The Firm of Gardner & Billing, CPAs PLLC

WASHINGTON--The Internal Revenue Service today released instructions to help employers implement the 2011 cut in payroll taxes, along with new income-tax withholding tables that employers will use during 2011. Workers will see their take-home pay increase during 2011 because the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 provides a payroll tax cut for employees.  The act reduces the Social Security tax withholding rate from 6.2 percent to 4.2 percent of wages paid. The new law also maintains the income-tax rates that have been in effect in recent years. Employers should start using the new withholding tables and reduce the amount of Social Security tax withheld as soon as possible in 2011 but no later than Jan. 31, 2011.  Publication 15, (Circular E), Employer’s Tax Guide, containing the extensive wage bracket tables that some employers use, will be available on IRS.gov in a few days. The IRS recognizes that the late enactment of these change

All Montana Counties except Big Horn, Carbon, Flathead, Gallatin, Glacier, Granite, Lake, Lincoln, Mineral, Missoula, Park, Pondera, Ravalli, Sanders, and Stillwater have been determined to be drought free for the 12 months ending with August of 2010. As a result, if you have deferred livestock sales resulting from drought in previous years, and you haven’t replaced the livestock yet, you will be required to do so in the calendar year 2011. If you fail to replace the livestock, and haven’t replaced with other depreciable property, you will need to amend your return for the year of the original sale and recognize the income from the livestock sale.

The Internal Revenue service has announced the 2011 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, medical, moving, or charitable purposes.  Beginning January 1, 2011 the standard mileage rates for these uses will be: 51 cents per mile for business miles driven 19 cents per mile for medical or moving purposes 14 cents per mile for service of a charitable organization A taxpayer may not use the business standard mileage rate for a vehicle they are currently depreciating or have depreciated in the past.  The standard mileage rate also is used instead of using actual vehicle costs such as fuel, repairs, etc.  Therefore a comparison between actual costs and the standard mileage rate are recommended. We recommend keeping an odometer log book to properly calculate and record business mileage.  For more information please contact our office.

The U.S. Treasury has proposed changes to no longer maintain the paper deposit coupon system after 2010.  This means that you will no longer be able to take your paper payroll coupon to the bank to make your payroll tax deposits.  Deposits will need to be done electronically via the internet or telephone through the Electronic Federal Tax Payment System (EFTPS).  If you have not been making deposits and owe less than $2,500 on your payroll report you can continue to send a check with your payroll report. If you are an employer, you may have already received a notice from EFTPS and the Department of Treasury or your bank, about this change.  Our office will be glad to assist you in completing your enrollment in EFTPS. We currently offer the service of initiating the payment for clients through EFTPS.  If you are interested in this service please contact us at your convenience.

Effective January 1, 2011, the mimimum wage for Montana employees will increase by ten cents to a rate of $7.35 an hour.  Therefore, all hours worked after midnight on December 31, 2010 by minimum wage employees need to be paid at this higher rate.

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This blog is sponsored by The Firm of David E. Gardner, CPA . We will be updating this blog with prudent information so stay tuned.