Just in time for the New Year, the IRS issued the 2016 version of the Employer’s Tax Guide (Circular E).
The social security tax rate remains unchanged at 6.2 percent each for the employee and employer. The social security wage base limit of $118,500 is also unchanged from 2015. The Medicare tax rate remains at 1.45 percent each for the employee and employer. And, the 2016 amount for one withholding allowance on an annual basis is $4,050.
The new filing date for both electronic and paper Forms W-2, W-3, and 1099-MISC is January 31, 2017. W-2 and W-3 forms are filed with the Social Security Administration, and 1099-MISC forms must be filed with the IRS.
The Work Opportunity Tax Credit for hiring qualified veterans has been extended. The credit is available to qualified tax-exempt organizations who hire eligible unemployed veterans to begin work after December 31, 2014, and before January 1, 2020. This credit can be claimed against an organization’s payroll tax liability. Click here for more information and instructions on claiming the credit.