Small Business ROCKS!

Colorado Update

Although we have mentioned some of these before, there has also been some new legislation that may impact some small businesses.

• Colorado's COVID related Public Heath Emergency (PHE) leave is still in effect. You can refer to our prior newsletter on this topic (sent in January 2022) but as a reminder this legislation requires an employer to provide up to 80 hours of paid leave when an employee cannot work due to COVID.
• FAMLI (Family and Medical Leave Insurance)- this is a new obligation on CO employers and employees that was approved by voters in 2020. Although this will not have immediate effect, payroll deductions (and potentially employer contributions if you have more than 9 employees) will start on January 1, 2023. However, the actual paid leave benefits will not go into effect on January 1, 2024 (2023 is essentially a year to help establish the funds that will pay this benefit). I highly recommend you click the FAMLI link below which goes to a very useful/informative webinar from the CO DOL on this topic. It is 20 minutes long and does more justice to this topic than I can in this newsletter.
• Retail Delivery Fee (RDF) - this is a new fee that goes into effect on July 1st, 2022. This fee impacts any business that uses a motor vehicle (theirs or a 3rd party) to deliver any personal property that is subject to CO sales and use tax. The fee is $.27 per delivery and must be shown on the receipt as "retail delivery fee". The fee must be remitted to CO on the same deadline as your sales tax return but will be filed via a new form (DR 1786) which is not available at this time.  We have several questions on this new fee and are seeking clarification from the CO Department of Revenue. In the meantime, the RDF link below has some additional information in case you have not received this already. As we understand it, if you use a third party delivery service (DoorDash, Grub Hub, etc.) and they currently collect and remit sales tax on the deliveries, they will also need to collect and remit this new fee. 

Federal Update

Although there is not much new legislation at the federal level as Congress continues to be in a stalemate, we are showing below some key updates/data points that may impact you on your personal taxes if you participate in these items.

(Note S = Single, HOH = Head of Household, MFJ - Married Filing Joint)

Standard Deduction

• S - $12,950 (up from $12,550 in 2021)
• HOH - $19,400 (up from $18,800 in 2021)
• MFJ - $25,900 (up from $25,100 in 2021)
• Additional deductions if blind or over 65 all went up $50

Kiddie Tax Limit

• No tax if under $1,150 (up from $1,100 in 2021), taxed at child's rate if under $2,300 (up from $2,200 in 2021), and taxed at parents rate if over $2,300.

Child Tax Credit

• $2,000 with a maximum refundable amount of $1,500 - this is DOWN from the special allowance made in 2021 when the credit was $3,000 and all of it was refundable.  The increased deduction of $3,600 for children under age 6 has also be discontinued.

Annual Gift Tax Exclusion

• $16,000 (up from $15,000 in 2021)

Capital Gain Rates/Taxable Income Limits

• S - 0% up to $41,675, 15% up to $459,750, 20% above $459,750
• HOH - 0% up to $55.800, 15% up to $488,500, 20% above $488,500
• MFJ - 0% up to $83,350, 15% up to $517,200, 20% over $517,200

Retirement related limits (excluding Social Security)

• IRA (traditional or Roth) - No change in max. contribution limit - $6,000 plus $1,000 catch-up if over 50 years old.
• Roth phase out range
• S/HOH - $129,000 - $144,000 (band is up $6,000 from 2021)
• MFJ - $204,000 - $214,000 (band is up $6,000 from 2021)
• 401K - $20,500 max. contribution (up from $19,500 in 2021) plus $6,500 catch-up if over 50 years old.
• SIMPLE IRA - $14,000 max. contribution limit (up from $13,500 in 2021) plus $3,000 catch-up if over 50 years old
• SEP and defined contribution plan (Profit Share Plan) - $61,000 max. contribution limit (up from $58,000 in 2021)

Social Security

• Compensation subject to 6.2% FICA tax - $147,000 (up from $142,800)
• Max earnings allowed to still receive full SS benefits (if under full retirement age) - $19,560 (up from $18,960 in 2021)
• Income limit on taxability of SS benefit (% of benefit taxable)
• S/HOH - 0% if under $25,000, 50% if under $34,000, 85% if over $34,000
• MFJ - 0% if under $32,000, 50% if under $44,000, 85% if over $44,000

You may also find the attached fact sheet from our strategic partner (ADP) very useful as a reference.