for the IRA accounts.  SIMPLE IRA programs allow both employer and pre-tax employee contributions.  The employer can deduct its contributions when made. As with all good things, there are limits on the contributions (both employer and employee).  For 2017, each employee is limited to $12,500 in contributions, but any employee who is age 50 or older during 2017 can contribute an additional $3,000.  As for employer contributions, there are two options, and each calendar year that the SIMPLE IRA is in effect, one or the other must be implemented.  The first option is to match each employee’s contribution at a rate of 100% of the first 3% of compensation deferred.  This matching contribution rate can be reduced to as low as 1% of compensation in any two out of five years of SIMPLE IRA sponsorship.  Alternatively, the employer can contribute 2% of each eligible employee’s compensation (referred to as an employer “nonelective” contribution).  Under either option, the amount of compensation that can be considered for each employee is limited; the limit for 2017 is $270,000. All employee and employer contributions are immediately 100% vested when made.  Employees are able to withdraw both their contributions and the employer’s contributions at any time, but any withdrawals are subject to income taxes AND an additional excise tax of 10% if withdrawn prior to attaining age 59½. In addition to the contribution requirements for the SIMPLE IRA, there are also minimum coverage rules to consider.  The employer must make the SIMPLE IRA available to any employee who has compensation from the employer of at least $5,000 in any prior two years and is reasonably expected to earn at least $5,000 in the current year.  Owners can participate in the SIMPLE IRA program just like other employees. Eligible employees must be notified annually (at least 60 days prior to January 1) of their ability to participate in the program and what contribution option the employer selected (matching contributions or nonelective contributions).  Failure to give the required notice can have significant consequences.  For example, the employer can be required to make a contribution in the amount of 1.5% of the employee’s compensation, plus earnings, and plus any missed matching contributions for any employee who did not get the required notice.  So, an employer that sponsors a SIMPLE IRA must make sure all appropriate employee notices are given in a timely manner. There are no annual filing requirements for an employer that sponsors a SIMPLE IRA program.  Periodically the tax laws change and the IRS Form 5304-SIMPLE or Form 5305-SIMPLE must be updated, but typically the financial institution will notify the employer of the need to adopt an updated form. Admit it, there are days when retirement seems a million years away.  Unfortunately, no one has a million years to plan and invest for their life after work.  Social Security cannot, and it was never intended to, be the sole source of retirement income for retired workers, especially if there is a need or desire to maintain one’s current standard of living.  Maybe a SIMPLE-IRA program is right for your agri-business.   Reprinted with permission by Badger Common'Tater

2018 IRS Standard Mileage Rates Reflect Rising Fuel Prices

Posted on December 15, 2017, Authored by Mary Ellen Schill, Filed under Employment

The Internal Revenue Service has announced the optional standard mileage rates for computing the deductible cost of operating an automobile for business, medical, and moving expenses for 2018, and the increased rates reflect the increase in gasoline prices. Effective January 1, 2018, the optional standard mileage rates will increase to 54.5 cents per mile for business transportation, and increase to 18 cents per mile for travel relating to medical and moving transportation expenses. These mileage rates apply only to those expenses incurred or paid by a taxpayer on or after January 1, 2018 (and if reimbursed by an employer, reimbursed by the employer on and after that date). Expenses incurred prior to January 1, 2018 (whether reimbursed by the employer before or after that date) are still subject to the old 2017 rates (53.5 cents for business transportation, 17 cents for medical and moving transportation). The standard mileage rate for the deduction for charitable contributions remains unchanged from 2017 at 14 cents per mile.   This change in mileage rates is relevant to employers that reimburse employees for business transportation based on mileage. While there is no legal requirement that employees be reimbursed at the IRS standard rate, many employers have a policy of doing so. As a reminder, any payments to an employee based on business travel at a rate in excess of the IRS standard rate generally is taxable income to the employee. If you have questions regarding the above, please contact Mary Ellen Schill, the author of this article, or any of the attorneys in the Employment, Benefits & Labor Relations Practice Group of Ruder Ware.

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