American Payroll Association (APA) Basic Guide to Payroll, 2013 Edition
It's more important than ever to be in compliance with payroll laws and regulations! How do you stay in compliance and avoid penalties? The APA Basic Guide to Payroll is written to make understanding the laws and regulations as easy as possible. And this single-volume guide is filled with tools to help you apply the law and make proper calculations – with ease!
On January 31, 2011 a new Puerto Rico Internal Revenue Code, Act No. 1 of January 31, 2011, entitled "Internal Revenue Code for a New Puerto Rico," (2011 Code), was signed into law, and is part of the public policy of More Money in Your Pocketbook, and constitutes the second and final phase of the corporate income and personal income tax reform. The 2011 Code grants relief to taxpayers averaging $1.2 billion per year during each of the next six years (more than $1,500 per year for each taxpayer). More Money in Your Pocketbook is aimed to fulfilling the following commitments: (1) relieving taxpayers with a reduction in tax rates for all Puerto Ricans; (2) establishing a fair, simple tax system with aggressive measures to combat evasion; (3) providing incentives to work and relief for the elderly; and (4) fostering economic development and job creation.
Individuals. The 2011 Code is designed to reduce the tax on individuals. For example, taxpayers with gross income of less than $20,000, accounting for 46% of taxpayers in Puerto Rico, will not pay tax. Additionally, the personal exemption will increase. Under the 2011 Code, the exemption increases to $3,500 per taxpayer. (This includes individual taxpayers and married taxpayers filing separate returns; in the case of married taxpayers filing joint returns, the exemption will be $7,000 ($3,500 per taxpayer.) Previously, the personal exemption was $1,300 for single taxpayers, $1,500 for married taxpayers filing separate returns, and $3,000 for married taxpayers filing joint returns or heads of household. The dependent deduction remains at $2,500 per dependent, and a new personal exemption for veterans of $1,500 is also added.
Also, a deduction is established for taxpayers whose sole source of income is employee compensation, professional services, sole proprietors, gain on the sale of property, pensions or alimony. For the 2011, 2012, 2013 and 2014 tax years, the deduction will be $9,350, $7,850, $5,350 and $2,350, respectively. In the case of a married couple where both spouses are employed, each will be entitled to this deduction individually. The deduction will be available in full to taxpayers whose income does not exceed $20,000, but will be reduced by $0.50 for each dollar of income above $20,000.
For credits, the earned income tax credit is maintained and the income limit is increased. Under the 2011 Code, the maximum credit amount increases by $50 (0.5%) each year up to 6% of income earned in the 2016 tax year, with a maximum credit of $600. Previously, the earned income tax credit is 3% of income earned, up to a maximum of $300. (Act No. 1 of January 31, 2011, effective immediately; Introduction to Internal Revenue Code for a New Puerto Rico (2011), Puerto Rico Department of Revenue, January 31, 2011.)
For more information on this and other topics, consult the Visit our News Library.
Visit our News Library to read more news stories.