For the first time in many years the IRS has significantly revamped the Federal W-4 form for 2020. This new form will be required to be completed by all new employees beginning on January 1, 2020. Any existing employees who wish to make changes to their federal tax withholding after January 1st will also need to use the new version. Employers can ask, but cannot require, all existing employees to submit a new version of the W-4 form. However, if an employee hired before January 1, 2020 does not complete a 2020 W-4 employers must use the last completed W-4 to calculate appropriate federal withholding for the employee. Continue reading
Oregon employers must begin withholding a new statewide transit tax beginning July 1, 2018. There is no employer paid portion of the new transit tax; it is paid entirely by individual employees through payroll withholding. The tax must be withheld from wages of Oregon residents (regardless of where the work is performed) and wages of nonresidents of Oregon who perform services in Oregon. Continue reading
On October 18, 2016 the Social Security Administration (SSA) announced that the maximum amount of wages subject to the Social Security payroll tax will increase 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.