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Posts Categorized / What’s New

  • Jan 25 / 2019
What's New

Federal Tax Reform

Federal tax reform continues to be a hot topic as many changes made by the Tax Cuts and Jobs Act (TCJA; Pub. L. 115-97) continue to impact payroll professionals. Although most of the changes in the TCJA took effect January 1, 2018, they will remain in effect through 2025.

Tax Rates and Brackets
The TCJA retains seven tax brackets, but adjusts tax rates and taxable income levels. The tax rates are also used to determine supplemental and backup withholding rates, so those rates also change. Here is a comparison of 2017, 2018, and 2019 rates.

Single

2017
Tax Rate
Taxable Income2018
Tax Rate
Taxable Income2019
Tax Rate
Taxable Income
10%$0-$9,32510%$0 – $9,52510%$0 – $9,700
15%$9,326 – $37,95012%$9,526 – $38,70012%$9,701 – $39,475
25%$37,951 – $91,90022%$38,701 – $82,50022%$39,476 – $84,200
28%$91,901 – $191,65024%$82,501 – $157,50024%$84,201 – $160,725
33%$191,651 – $416,70032%$157,501 – $200,00032%$160,726 – $204,100
35%$416,701 – $418,40035%$200,001 – $500,00035%$204,101 – $510,300
39.6%$418,401+37%$500,000+37%$510,301+

Married, Filing Jointly

2017
Tax Rate
Taxable Income2018
Tax Rate
Taxable Income2019
Tax Rate
Taxable Income
10%$0 – $18,65010%$0 – $19,05010%$0 – $19,400
15%$18,651 – $75,90012%$19,051 – $77,40012%$19,401 – $78,950
25%$75,901 – $153,10022%$77,401 – $165,00022%$78,951 – $168,400
28%$153,101 – $233,35024%$165,001 – $315,00024%$168,401 – $321,450
33%$233,351 – $416,70032%$315,001 – $400,00032%$321,451 – $408,200
35%$416,701 – $470,70035%$400,001 – $600,00035%$408,201 – $612,350
39.6%$470,701+37%$600,001+37%$612,351+

Rates for Withholding on Supplemental Wages for 2018
There is a two-tiered system for withholding income tax from supplemental wages at a flat rate:

  • Optional flat rate: 22%. The TCJA lowers the optional flat tax rate on supplemental wages of up to $1 million in a taxable year to 22% (no other percentage is allowed).
  • Mandatory flat rate: 37%. The TCJA lowers the mandatory withholding rate on supplemental wages exceeding $1 million in a taxable year to 37% for tax years 2018 through 2025.

Backup Withholding Rate
The TCJA lowers the backup withholding rate to 24% for tax years 2018 through 2025.

Personal Exemption Elimination and Income Tax Withholding
The TCJA eliminates the personal exemption claimed by taxpayers for themselves and their spouse and dependents for 2018-2025. For 2019, the standard deduction is $24,400 for married individuals filing jointly, $18,350 for head-of-household filers, and $12,200 for all others.

Withholding Allowance
The 2019 amount for one withholding allowance on an annual basis is $4,200.

Federal Tax Levies
The IRS has revised Publication 1494, Tables for Figuring Amount Exempt from Levy on Wages, Salary, and Other Income, and issued new Notice 1439, which updates the instructions for levy notices (Form 668-W).

IRS Tax Reform Implementation Office
The IRS has created the Tax Reform Implementation Office (TRIO) to develop a plan to implement the TCJA. The IRS must reprogram 140 systems and over 460 IRS forms, instructions, and publications will be created or revised.

Other Areas Important to Payroll
The TCJA also affects other areas important to payroll professionals, including: the suspension of the fringe benefit for moving expenses (except for certain military-related moves); a new employer tax credit for paid family and medical leave; and how states are reacting to the TCJA. States may revise their employee withholding allowance certificates or change which version of the Internal Revenue Code they follow.

  • Jan 25 / 2019
What's New

IRS Releases 2019 Publication 15 and Wage Levy Exemption Amount Tables

On December 18, the IRS released the 2019 Publication 15, Circular E, Employer’s Tax Guide, and the 2019 Publication 1494, Tables for Figuring Amount Exempt From Levy on Wages, Salary, and Other Income. https://www.irs.gov/pub/irs-pdf/p15.pdf

Publication 15 includes the 2019 wage bracket and percentage-method withholding tables. It also sets the amount for one withholding allowance at $4,200 (up from $4,150 in 2018). Publication 15 reminds employers that the IRS extended the deadline for employees who have a change of status “solely due to the changes made by the TCJA [Tax Cuts and Jobs Act]” to furnish a new Form W-4, Employee’s Withholding Allowance Certificate, to their employers until May 10, 2019.

Publication 1494 provides tables showing the amount of an individual’s wages that is exempt from a Notice of Levy used to collect delinquent federal income tax in 2019. As in 2018, the publication contains a column for zero dependents to reflect changes made by the TCJA.

  • Jan 25 / 2019
What's New

IRS Releases Percentage Method Withholding Tables, 2019 Form W-4

The IRS has released Notice 1036Early Release Copies of the 2019 Percentage Method Tables for Income Tax Withholding(rev. 12-18). The tables included in Notice 1036, along with the 2019 wage-bracket withholding tables, will appear in IRS Publication 15, (Circular E), Employer’s Tax Guide.

The IRS also released the 2019 Form W-4Employee’s Withholding Allowance Certificate. The 2019 Form W-4 is very similar to the 2018 Form W-4.

  • Jan 25 / 2019
What's New

Business Standard Mileage Rate Increases to 58 Cents for 2019

The IRS announced that the business standard mileage rate for transportation expenses paid or incurred beginning January 1, 2019, will be 58 cents per mile up, 3.5 cents from the 54.5 cents-per-mile rate in effect during 2018 [Notice 2019-02, released 12-14-18].

The mileage rate may be used to compute the amount to reimburse employees who are using their own cars for business purposes. It may also be used by employers that elect to use the “cents-per-mile” valuation method for purposes of determining the amount that needs to be imputed to an employee’s income for personal use of certain company-owned or leased nonluxury vehicles. However, it may not be used by employees in claiming a tax deduction for unreimbursed employee business expenses.

  • Jan 25 / 2019
What's New

E-Verify Unavailable During Government Shutdown

Due to a lapse in government funding, E-Verify and E-Verify services are not available [E-Verify website, 12-22-18]. During this time, employers cannot access their E-Verify accounts to enroll in E-Verify; create E-verify cases; view or take action on cases; reset passwords; terminate accounts; or run reports.

Policies During the Shutdown

While E-Verify is unavailable, employees will not be able to resolve any tentative nonconfirmations (TNCs). U.S. Citizenship and Immigration Services (USCIS) suspended the “three-day rule” for creating E-Verify cases and extended the time period during which employees may resolve TNCs. The number of days E-Verify is not available will not count toward the days employees have to begin the process of resolving their TNCs.

When operations resume, USCIS will issue additional guidance. In the meantime, employers may not take adverse action against an employee whose E-Verify case is in an interim status.

Form I-9 Requirements Still in Effect

The lapse in government appropriations does not affect Form I-9, Employment Eligibility Verification, requirements. Employers must still complete Form I-9 no later than the third business day after an employee starts work for pay and comply with all other Form I-9 requirements.

  • Jan 25 / 2019
What's New

IRS Releases Form for Employer Credit for Paid Family and Medical Leave

The IRS released the new Form 8994Employer Credit for Paid Family and Medical Leave, and its instructions, which will be used by employers to claim the credit for paid family and medical leave provided to their employees.

Employers may take a general business tax credit equal to a minimum of 12.5% of wages paid to employees on family and medical leave if the employees are paid at least 50% of their normal wages. The tax credit increases by 0.25% for each percentage point that wage payments exceed 50%. The maximum employer tax credit is 25% of wages paid to employees. The credit is applicable to wages paid for up to 12 weeks of leave. The credit is available for wages paid after December 31, 2017, and until December 31, 2019.

  • Jan 25 / 2019
What's New

State Electronic/Magnetic Media W-2 Reporting Deadlines Quickly Approaching

Under federal law, employers that file 250 or more Forms W-2, Wage and Tax Statement(Copy A), must file them electronically by January 31 after the year to which the form applies. The Social Security Administration no longer accepts Form W-2 data reported on magnetic media.

Most states require Forms W-2 to be filed with their tax departments electronically or on magnetic media by January 31 (36 states, District of Columbia, and Puerto Rico). The due date is February 28/last day of February for three states (Hawaii, New Jersey, and New Mexico). The remaining 11 states do not require Forms W-2 to be sent to them (California and New York), or do not have a state income tax (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming).

Employers should check their state tax department’s website for Form W-2 reporting guides, specifications, and instructions. 

American Payroll Association

  • Dec 07 / 2018
What's New

Year End Check List – It’s that time of the Year again!! Some useful tips:

  • Create 2019 Payroll Calendar & Holiday Schedule
  • Review W-2 Data (SSN, Address) before final print
  • Complete a W-4 Audit, verifying state
  • Complete a WC Code Classification Audit
  • Complete a Job Title/Description Audit, ensure all EEs have one
  • Create 2019 Payroll Tax Folders, Time keeping Folders, Payroll Report Folders
  • Create 2019 401k Binder for payments, adjustments, letters from administrators
  • Create 2019 WC Binder for payments, adjustments, letters, reclassifications
  • Place Change of Address Forms on your company intranet & in lunchrooms
  • Upload new Benefit data into your payroll system, run trial tests before 1st payroll
  • Create 2019 Benefit Rate sheet (EE Cost, ER Cost, Cobra Cost)
  • Enter Fringe Benefit data from A/P, 3rd Party Sick Pay Data, Gift Cards w/cash value
  • Oder Labor Law Posters for 2019
  • Create Important Message Log for 2019 (Paystub message)
  • Ensure 1095C Data is complete/accurate
  • Submit requests to Payroll Service for any extra (Bonus) runs early
  • Audit EE Locations for Worksite EDD Report
  • Review Wage & Tax Reports & Fix before last payroll of the year
  • Verify with Accounting Dept any updates to Department and GL numbers
  • Update Self Service Forms, if needed
  • Complete an I9 Audit
  • Create 2019 tasks Calendar (Qtrly tax form filing, WS filing, Training, Safety, etc.)
  • Review EE Handbook for updates   

Audits should start early November…  so that you have enough time to fix before last payroll of the year.

  • Nov 27 / 2018
What's New

State Unemployment Insurance Taxable Wage Bases for 2019

 

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Most states have released their state unemployment insurance (SUI) taxable wage bases for 2019.  State Unemployment Insurance Taxable Wage Bases 2016-2019

Following the Federal Unemployment Tax Act (FUTA) scheme, SUI contributions (taxes) are determined by applying a certain percentage to the taxable wages paid by the employer. FUTA requires that each state’s taxable wage base must at least equal the FUTA taxable wage base of $7,000 per employee, and most states have wage bases that exceed the required amount. The states use various formulas for determining their taxable wage base, with a few tying theirs by law to the FUTA wage base and others using a percentage of the state’s average annual wage.

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