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Year 2013 Baratz Payroll Tax Reference Sheet

FEDERAL TAX RULES


  • New - Social Security: The wage base has increased to $113,700. The employer contribution rate remains at 6.2%. However, the employee contribution rate has reverted back to 6.2%.
  • New - Medicare: The wage base remains unlimited. The employer contribution rate also remains at 1.45%. However, the employee contribution rate will be 1.45% for the wages up to $200,000 and 2.35% (1.45% plus additional 0.9% tax) for the wages paid in excess of $200,000.
    Important Note: An individual is liable for the additional 0.9% Medicare tax if the individual's wages and other compensation are above the threshold. The threshold amounts are $250,000 for joint filers and $200,000 for single filers. However, the statute requires an employer to withhold the additional 0.9% Medicare tax on wages it pays to an employee in excess of $200,000, regardless of the employee's filing status. The excess withholding will be credited against the employee's total income tax liability shown on his or her tax return.
  • FUTA: " FUTA: The wage base remains at $7,000. The rate is 6.0% and the maximum credit is 5.4% of the taxable wages. Therefore, the nominal net rate is 0.6%. However, the credit is reduced for a state that borrows money from federal and defaults on the loan. In such case, the credit is reduced by 0.3% for each year the loan remains unpaid. For 2012, New Jersey and Pennsylvania are among the 0.6% credit reduction states. Therefore, the employers in these states will pay FUTA tax at the rate of 1.2% for 2012. The rate for 2013 will be announced in November 2013.
  • Federal minimum wage remains at $7.25 per hour.

NEW JERSEY STATE TAX RULES


  • Withholding rates vary from 1.5% - 7.0% for wages up to $500,000. Wages in excess of $500,000 have a withholding rate of 9.9%.
  • New - The unemployment tax wage base increases to $30,900 and the employee contribution rate increases to 0.885% (0.3825% unemployment fund, 0.0425% workforce development, 0.36% disability, 0.10% family leave insurance). The maximum employee contribution is $273.47.
  • New Jersey minimum wage is currently at $7.25 an hour. There are proposals in the New Jersey Legislations to increase the minimum wage. However, it has been vetoed as of December 7, 2012. Please visit our website at www.baratzcpa.com for any future updates.
  • The State of New Jersey requires all employers to file and pay their Employer's Quarterly Report (Forms NJ-927, NJ-927W, NJ-500), the annual Household Employer's Annual Report (Form NJ-927H) and the Employer Report of Wages Paid (Form WR-30) electronically. Please visit the state website at www.state.nj.us/treasury/taxation to file the reports and for further information.

 

PENNSYLVANIA STATE TAX RULES


  • The withholding rate continues to be 3.07%.
  • New - Employer unemployment tax wage increases to $8,500.
  • New - Employee unemployment contribution rate is reduced to 0.07% of total wages.
  • Pennsylvania minimum wage remains at $7.25 an hour.
  • The State of Pennsylvania Department of Labor & Industry is currently transitioning the unemployment compensation reporting from UC E-Tides to a new system called Unemployment Compensation Management System (UCMS). UCMS will be available only to current active UC E-Tides users beginning January 1, 2013. The active users should receive a letter from the state regarding pre-registration with UCMS. At this point, UCMS has not been made available to the employers that are not registered with UC E-Tides and therefore, they should continue paper filing the quarterly UC-2/2A reports until further notice. Call UC Employer Contact Center toll free at 866-403-6163, option 2 for additional information on UCMS.

 

PHILADELPHIA CITY TAX RULES


  • The current wage tax withholding rates are 3.928% for the City residents and 3.4985% for the non-residents. The City usually issues the updated rates in June for the second half of the year. Please visit www.phila.gov/revenue for any rate change updates during the year.

 

ELECTIVE DEFERRAL LIMITATIONS


  • New - 401(k) maximum annual deferral is $17,500 and special catch up provision for those 50 and older is $5,500 for 2013.
  • New - Simple IRA Plan 408(p) maximum annual deferral is $12,000 and special catch up provision for those 50 and older is $2,500 for 2013.

 

PENSION CONTRIBUTIONS


  • New - Simple Employee Plan (SEP): maximum contribution is the smaller of $51,000 or 25% of participant's compensation.*
  • New - Defined Contribution Plan: profit sharing - maximum contribution is the smaller of $51,000 or 100% of participant's compensation.*
  • New - Defined Contribution Plan: money purchase - maximum contribution is the smaller of $51,000 or 100% of participant's compensation.*
  • New - Defined Benefit Plans: maximum contribution is the amount needed to provide an annual benefit no larger than the smaller of $205,000 or 100% of the participant's average compensation for his or her highest 3 consecutive calendar years.

* Compensation is generally limited to $255,000


 

YEAR 2013 BARATZ FEDERAL TAX DEPOSITORY RULES


DEPOSIT FREQUENCY

DETERMINATING FACTOR

DEPOSIT REQUIREMENTS

PAY DATE

DEPOSIT DATE

Monthly

If the accumulated tax liability is less than or equal to $50,000 for the annual base period

Any Day

Deposit monthly by the 15th of the following month.

 

 

Semi Weekly

 

 

If the accumulated tax liability is greater than $50,000 for the annual base period

Wednesday,
Thursday or
Friday

 

Deposit the following Wednesday.

Saturday,
Sunday,
Monday or
Tuesday

Deposit the following Friday.

EXCEPTION RULES

TAX   LIABILITY AMOUNT

DEPOSIT REQUIREMENTS

$2,500 Rule

If the accumulated tax liability is less than $2,500 for the entire quarter

Remit the liability with the quarterly tax return.

$100,000 Rule

If the accumulated tax liability is $100,000 or more on any single day

Deposit the liability on the next business day.

The Internal Revenue Service established an Electronic Federal Tax Payment System (EFTPS) in 2008. U.S. Department of Treasury has eliminated paper Form 8109 - federal tax coupons. All employers are required to make federal tax payments electronically using EFTPS. Failure to do so could result in 10% penalty. Visit https://www.eftps.gov/eftps/ to enroll with the EFTPS.

New Jersey Electronic Filing

New Jersey, under its Electronic Funds Transfer (EFT) program, has a threshold of $10,000. New Jersey requires that a taxpayer with a prior year's tax liability of $10,000 or greater in any one tax to remit all tax payments to the Division of Revenue using EFT. Visit http://www.state.nj.us/treasury/revenue/enrolleft.shtml to enroll with EFT.

Annual Base Period

The determination of which federal deposit schedule applies will be made by looking back at the employment taxes reported for a 12-month look back period, July 1 of the second preceding calendar year through June 30 of the prior year.

Safe Harbor

An employer who under-deposits will not be penalized if the shortfall is less than or equal to $100, or less than two percent of the amount which should have been deposited, whichever is greater.

New Hire Reporting

A Federal Regulation mandates that all employers are to report information for any new hire or rehire within 20 days of their start date. You must report employee's name, address, social security number, date of birth, and hire date along with your employer's name, address and Federal identification number. Information should be mailed or faxed within the 20 day period to: New Hire Directory, P.O. Box 4654, Trenton, New Jersey 08650-4654. The fax number is (800) 304-4901. Information can also be reported online at www.nj-newhire.com.

Most payroll services will handle the new hire reporting automatically, and therefore, it will not be any burden for those utilizing their services. For those not using an outside payroll services, please note the requirements in order to avoid any compliance penalties.

Form I-9 Requirements

Federal Form I-9 was developed by the U.S. Department of Justice, Immigration and Naturalization Services. The purpose of the form is to document the verification of an individual's eligibility to work in the U.S. All employees, citizens and non-citizens, hired after November 6, 1986 must complete and sign Section 1 of the form at the time of hire. The employer is responsible for ensuring that Section 1 is timely and properly completed.

Employers are responsible for completing Section 2 of the form by examining evidence of the applicant's identity and employment eligibility within three business days of the date employment begins. If the applicant is unable to produce the required documents within three business days they must present a receipt for the application of the required documents within three business days and the actual documents within ninety days.

Employers must complete Section 3 of the form when updating or re-verifying the I-9 information. Employers must re-verify employment eligibility of their employees on or before the document expiration date recorded at the time of hire.

Employers must retain completed I-9s for three years after the date of hire or one year after the date employment ends, whichever is later.

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