New 2015 Limits (Direct from the IRS)
What you need to know
Social Security wage base
Wages are taxed up to $118,500 for FICA in year 2015 (up from $117,000 in 2014). The 2015 rates for FICA (6.2%) and Medicare (1.45%) remain unchanged from 2014.
Funding 2015 retirement plans
Funding limits for employee payroll contributions to various types of "qualified" retirement plans during 2015 are as follows:
- 401(k), 403(b) annuity, and 457 government
- Regular amount: $18,000
- Additional catch-up*: $6,000
- Regular amount: $12,500
- Additional catch-up*: $3,000
*An employee must be at least age 50 by 12/31/15 to contribute the "catch-up" contributions.
Note: The maximum compensation which can be "counted" for defined contribution retirement plans is $265,000 for 2015 (which produces a funding "cap" of $53,000 in 2015).
Health savings accounts
The 2015 annual funding limits to health savings accounts (HSAs) increases to $3,350 for self-only or $6,650 for family HSAs. Employees age 55 - 65 can fund additional "catch-up" amounts of $1,000 to HSAs (to $4,350 for self-only and $7,650 for family HSA accounts). These 2015 annual funding limits are the combined contribution amounts between employee and employer funding.
Note: It is always smart to include employee HSA contributions as an "includable benefit" in a written Section 125 cafeteria plan document, in order to save FICA/Medicare taxes.
Flexible spending accounts (FSA)
The maximum amount an employee can contribute to a health FSA during 2015 is $2,550 (up $50 from 2014). Contributions to "dependent care" FSA accounts (for child care) are limited to $5,000 in 2015; OR $2,500 if "married filing separately" as your tax filing status.
Note: Make sure you have a written Section 125 plan document if you sponsor FSAs.
An employer may reimburse or directly pay employees for up to $250 per month during 2015 for parking as a non-taxable fringe benefit. The parking must be job-related and on or near the employer's business location.
Note: "Downtown" employers may want to consider providing non-taxable parking benefits in lieu of taxable employee wages.
Beginning on Jan. 1, 2015, the standard mileage rates for the use of a car, van, pickup or panel truck will be:
- 57.5 cents per mile for business miles driven; up from 56 cents in 2014
- 23 cents per mile driven for medical or moving purposes; down .5 cents from 2014
- 14 cents per mile driven in service of charitable organizations
An employer may choose to reimburse employees at the IRS rate for business miles driven on their personal vehicle without the reimbursement being reported as taxable wages to the employee. Reimbursements above the IRS mileage rate must be treated as taxable wages.
Note: An employer is NOT required to use the IRS mileage rate for employee reimbursements; therefore, it can reimburse more (taxable on excess) or less than the IRS rate listed above.
How much can students earn in 2015?
Students and/or children of business owners can earn up to $6,300 in wages during 2015 without paying any Federal income tax. Please also note this: The wages paid to the owner's children/grandchildren must be reasonable amounts based on the actual work completed. Maintain records to prove that wages paid to family members are "reasonable."
Have a question? Contact us!
Senior Vice President
Cindy McSwain leads AGH’s outsourcing services group. Her team provides payroll, accounting, funds disbursement, controller, and other financial outsourcing services to numerous clients throughout the U.S. Prior to directing the outsourcing group, Cindy served AGH’s audit clients for 10 years, working with a wide range of middle-market, closely held and family-owned clients.
Her current clients cross many industry sectors, including manufacturing, distribution, restaurants, retailers, medical, and not-for-profit. She has participated in numerous SEC filings and public registrations and has experience in mergers and acquisitions. Cindy is a certified public accountant and a member of both the American Institute of Certified Public Accountants and the Kansas Society of Certified Public Accountants.
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