Tag Archives: tax

Employee or Independent Contractor?

Deciding whether an individual is an employee or an independent contractor can be difficult. This is a recurring question whenever employers are determining how to treat payments for services. The IRS outlines three categories to help define the degree of control that an employer has and the independence that an individual has:

Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?

Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)

Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

If it is still not clear as to how an individual should be classified, the IRS gives employers the option to file the Form SS-8. The IRS will then review the facts and circumstances and make an official determination on the individual’s working status.

Tennessee Releases 2017-2018 Tax Rate Notice

TENNESSEE EMPLOYERS: The state has recently mailed out the unemployment tax rate notice for the taxable year 2017-2018. This year the state is using premium rate table six to assign tax rates to employers.

Are you sure that the numbers on the tax rate notice is correct? Should your tax rate be revised? Are the figures used in the tax rate calculation accurate?

Contact us today to see how Dunn Corporate Resources helps ensure that employers recieve the LOWEST POSSIBLE tax rate. We are happy to offer a no-cost analysis of you unemployment tax account to see what savings may be available!

Case Study – Saving a client 36% through a Private Disability Plan

Case Study – Saving a client 36% through a Private Disability Plan

The unemployment tax rate is not the only tax rate that Dunn Corporate Resources (DCR) helps employers reduce. The majority of our employers are unaware that savings are available in other areas such as temporary disability. (In New Jersey, “TDB” is the term used for mandated short term disability coverage). In fact, earlier this year, DCR helped an auto group with 600 employees save $40,000 on their state mandated disability taxes.

Dunn Corporate Resources proposed that the auto group look into moving off of the state plan to a privatized plan. Since we receive notification of most clients’ tax rates, we knew going in that we had an excellent chance of success. We took the key data for the auto group and received bids from several insurance carriers that specialize in private disability plans. We presented, and our client accepted, the best offer.

The result? The auto group received a 36% reduction in their tax rate. This generated a dollar savings of $40,000 over the next two years.

Savings was not the only benefit to switching to a private plan. Of equal, or perhaps, greater importance, is the dramatic improvement in claims processing. This directly impacts your employees at a vitally important time. If someone is sick or injured and unable to work for any extended period of time, the last thing they need is to wait for over two months between their last paycheck and receiving a disability check.

With a private plan, claims get processed and paid in one week or less with our carrier, compared to the state plan where claims get processed in an average of nine weeks. Once employee’s claims are processed, they receive payment via check with the private carrier instead of a pre-loaded debit card through the state plan.

The bottom line? Lower costs and better benefits for your people.

Ask your Dunn representative today about exploring the potential savings in your temporary disability plan! If you are already in a privatized disability plan, ask us about getting a competitive quote!

Voluntary Contributions: What are they and how do they work?

What is a voluntary contribution?

Simply stated, a voluntary contribution is a way of “buying down” your tax rate in order to produce a savings over the course of a year. By making a voluntary contribution payment, an employer will reduce their tax rate by a single bracket or sometimes two depending on the tax rating system in a certain State. Once this voluntary payment is made, the sum of the following tax payments at the new rate plus the amount of the voluntary contribution should be less than the sum of tax payments at the original tax rate – resulting in a net savings over the course of a year.

Voluntary contributions can only be made by contributory employers. A contributory employer pays quarterly unemployment insurance tax at an assigned rate based on experience. A reimbursable employer repays the state agency dollar for dollar for all benefits paid to former employees. There are pros and cons to each, however reimbursable employers do not have the benefit of making voluntary contributions.

Each state may have different deadlines to make a voluntary contributions, so make sure you stay within the time limits of your state. Many states allow for a deadline of 30 days after the mailing date of the unemployment tax rate notice.

How do you know if it’s beneficial to make a voluntary contribution?

Deciding whether to make a voluntary contribution can be confusing. Here are some easy steps:

The first step is to understand how your state’s tax system works and how your tax rate is calculated. New Jersey simply divides the reserve account balance by average taxable wages to produce the reserve ratio. The reserve ratio is then translated into a tax bracket based on the current year’s tax table. The state of New York calculates the rate the same way, however adds an additional rate called a subsidiary rate, which is derived from a separate tax table. It’s important to keep track of each moving part of your tax rate as a voluntary contribution can affect more than one part of the rate, as seen in the case of New York.
Once you understand the method your state uses to calculate the tax rate you will need to determine how much money to add to your reserve account in order to get to your desired reserve ratio. This sum of money is called the “voluntary contribution”. Remember: reserve ratio = reserve account balance / average taxable wages.
After you determine the amount needed to achieve the desired reserve ratio, the next step is to multiply your average taxable wages by the desired tax rate. This will give you the projected amount that you will pay in UI taxes throughout the next year.
Add the value of the voluntary contribution you found in step to the total projected UI taxes found in step three.
Subtract the value found in step four from the total amount of UI taxes that will be paid at the original UI tax rate. If this is a positive number then it is beneficial to make a voluntary contribution. If this is a negative number, it will not be beneficial to make a voluntary contribution.

Can everyone make a voluntary contribution?

The answer is no. As mentioned before, you must be a contributory employer to make a voluntary contribution. Most government entities and nonprofit organizations are not contributory employers and cannot make voluntary contributions.

Only about half of the states in the U.S. allow employers to make voluntary contributions. Refer to the chart below to see if a voluntary contribution is allowed in your state:

State

Voluntary Contribution

Alabama	No
Alaska	No
Arizona	Yes
Arkansas	Yes
California	No
Colorado	Yes
Connecticut	No
Delaware	No
Florida	No
Georgia	Yes
Hawaii	No
Idaho	No
Illinois	No
Indiana	Yes
Iowa	No
Kansas	No
Kentucky	Yes
Louisiana	Yes
Maine	Yes
Maryland	No
Massachusetts	Yes
Michigan	Yes
Minnesota	Yes
Mississippi	No
Missouri	Yes
Montana	No
Nebraska	Yes
Nevada	No
New Hampshire	No
New Jersey	Yes
New Mexico	No
New York	Yes
North Carolina	Yes
North Dakota	Yes
Ohio	Yes
Oklahoma	No
Oregon	No
Pennsylvania	Yes
Rhode Island	Yes
South Carolina	No
South Dakota	Yes
Tennessee	No
Texas	Yes
Utah	No
Vermont	No
Virginia	No
Washington	Yes
West Virginia	Yes
Wisconsin	Yes
Wyoming	No
District of Columbia	No
Puerto Rico	No
Virgin Islands	No

To see whether it would be advantageous to make a voluntary contribution for your organization, contact us today! One of our experts will be more than happy to assist you.