Employee Paid Time Off Donation Program

Let’s discuss a situation that’s somewhat common among employers.  You have an employee, Sharon, who has used all of her allowed paid time off (vacation, personal, sick, etc.) for the year. Sharon’s mother falls ill with a serious medical condition and Sharon needs to take additional time off work to help care for her mother, but she doesn’t have any paid time off available. Sharon’s coworker, Kim, has a lot of accrued paid time off with no vacation plans so she asks you if she can donate some of her available paid time off balance to Sharon to be able to use during her absence so that Sharon doesn’t have to take unpaid time off work to care for her mother. Can you allow Kim to donate her paid time off to Sharon?

You can. But it’s not that simple.

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Increased Social Security Payroll Taxes in 2017 for High Wage Workers

On October 18, 2016 the Social Security Administration (SSA) announced that the maximum amount of wages subject to the Social Security payroll tax will i2017-tax-update-1ncrease in 2017 by $8,700 to $127,200.  This adjustment, which takes place on January 1, 2017, is calculated by the SSA based on average wage increases.

Social Security payroll tax is collected with Medicare payroll tax as the Federal Insurance Contributions Act (FICA) tax.  In a traditional employment relationship, FICA taxes are paid by both employers and employees.  Employers and employees both pay 6.2% of taxable wage for the Social Security portion up to the annual maximum level and pay 1.45% of taxable wage for the Medicare portion.  There is no limit on the Medicare portion, however under a provision of the Affordable Care Act, highly compensated employees are required to pay an additional 0.9% in Medicare tax for all wages over $200,000 per year.  Employers are not required to pay this additional Medicare tax.

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