In December President Obama signed legislation that will renew more than 50 expired tax breaks. Included among these tax breaks are an increase in tax-free qualified public transportation and van-pool fringe-benefit arrangements to $250 a month from $130 a month for 2014. This retroactive provision applies to taxpayers for 2014 filing returns in 2015.
The IRS has not yet issued any directive to employers as to whether they need to account for the difference when they report taxable amounts on 2014 W2s to employees.
The Tax Increase Prevention Act of 2014 breaks down the payroll tax-collection authority of Professional Employer Organizations (PEOs) by requiring them to meet minimum IRS standards before they can be certified as collection service bureaus. In addition, the Act ensures that professional employer organizations operate as employers of their client employees only to the extent that they perform covered tax functions.
Check back with Optimum’s blog to find out if the IRS issues any orders for employers regarding changes in W2s for 2014. To ensure your processes are always compliant, check out our Payroll Software for automatic federal, state, and local updates.