Some brief notices that may affect your company heading into the new year:
Starting in 2008 - Tax Law Changes
Self-Employment Tax Contribution Base Increases. The maximum amount of self-employment income subject to Social Security taxes will increase, probably to about $102,000 in 2008, up from $97,500 in 2007. (The exact amount was not set at this writing. Check this Web site for updates.) The self-employment tax rate remains 15.3 percent. The full rate applies to the first $102,000 of self-employment income; after that only the 2.9% Medicare tax applies.
Social Security Tax Contribution Base Increases. The maximum amount of wages subject to Social Security tax will increase to about $102,000 in 2008, up from $97,500 in 2007. (The exact amount was not set at this writing. Check this Web site for updates.) The 7.65 percent tax on employers and employees will apply to the first $102,000 or so of wages; after that only the 1.45% Medicare portion of the tax will apply.
Business Standard Mileage Rate Rises. The standard business mileage rate will increase for miles driven in 2008 for business, up from 48.5 cents per mile in 2007. (The exact 2008 rate was not set at this writing. Check this Web site for updates.) Remember that you can deduct the cost of parking and tolls in addition to the mileage allowance.
Fence Wizard Update on this item:
Tax-free Parking for Employees. Starting in 2008, firms can pay for $220 a month of parking tax free for employees, up $5 per month from 2007. The cap on tax-free transit passes rises to $115 a month, up $5 a month from 2007.
Increased Section 179 Expense Deduction. The maximum amount of equipment placed in service in 2007 that businesses can expense increases to $128,000, a $3,000 increase from 2007. The annual investment limit increases to $510,000 for 2008, up from $500,000 the year before. Thus, you won't begin to lose the benefit of expensing until you place more than $510,000 of assets in service in 2008.IRS 2008 Benefit Plan Limits Announced (feed courtesy of Strategic HR Lawyer)
The IRS recently announced benefit plan limits for 2008. Here are some of the highlights:
- Maximum 401(k) Contributions - $15,500
- Maximum Compensation Limit - $230,000
- Highly Compensated Employees - $105,000
- Annual Contribution Limit for Defined Contribution Plans - $46,000
- Annual Benefit Limit for Defined Benefit Plans - $185,000
- Age 50 and Older Catch-Up Contributions (for other than SIMPLE Plans) - $5,000
- Annual Contribution Limit for 457 Plans - $15,500
CA Law will take away hand held cell phones and all phones from CA teenage drivers July 1st