The Task Of Calculating Payroll Tax

Calculation of payroll tax is always a daunting task. The calculation must be made based on the current tax structure announced by the government. As you may be aware, the structure is revised every year and therefore the computation of the tax must be made based on the existing structure. It is therefore needless to say, that the organization must be aware of the prevailing tax structures and other related laws. In order to compute the tax, the organization will have to get the necessary forms filled up by the employees.

The details of salary as declared in the form will have to be cross checked with the official records. After this, the organization will have to compute the tax payable by the employee. If there is any mistake in calculation, the employee may not get certain tax benefits and on the other hand, the organization may also be put to greater inconvenience. Remember, tax laws are very stringent and IRS may take strict action against the organization.

Role of Outsourcing Agencies

Considering the complexities involved in the computation of tax and other related issues, many organizations now prefer to outsource this task of deducting the tax from the employees’ payroll. There are several outsourcing agencies who undertake this tedious task of calculating the tax from the payrolls of the employees. You can browse for such agencies. These agencies in addition to computing the tax also help the employees in filling the appropriate forms. Wherever necessary, they also guide the employees on the relevant laws. Similar assistance is also provided to the organization.

They provide Comprehensive Tax Related Services

As already said, tax laws are very stringent. It needs an expert to understand and interpret them. Therefore, while selecting the outsourcing agency, the organization must ensure that the outsourcing agency has adequately qualified and experienced staff who can take up such tasks. Many times it may happen that in order to resolve some of the issues, discussions may have to be held with the IRS authorities. In such cases, the organization may not be able to effectively interact with the IRS authorities. But, the outsourcing agencies will undertake such tasks with ease. Once the agency is entrusted with the task of computing the tax, they resolve all the issues that crop up and wherever necessary, they will also hold necessary discussions with the IRS authorities. In short, these tax law firms represent the organization and all fronts and resolve the issues keeping in view the best interests of the organization.

Other Services Offered

Interestingly, many of these outsourcing agencies apart from computing tax from the payroll also offer other services. For example, there are several agencies who also offer HR services like pre-employment screening, workers comp insurance and various other such related services. These services are available for both domestic and international based organizations. The service charges for computation of tax are normally based on the total tax payable. In so far as other services like HR assistance, it varies from agency to agency. Before short listing, the organization must go through reviews of the particular outsourcing agency.

Payroll Massachusetts, Unique Aspects of Massachusetts Payroll Law and Practice

The Massachusetts State Agency that oversees the collection and reporting of State income taxes deducted from payroll checks is:

Department of Revenue

51 Sleeper St.

Boston, MA 02205

(617) 887-6367

(800) 392-6089 (in state)

http://www.state.ma.us/dor/dorpg.htm

Massachusetts allows the use of the federal W-4 form if exemptions claimed are the same for state and federal. Otherwise, you must use “M4 Massachusetts Employee’s Withholding Exemption Certificate” for Massachusetts income tax withholding.

Not all states allow salary reductions made under Section 125 cafeteria plans or 401(k) to be treated in the same manner as the IRS code allows. In Massachusetts cafeteria plans are not taxable for income tax calculation; taxable for unemployment insurance purposes. 401(k) plan deferrals are not taxable for income taxes; taxable for unemployment purposes.

In Massachusetts supplemental wages are required to be aggregated for the state income tax withholding calculation.

You must file your Massachusetts State W-2s by magnetic media if you are required to file your federal W-2s by magnetic media.

The Massachusetts State Unemployment Insurance Agency is:

Division of Employment Security

Charles F. Hurley Bldg.

19 Staniford St., 5th Fl. DET

Boston, MA 02114-2589

(617) 626-6855

http://www.detma.org/

The State of Massachusetts taxable wage base for unemployment purposes is wages up to $14,000.00.

Massachusetts requires Magnetic media reporting of quarterly wage reporting if the employer has at least 250 employees that they are reporting that quarter.

Unemployment records must be retained in Massachusetts for a minimum period of four years. This information generally includes: name; social security number; dates of hire, rehire and termination; wages by period; payroll pay periods and pay dates; date and circumstances of termination.

The Massachusetts State Agency charged with enforcing the state wage and hour laws is:

Department of Labor and Industries

Fair Labor and Business Practices Division

200 Portland St.

Boston, MA 02114

(617) 727-3465

http://www.ago.state.ma.us/

The minimum wage in Massachusetts is $6.75 per hour.

The general provision in Massachusetts concerning paying overtime in a non-FLSA covered employer is one and one half times regular rate after 40-hour week.

Massachusetts State new hire reporting requirements are that every employer must report every new hire and rehire and contractors over $600. The employer must report the federally required elements of:

  • Employee’s name
  • date of hire or contract
  • Employee’s address
  • Employee’s social security number
  • Employer’s name
  • Employers address
  • Employer’s Federal Employer Identification Number (EIN)

This information must be reported within 14 days of the hiring or rehiring.

The information can be sent as a W4 or equivalent by mail, fax or electronically.

There is a $25.00 penalty for a late report and $500 for conspiracy in Massachusetts.

The Massachusetts new hire-reporting agency can be reached at 800-332-2733 or 617-626-4154 or on the web at http://www.cse.state.ma.us/.

Massachusetts does not allow compulsory direct deposit.

Massachusetts requires the following information on an employee’s pay stub:

  • Gross and Net Earnings
  • Employer’s and employee’s name.
  • payment date
  • amount and nature of deductions
  • increases
  • straight time and overtime pay
  • hours worked
  • itemized deductions

Massachusetts requires that employee be paid biweekly or weekly; semimonthly or biweekly for FLSA-exempts or salaried employees (monthly if they agree).

Massachusetts requires that the lag time between the end of the pay period and the payment of wages to the employee not exceed six days if workweek is 5 or 6 days; 7 days after pay period if workweek is 7 days or less than 5 days.

Massachusetts payroll law requires that involuntarily terminated employees must be paid their final pay immediately and that voluntarily terminated employees must be paid their final pay by the next regular payday (if there is none, the next Saturday) or by mail if employee requests it.

Deceased employee’s wages of $100 must be paid to the surviving spouse, adult child, or parent (in that order) 30 days after death and if there is no will.

Escheat laws in Massachusetts require that unclaimed wages be paid over to the state after three years.

The employer is further required in Massachusetts to keep a record of the wages abandoned and turned over to the state for a period of 5 years.

Massachusetts’s payroll law mandates no more than $4.125 may be used as a tip credit.

In Massachusetts the payroll laws covering mandatory rest or meal breaks are only that all employees must have 30 minutes rest after six hours of work.

Massachusetts’s statute requires that wage and hour records be kept for a period of not less than two years. These records will normally consist of at least the information required under FLSA.

The Massachusetts agency charged with enforcing Child Support Orders and laws is:

Massachusetts Department of Revenue

Child Support Enforcement Division

51 Sleeper St.

P.O. Box 9492

Boston, MA 02205-9492

(800) 332-2733

http://www.cse.state.ma.us/

Massachusetts has the following provisions for child support deductions:

  • When to start Withholding? Next payday more than 3 days after notice.
  • When to send Payment? Within 3 days of Payday.
  • When to send Termination Notice? Within 3 days of payday.
  • Maximum Administrative Fee? $1 per payment.
  • Withholding Limits? Federal Rules under CCPA.

Please note that this article is not updated for changes that can and will happen from time to time.

Improve the Accounts Payable Process: Switch to MICR Check Printers

Accounts Payable is a critical function of every business, and it is important that invoices are paid quickly and efficiently. While personal check payments have been declining over the past decade, the majority of businesses still use check payments to pay their bills, according to the Federal Reserve’s 2016 Payment Study. MICR printers can offer these businesses the ability to minimize the risk of fraud and human error, while also saving money.

Before MICR Check Printers: Issuing A/P check payments manually

The majority of Acounts Payable (A/P) departments paying invoices through check payments are still using pre-printed check stock and a laser or dot matrix printer instead of a MICR printer. Those pre-printed checks alone pose some significant risks:

  • Cost – Pre-printed check stock is expensive to purchase, store, distribute and re-order if company information changes.
  • Fraud – A pre-printed check is the easiest instrument to alter or forge.
  • Human Error – Manual processes are vulnerable to mistakes.

After: Automating the Accounts Payable (A/P) check issuance process with MICR Printers

An integrated software and hardware solution created specifically for check printing creates a secure, cost-effective method for printing A/P invoices on-demand while providing control over the entire process. The Accounts Payable printing solution includes CheckPartner Enterprise software and secure MICR printers.

CheckPartner Enterprise combines the data transfer capabilities of the internet and the latest check printing technology to allow businesses to securely print checks with complete control of the process. Our secure MICR printers print static data, variable data and required signatures on blank check stock on-demand in a single printer pass. This combination of software and hardware offers control and visibility for printing A/P check payments on demand, offering greater efficiency for this business-critical function.

Listed below are the benefits of using a secure MICR solution for check printing.

  • Eliminate the need for pre-printed check stock – it save 82% in paper costs alone by switching to blank check stock and check printing technology
  • Virtually eliminate the risk of check fraud – no pre-printed checks to be pilfered
  • Automate a manual check payment process – automation eliminates the risk of human error

Is your company still using checks to pay employees? Save money and reduce the risk of fraud by implementing a secure MICR solution to print the checks. After all, who does not want to save some money and not lose sleep at night over the way they are distributing their employees earnings?