On May 18, 2016, President Obama and Secretary Perez announced the publication of the Department of Labor’s final rule updating the overtime regulations.
The Final Rule focuses primarily on updating the salary and compensation levels needed for Executive, Administrative and Professional workers to be exempt. Specifically, the Final Rule:
1. Raises the salary threshold indicating eligibility from $455/week($23,660 per year) to $913/week ($47,476 per year)
2. Sets the total annual compensation requirement for highly compensated employees (HCE) at $134,004 (currently at $100,000)
3. Establishes a mechanism for automatically updating the salary and compensation levels every three years beginning January 1, 2020
Additionally, the Final Rule amends the salary basis test to allow employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level.
The final rule will become effective on December 1, 2016, giving employers six months to assess and comply. The final rule does not make any changes to the duties test for executive, administrative and professional employees.
For more detailed guidance on the rule, visit these links:
Nothing in the Fair Labor Standards Act – or in the overtime rule – requires the choice between flexible work arrangements or opportunities for career advancement and complying with basic labor standards. There is no requirement that a worker must have a predetermined schedule, and nothing prohibits working whenever, wherever or however the worker and the employer agree.
The FLSA requires that employers keep certain records to ensure that workers get paid the wages they earn and are owed, it’s up to the employer to choose the method that works best for them and the needs of their workforce. There’s no requirement that employees “punch in” and “punch out.” Employers have flexibility in designing systems to make sure appropriate records are kept to track the number of hours worked each day.
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As the end of the year approaches, it is a good time to think of planning moves that will help lower your tax bill for this year and possibly the next. A few unknown factors include turbulence in the stock market, overall economic uncertainty, and Congress’s failure to act on a number of important tax breaks that expired at the end of 2014. Some of these tax breaks ultimately may be retroactively reinstated and extended, as they were last year, but Congress may not decide the fate of these tax breaks until the very end of 2015 (or later). These breaks include:
Higher-income earners have unique concerns to address when mapping out year-end plans. The 3.8% net investment income (NII) tax and the 0.9% Medicare tax on wages are still in effect. Both taxes come into play when income levels reach $250,000 for joint filers, $125,000 for married couples filing separately, and $200,000 in any other case.
Social Security loophole ending May 1, 2016 – The “file and suspend” loophole is a combination of Social Security rules that provides a legal benefit-claiming strategy for married couples where one partner is at least 66 years old. It essentially allows one spouse to claim the Social Security spousal benefit, while their other spouse’s retired worker benefit continues to grow in value by 8% a year until they claim the maximum benefit at the age of 70. After May 1, recipients will be able to claim whichever payment is higher (the retiree or the spousal benefit), but not game the system by switching from one to the other.
Employer Health Insurance Mandate
South Carolina Tax Credits – for those of you in alternative minimum tax (AMT) that won’t benefit from a deduction of state taxes paid, you might want to consider paying your SC liability via a SC tax credit. And even those that aren’t in AMT, some of the available credits have charitable purposes and some can be purchased at discounts. Below are some of the credits and when they are available:
Additional Tax Planning Actions to Take Before December 31, 2015
Businesses and Business Owners
These are just some of the year- end steps that can be taken to save taxes. We will keep you updated on Congress’ decision to extend expired tax breaks. If you would like for us to prepare any year-end projections or discuss any of these strategies, please give us a call.
On Saturday the budget proviso creating the exceptional needs program was passed through conference committee. It permitted a total of $8M in tax credits for this program. We are now waiting for Governor Haley to sign this into law. Unlike last year, this credit is expected to go quickly. Credits are awarded on a first-come, first-served basis. We expect most of this to occur on July 1 or July 2nd. Credit will work just like last year so only can take up to 60% of your SC liability.
As soon as the window opens up, you will need to send in the TC-57A form (They are stating that this form could be updated so check the website) to the DOR requesting the tax credit. Email (from last year’s form) is: email@example.com.
We also want to address that there are numerous agencies that sponsor the exceptional needs program. We encourage you to read about all of the agencies and determine the one that fits your beliefs and that produces the greatest impact in the community. The credit works the same for all of them – you just have to tell SCDOR which program you want to sponsor. Below are the agencies we know about and a link to their websites.
St Thomas Aquinas (Catholic based organization but 82% of its recipients are non-Catholic, public school children): http://stasfo.org/
Palmetto Kids First (general program): https://palmettokidsfirst.org/
Advance Carolina (SC Christian School Association): http://advancecarolina.com/
D.E.S.K (general program): http://www.scdesk.org/
Lastly, we have heard that there has been allotted $4M for a credit for individuals whose children are enrolled in special needs programs. This credit is $10K per student and the requirement is that you have had to pay at least that in tuition for the tax year for a special needs child.
South Carolina taxpayers impacted by the 2012 security breach at the SC Department of Revenue are able to enroll for up to one year of identity and credit protection coverage with CSID by visiting www.scidprotection.com or by calling 855-880-2743. Enrollment will remain open until October 1, 2014.
South Carolina’s taxpayers, their dependents, and businesses who filed an electronic South Carolina tax return between 1998 and 2012 may be eligible for this coverage and are encouraged by the SCDOR to enroll with CSID
Rules for Clothing and Household Items
Guidelines for Monetary Donations
To help plan your holiday-season and year-end giving, here are some additional reminders:
The best advice is to keep good records and receipts!!!
If you plan to hire soon, consider hiring veterans. By doing so, you may be able to claim the federal Work Opportunity Tax Credit (WOTC) worth thousands of dollars.
You must act soon. The WOTC is available to employers that hire qualified veterans before December 31, 2013.
Here are six key facts about the WOTC: