Payroll Tax Update for 2018

Published on January 2, 2018.

January 2018

We wish all of our friends a Happy and Healthy New Year!

This letter contains important payroll tax related information that you may need for 2017 and 2018. As always, please contact us if you have any questions.

 

TOPIC

IMPORTANT WEBSITES.

DUE DATES FOR ALL 2017 TAX RETURNS.

AUTOMOBILE MILEAGE RATES.

FLEXIBLE SPENDING ACCOUNT CHANGES.

SOCIAL SECURITY.

MINIMUM WAGE.

NEW JERSEY SALES TAX CHANGES.

1099 REPORTING REQUIREMENTS.

RETIREMENT PLAN BENEFITS AND LIMITS.

FEDERAL & STATE TAX FILINGS AND PAYMENTS FOR BUSINESS TAXPAYERS.

REPORTING REQUIREMENTS FOR EMPLOYERS AND HEALTH PLANS.

2018 PAYROLL TAX RATES.

2017 Federal Unemployment (FUTA) Tax Rates by State.

Additional Medicare Tax on Wages & Self-Employment

 

IMPORTANT WEBSITES

 

Internal Revenue Service:

United States Department of Treasury:  www.irs.gov

Electronic Federal Tax payments (EFTPS):  https://www.eftps.gov/eftps/

 

New Jersey:

Division of Taxation: www.state.nj.us/treasury/taxation/index.shtml

Annual Report & other miscellaneous business filings:  http://www.nj.gov/treasury/revenue/

Electronic Services: http://www.state.nj.us/treasury/taxation/eservicesother.shtml

New hires: www.nj-newhire.com

 

Pennsylvania:

Department of Revenue: www.revenue.state.pa.us/

e-TIDES (Electronic tax payments): https://www.etides.state.pa.us/

New hires: https://www.cwds.state.pa.us/

 

Social Security Administration: www.ssa.gov

 

 

DUE DATES FOR ALL 2017 TAX RETURNS

 

Type of Tax Return: Due Date:
Partnerships and S Corporations March 15, 2018
C Corporations and individuals April 17, 2018
Exempt Organizations May 15, 2018
Final deadline for extended organizations August 15, 2018
Final deadline for partnerships and S Corporations September 17, 2018
Final deadline for C Corporations and individuals October 15, 2018

 

 

AUTOMOBILE MILEAGE RATES

2017                            2018
Business $0.535/mile $0.545/mile
Medical/Moving $0.17/mile $0.18/mile
Charitable $0.14/mile $0.14/mile

 

FLEXIBLE SPENDING ACCOUNT CHANGES

Pre-tax dollar limit:

2017: $2,600 maximum per employee

2018: $2,650 maximum per employee

 

All clients who sponsor an FSA should review their plan documents and amend the plan, if applicable, to provide for the new mandatory limit.

SOCIAL SECURITY

 

Social Security Cost Of Living Adjustment

The cost of living adjustment for 2018 will be 2.0 percent.

 

Social Security While Continuing To Work

The maximum Social Security Benefit eligibility is based on the following chart:

                                                                          

Year of Birth Normal Retirement Age

 

1937 and Prior

1938 -1942

1943-1954

1955

1956

65

65 – 66

66

66 + 2 months

66 + 4 months

1957 66 + 6 months
1958 66 + 8 months
1959 66 + 10 months
1960 and Later 67

 

The following chart reflects the annual retirement earnings test exempt amounts for 2017 and 2018.

 

Year NRA attained    2017    2018 Social Security Benefits Withheld
The year reaching full retirement age $ 44,880

$3,740/mo.

$ 45,360

$3,780/mo.

$1 in benefits for every $3 of earnings in excess of the higher exempt amount, but only for months prior to the reaching of NRA.

 

Under full retirement age $ 16,920

$1,410/mo.

$ 17,040

$1,420/mo.

$1 in benefits for every $2 in earnings in excess of lower exempt amount

The maximum social security benefit for a worker retiring at full retirement age is $2,687 per month for 2017 and $2,788 for 2018.

 

MINIMUM WAGE

 

Jurisdiction    Minimum Wage Minimum Wage with Tips

 

Federal

Delaware

New Jersey (effective 1/1/18)

$7.25

$8.25

$8.60

$2.13

$2.23

$2.13

Pennsylvania $7.25 $2.83

Full minimum wage information listed by state can be found at:

http://www.ncsl.org/research/labor-and-employment/state-minimum-wage-chart.aspx

 

 

NEW JERSEY SALES TAX CHANGES

 

New Jersey’s 6.875% sales tax is scheduled to change to 6.625% as of 1/1/2018

1099 REPORTING REQUIREMENTS

 

Clients are required to file Form 1099-MISC (for Miscellaneous Income) if you have paid during the year to an unincorporated business, including LLC’s, the following:

 

  1. At least $10 in royalties.
  2. At least $600 in rents, services, prizes & awards, and other income payments. Report only when payments are made in the course of your trade or business. Personal payments are not reportable.
  3. At least $600 in fees or gross proceeds paid to an attorney in connection with legal services.Exceptions are generally:
  1. Payments made to a corporation (except in the case of gross proceeds or fees paid to an attorney).
  2. Payments for merchandise, telegrams, telephone, freight, storage, and similar items.
  3. Payments of rent to real estate agents.
  4. NEW Due dates for 1099’s for the 2017 tax year are as follows:
  • You must provide the recipient with their respective Form 1099 by January 31, 2018
  • You must file Form 1096 & the 1099’s with the government (Social Security and the IRS) by January 31, 2018 as well

RETIREMENT PLAN BENEFITS AND LIMITS

Type 2018 2017
Traditional and Roth IRA contribution $               5,500 $               5,500
Traditional and Roth IRA catch-up contribution $               1,000 $               1,000
SIMPLE IRA and SIMPLE 401(k) salary deferral $               12,500 $               12,500
SIMPLE IRA and SIMPLE 401(k) catch-up contribution (50 years old & above) $                3,000 $                3,000
401(k), 403(b), 457(b), and SARSEP salary deferral contribution $               18,500 $               18,000
401(k), 403(b), 457(b), and SARSEP catch-up contribution (50 years old & above) $               6,000 $                 6,000
SEP minimum compensation

SEP maximum compensation

$                   600

$             275,000

$                   600

$             270,000

Retirement Savings Contribution Credit
                   Married filing jointly $              63,000 $               62,000
                   Married filing separately and Single $               31,500 $               31,000
                   Head of Household $               47,250 $               46,500
Roth IRA eligibility compensation Married filing jointly 100% $189,000 or less $186,000 or less
Partial $189,000 – $199,000 $186,000 – $196,000
None $199,000 or more $196,000 or more
Married filing Partial Less than $10,000 Less than $10,000
 separately None $10,000 or more $10,000 or more
100% $120,000 or less $118,000 or less
Single/Head of Household Partial $120,000 – $135,000 $118,000 – $133,000
None $135,000 or more $133,000 or more
IRA deductibility compensation Married filing jointly 100% $101,000 or less $99,000 or less
Partial $101,000 – $121,000 $99,000 – $119,000
None $121,000 or more $119,000 or more
Married filing Partial Less than $10,000 Less than $10,000
 separately None $10,000 or more $10,000 or more
100% $63,000 or less $62,000 or less
Single/Head of Household Partial $63,000 – $73,000 $62,000 – $72,000
None $73,000 or more $72,000 or more
Annual addition/contribution limit under a defined contribution plan or SEP IRA $             55,000 $             54,000
Annual benefit under a defined benefit plan $           220,000 $           215,000
Compensation cap $           275,000 $          270,000
Key Employee definition $           175,000 $           175,000
Highly compensated employee definition $           120,000 $           120,000
Social Security (FICA) wage base $           128,400 $           127,200

 

 

FEDERAL & STATE TAX FILINGS AND PAYMENTS FOR BUSINESS TAXPAYERS

 

Electronic Federal Tax Payments

 

Electronic federal tax payments are mandatory

All business tax deposits (Forms 941, 943, 944, 945 and 1120) are now required to be paid using Electronic Federal Tax Payment System (EFTPS). Form 8109, Federal Tax Deposit Coupon, will no longer be accepted by the IRS.

 

To enroll, you will need your taxpayer ID number (EIN) and your financial institution information, including routing number, account number, and account type.

 

To avoid being considered “late” on your payments, you must submit your payment no later than 8pm ET the day prior to the due date.

 

The IRS provides two options for electronic tax payments.

1) EFTPS online:  https://www.eftps.gov/eftps/

2) EFTPS Voice Response System at 1-800-555-3453

 

 

New Jersey Wage Taxes

 

All New Jersey tax payments and returns (NJ927, NJ927-W, NJ927-H and WR-30) must be remitted by electronic means.

 

The following website may be used for various NJ business tax payments:

http://www.state.nj.us/treasury/taxation/online.shtml

 

NOTE: Electronic transfers must be done one (1) day prior to the withdrawal from your account.

 

New Jersey Annual Reports

 

Corporate Annual Reports must be filed electronically. Businesses will receive notification by mail of the filing requirements and instructions from the Division of Revenue.

 

The website for filing the Annual Report is: https://www.njportal.com/dor/annualreports

 

Annual report filing is a prerequisite for maintaining an active business status. In accordance with State law, businesses that fail to file annual reports for two consecutive years will be revoked.

 

The annual fees are:

  • $50.00 for profit corporations, LPs, LLPs, and LLCs
  • $25.00 for non-profits

 

 

Additional fees may apply to change a registered agent or office for the business.

 

 

 

Pennsylvania

 

Pennsylvania provides two options for electronic payroll, corporation taxes, and sales and use tax payments.

 

  1. TeleFile: 1-800-748-8299.
  2. e-Tides: https://www.etides.state.pa.us/

 

PA Cities: All employers in Pennsylvania must withhold the earned income tax for individual cities, if applicable.  To find your employees withholding rates by address use the link below or contact your payroll company:  https://munstats.pa.gov/public/findlocaltax.aspx  

REPORTING REQUIREMENTS FOR EMPLOYERS AND HEALTH PLANS

W-2 Requirements under PPACA

Under the Patient Protection and Affordable Care Act (PPACA), employers must report the cost of employer-sponsored group health plan coverage on an employee’s Form W-2.  Employers will need to include the total reportable cost of applicable employer-sponsored group health plan coverage on Form W-2, in box #12 using code DD. This amount is not taxable and is for disclosure purposes only.

 

Employers with more than 250 employees must report the value of health insurance on W-2s. An employer that is required to file fewer than 250 Form W-2s qualifies for transition relief and will not be required to report the value of health insurance on W-2’s until the IRS publishes guidance on this matter giving at least six months of advance notice to any change in this relief.

 

Summary of Coverage Required to be Reported:

  1. Medical plans – The combined cost of applicable employer-sponsored coverage.  Coverage under any group health plan (including a self-insured plan) that is excludable from the employee’s gross income is to be included.  The aggregate cost includes both the portion of the cost paid by the employer and employee, regardless of whether the employee paid for the cost through pre-tax or post-tax contributions.
  2. Prescription drug plans.
  3. Employee assistance plans, wellness programs, and on-site clinics (required only if the employer charges a COBRA premium).Additional details and a comprehensive list of all items required to be reported can be found at:If a company has fewer than 50 employees, they have the option to purchase affordable insurance through the Small Business Health Options Program (SHOP). To learn more visit HealthCare.gov.
  4. http://www.irs.gov/Affordable-Care-Act/Form-W-2-Reporting-of-Employer-Sponsored-Health-Coverage

 

 

 

2018 PAYROLL TAX RATES

Jurisdiction and Tax Type    Employee Rate Employer Rate Limits, if any
Federal
Federal Unemployment N/A 0.60% Maximum wages $7,000

Maximum of $42 per employee

*0.6% unless in a State listed on next page.
FICA 6.20% 6.20% Maximum wages $128,400
Max deduction: $7,960.80
Medicare 1.45% 1.45% No wage base limit
0.09% N/A Additional tax on wages above $200,000
Federal Income Tax Based on Circular E N/A Rates vary (10%-37%)
 
New Jersey
0.425% Rates Vary             (0.5% – 5.8%) Maximum wages: $33,700
NJ State Unemployment Maximum deduction: $143.23 per taxpayer.
 
Standard New Employer Rate is 2.8%
NJ Disability Rate 0.19% Rates Vary             (0.1% – 0.75%) Maximum wages: $33,700
Max deduction: $64.03
Standard New Employer Rate is 0.5%
NJ Paid Family Leave Rate 0.09% N/A Maximum wages $33,700
Max deduction: $30.33
NJ Income Tax See Withholding Charts N/A Rates vary (1.4%-8.97%)
 
Pennsylvania
PA State Unemployment 0.06% Rates Vary       (2.801% -10.8937%) Maximum wages for employers $10,000.
New Employer Rate 3.6890%
PA Income Tax 3.07% N/A
 
Philadelphia
Wage Tax:
Residents 3.8907% N/A Effective July 1, 2017 through June 30, 2018
Non Residents 3.4654% N/A Effective July 1, 2017 through June 30, 2018

 

2017 Federal Unemployment (FUTA) Tax Rates by State

 

All states not listed have a 0.6% FUTA tax rate and are not subject to an increased rate. New Jersey and Pennsylvania are both at a 0.6% rate on the first $7,000 of taxable wages, maximum of $42 per employee.

 

State/Territory FUTA Reduction FUTA Tax Rate
California and the Virgin Islands 2.1% 2.7%

 

Additional Medicare Tax on Wages & Self-Employment

The Medicare payroll tax will increase by 0.9% to 2.35% on wages above $200,000 for individuals & head of household, $250,000 for joint filers, and $125,000 for married filing separately. There is no employer match for this additional Medicare tax but the employer does have an obligation to withholding and remit the additional 0.9% tax on all wages over $200,000 regardless if they are married filing joint. Self-employment income is also subject to the additional 0.9% tax increase.

 

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