Higgins & Associates, CPA Inc.

FAQ's
  • What are the 2014 payroll tax rates and limits?

  • When am I required to file a 1099-MISC?

  • When can I throw away my records?

  • What information should I bring to my tax appointment?

  • Can I mail or drop off my tax information without an appointment?

  • Where's my IRS refund?

  • How much gain can I exclude on the sale of my principal residence?

What are the 2014 payroll tax rates and limits?

Social Security Tax

The employee tax rate for Social Security for 2014 is 6.2% (amount withheld).  The employer tax rate for social security is also 6.2% (12.4% total).  Do not withhold social security tax after an employee reaches $115,500 in social security wages.

Medicare Tax

The employee tax rate for Medicare is 1.45% (amount withheld). The employer tax rate for Medicare tax is also 1.45% (2.9% total).  There is no limit on the amount of the wages subject to Medicare tax.

Federal Unemployment (FUTA) Tax

The FUTA tax rate is 0.8% after the credit.  The tax applies to the first $7,000 that you pay to each employee as wages during the year.

Unemployment Insurance (UI)

The UI taxable limit for 2014 is $7,000 per employee, per year.  *The UI tax rate for new employers is 3.4 percent (.034) for up to three years.  The UI tax rate for experienced employers varies based on each employer's experience and the balance in the UI Fund.

Employment Training Tax (ETT)

The 2014 ETT rate is 0.1 percent (.001) of the first $7,000 per employee, per year.

State Disability Insurance (SDI) and Paid Family Leave (PFL)

The 2014 SDI tax rate (which includes PFL) is 1.2 percent (.12).  *The SDI taxable wage limit is $102,960 per employee, per year.  The 2014 maximum weekly SDI/PFL benefit award is $$$$.  PFL is a component of SDI. 

*UI, ETT, and SDI rate information is available on the Employment Development Department (EDD) 24-hour automated call system at (916) 653-7795.

When am I required to file a 1099-MISC?

File Form 1099-MISC, Miscellaneous Income, for each person to whom you have paid:

  • At least $600 in rents, services (including parts and materials), prizes and awards, other income payments, medical and health care payments, crop insurance proceeds, cash payments for fish (or other acquatic life) you purchase from anyone engaged in the trade or business of catching fish, or, generally, the cash paid from a notional principal contract to an individual, partnership, or estate;
  • Any fishing boat proceeds; or
  • Gross proceeds to an attorney

Report on Form 1099-MISC only when payments are made in the course of trade or business.  Personal payments are not reportable.

When can I throw away my records?

The following question should be applied to each record as you decide whether to keep a document or throw it away.

Are the records connected to assets?

Keep records relating to property until the period of limitations expires for the year in which you dispose of the property in a taxable disposition.  You must keep these records to figure any depreciation, amortization, or depletion deduction and to figure the gain or loss when you sell or otherwise dispose of the property.

If you received property in a non taxable exchange, you must keep the record on the old property, as well as on the new property, until the period of limitations expires for the year in which you dispose of the new property in a taxable disposition.

What should I do with my records for nontax purposes?

When your records are no longer needed for tax purposes, do not discard them until you check to see if you have to keep them longer for other purposes.  For example, your insurance company or creditors may require you to keep them longer than the IRS does. 

The IRS statue is 3 years and the State of California statue is 6 years.  We recommend you keep your tax information for 7 years.

What information should I bring to my tax appointment?

Please bring your completed tax organizer and all W-2's, 1099's.

For those that itemize their deduction please don't forget to include the following:

  • Medical expenses
  • Property Taxes
  • DMV Licenses
  • Mortgage Interest
  • Contributions

Can I drop off or mail my tax information without an appointment?

Yes! 

Where's my IRS refund?

Okay now, Where's my refund?

Home Sale Exclusion

Under Section 121 of the Internal Revenue Code, a taxpayer can exclude up to $250,000 of the gain on the sale of a home if the taxpayer:

• Owned the home for at least 2 years during the 5-year period ending on the
  date of the sale (ownership test),
• Used the home as his or her principal residence for at least 2 years during
  the 5-year period ending on the date of the sale (use test); and
• Did not exclude gain from the sale of another home during the 2-year period
  ending on the date of the sale. 

Taxpayers who are married can exclude up to $500,000 of the gain on the sale of a home if:

• The taxpayers file a joint return for the year of the sale;
• Either spouse meets the ownership test;
• Both spouses meet the use test;
• Neither spouse excluded gain from the sale of a home during the 2-year
  period ending on the date of the sale.