Developments in Tax and Business
W-2 Reporting of Health Coverage
The health care reform law included a new requirement that the cost of employer-sponsored health insurance coverage be reported on Form W-2. The new requirement was to take effect starting in 2011, but the IRS has made it optional for all employers for the 2011 Form W-2. And for eligible small employers, the new requirement will be optional through at least 2012.
2012 Plan Limits
The IRS has announced increases in retirement plan contribution limits for 2012. In general, plan participants in 401(k) plans can now defer up to a maximum of $17,000 of wages in 2012. The limit for employees age 50 or older making catch-up contributions stands at $22,500. The limit on annual additions to a defined contribution plan account is $50,000 for 2012.
Social Security Limits for 2012
The Social Security Administration announced that the taxable wage base for 2012 is $110,100, up from $106,800 in 2011. Wages above this cap are not subject to Social Security tax, but all wages are subject to Medicare tax.