Several of the new rules that impact businesses in 2020 are changing. We mention them below, so you can prepare for them and make the necessary changes:
Federal Changes
These modifications will affect employers the most:
Taxes
The numbers for tax rules are changing because of the variations in cost-of-living adjustments. You’ll find differences in:
- Expenses limit of the first year for section 179. Read all about it here.
- Limits for Qualified Business Income (QBI). Read all about it here.
- Rates for pass-through entities. Read all about it here.
- How much they contribute to qualified retirement plans and the associated benefits
- HSAs and high-deductible health plans
- Benefits and individual coverage for HRAs
Moreover, a recent addition, the Form W-4, will be in play this year. It is specially designed for employees facing wage withholding issues and who’d like to file a claim. And, while, existing employees don’t have to file this form, we’d advise they do so. They will be able to confirm wage withholding more accurately when they do.
Additionally, the end of the previous year also signifies the expiration of medical leaves, paid family leaves, and work opportunity tax credit. However, you may retroactively extend them to January 1, 2020.
There are 6 important changes to 2020 filing for 2019 tax year. Read more here.
Overtime
This new government overtime rule mandates that employers use the new salary levels for determining overtime pay rules for each worker.
State and Local Changes
Every so often, many states will change their tax rules. Usually, they do so to:
- Raise revenue
- Make the taxes easier on businesses and residents
Thus, employees working in different states may need to remain apprised of the changes.
Taxes
To illustrate how various states may have different rules regarding taxes, let us look at the example of Illinois. This state will phase out the franchise tax. Therefore, we’d recommend reviewing the rules about any state-level taxes.
Likewise, the rules may also be different for companies carrying out a specific amount of business in one state without being physically located there. For instance:
- Hawaii state income tax is applicable should the gross income is $100,000 or higher. The same rule applies to gross profit from a sale of property in the state. Besides those, the rate is also a go for businesses carrying out 200 or more in-state separate transactions.
- In Texas, companies must pay the franchise tax if their gross receipts from in-state transactions amount to $500,000 or more.
Hawaii and Texas are only using economic nexus in this fashion now. Portland and San Francisco already do so. Moreover, other states could soon follow suit. It’d be better for companies to stay alert!
What happens with tax when you use the same assets for both business and personal. Let’s find out.
Minimum Wage
The federal hourly rates are $7.25. Find which localities and states have raised their hourly rates. The change may be a result of legislation or to match the higher cost-of-living adjustments. Either way, it will work as long as it is higher than $7.25/hour.
Employers, make sure you do put up the posters that show the new tax rates for 2020. Failing to do so may earn you a penalty!
Workplace
The rules of the workplace are changing too. Here are some examples from different states:
- In California, the degree of accommodation at offices for lactation has increased. Also, no hair texture- or style-based discrimination can be practiced.
- For Colorado, even wage theft doesn’t take the right of any employee to get paid. The employer who refuses to do so commits a felony!
- Preventing sexual harassment gains more importance – via mandatory training — in offices in Illinois.
- New Yorkers may relax because any newly drafted NDAs will have a clause where employees can speak with law enforcement freely. The bars must now inquire about salary history prior to hiring.
Are you ready for 2020? As you can see, you’ll have to face it with more than resolutions. We’d suggest you get started!
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances. Akif CPA will not be held liable for any problems that arise from the usage of the information provided on this page.
