Photo courtesy of Nick TranSan Diego Chapter
American Payroll Association 

2015 PAYROLL UPDATES *Updated as of 1-30-15*

FEDERAL CHANGES:

ACA Information Center for Tax Professionals:

http://www.irs.gov/Tax-Professionals/ACA-Information-Center-for-Tax-Professionals

Adoption assistance:
For 2015 the maximum amount that can be excluded from an employee's gross income for qualified adoption expenses under an employer's adoption assistance program is $13,400 ($13,190 in 2014). The maximum amount that can be excluded in connection with the adoption of a child with special needs is $13,400 ($13,190 in 2014).

The amount excludable from an employee's gross income begins to phase out for taxpayers with adjusted gross income of $201,010 ($197,880 in 2014) and is completely phased out for taxpayers with adjusted gross income of $241,010 ($237,880 in 2014).

IRS Announces 2015 COLAs for Transportation Fringes, FSA Deferrals, Foreign Earned Income Exclusion, and More:
The IRS has released inflation-adjusted tables for 2015 reflecting increases in the standard deduction, foreign earned income exclusion, and excludable transportation fringes among other changes [Rev. Proc. 2014-61, 10-30-14.

IRS Releases Publication 509 for 2015:

IRS: Has released the 2015 Publication 509 Tax Calendars.

 

The legal holidays for 2015 are as follows:

 

January 1--New Year's Day

January 19--Birthday of Martin Luther King, Jr./Inauguration Day

February 16--Washington's Birthday

April 16--District of Columbia Emancipation Day

May 25--Memorial Day

July 3--Independence day is observed

September 7--Labor Day

October 12--Columbus Day

November 11--Veteran's Day

November 26--Thanksgiving Day

December 25--Christmas Day

 

Remember that a statewide legal holiday does not delay a due date for making a federal tax deposit. 

IRS Releases 2014 Form 940: The IRS has released the 2014 Form 940: http://www.irs.gov/pub/irs-pdf/f940.pdf

  • ·        Publication 80, Circular SS Federal Tax Guide for Employers in the U.S. Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands http://www.irs.gov/pub/irs-pdf/p80.pdf

·        The IRS has released Publication 15-A Employer's Supplemental Tax Guide for 2015.

2015 W-4 form (English):  http://www.irs.gov/pub/irs-pdf/fw4.pdf

IRS Releases Notice 1036 for 2015:  The IRS has released Notice 1036 Early Release Copies of the 2015 Percentage Method Tables for Income Tax Withholding. This includes not only the percentage tables but the supplemental rates and the table for withholding adjustments for nonresident alien.
The Notice 1036 is available on the IRS website: 
http://www.irs.gov/pub/irs-pdf/n1036.pdf

Foreign earned income exclusion:
For 2015, the maximum foreign earned income exclusion amount under IRC §911(b)(2)(D)(i) is $100,800 ($99,200 in 2014). The maximum amount of the foreign housing cost exclusion is $14,112 ($13,888 in 2014).

Fringe Benefits Updates for 2015:

Qualified Transportation Fringe Benefits: These rates are not changed from 2014. Parking remains $250 and transit passes remain $130. 

Health flexible spending arrangements:
For plan years beginning in 2015, the dollar limitation under §125(i) on voluntary employee salary reductions for contributions to health flexible spending arrangements (FSAs) is $2,550 ($2,500 in 2014).

Long-term care insurance benefits:
If a long-term care insurance contract makes per diem benefit payments, the amount of the payments that is excluded from income in 2015 is capped at $330 per day (unchanged from 2014).

Medical Savings Accounts:
To be eligible to make contributions to a Medical Savings Account (or to have the employer make the contributions), an employee must be covered by a high deductible health plan. For 2015, a high deductible health plan is a plan with an annual deductible of $2,200-$3,300 for individual coverage ($2,200-$3,250 in 2014) and $4,450-$6,650 for family coverage ($4,350-$6,550 in 2014).

Maximum out-of-pocket expenses can be no more than $4,450 for individual coverage ($4,350 in 2014) and $8,150 for family coverage ($8,000 in 2014).

Mileage Rate Increase (Business Standard):
The IRS has announced that the business standard mileage rate for transportation expenses paid or incurred beginning January 1, 2015, will be 57.5 cents per mile.

Additional Mileage increases:

Moving expenses: 23 cents per mile
Charity:  14 cents per mile

Pension Plan Limits:

The IRS has announced the 2015 pension plan limits. They are as follows:

  • Employee elective deferral will increase to $18,000 up from $17,500 for this year
  • Catch up contributions for employees 50 and over will actually increase this year to $6,000 up from $5,500
  • Limit on defined contribution plans will increase to $53,000 up from $52,000 for this year
  • Annual compensation limit will increase to $265,000 up from $260,000
  • Definition of highly compensated employee will increase to $120,000 up from $115,000 for this year.

Personal exemption:
The personal exemption amount for 2015 is $4,000 ($3,950 in 2014). Note that under ATRA the phase-out of the personal exemption for higher income taxpayers is reinstated and begins at $258,250 of adjusted gross income for single taxpayers ($250,000 in 2014), at $309,900 for married couples filing jointly or surviving spouses ($300,000 in 2014), at $154,950 for married taxpayers filing separately ($150,000 in 2014), and at $284,050 for heads of household ($275,000 in 2014).

Pipeline construction industry per diem option:
For 2015, an eligible employer may pay certain welders and heavy equipment mechanics up to $17 per hour for rig-related expenses that will be deemed substantiated under an accountable plan (unchanged from 2014) and up to $11 per hour for fuel ($10 in 2014), when paid in accordance with Rev. Proc. 2002-41 (2002-23 IRB 1098).

Qualified transportation fringes:
The amounts that may be excluded from gross income for employer-provided "qualified transportation fringe benefits" for 2015 are as follows: $250 per month for "qualified parking" (unchanged from 2014), and $130 per month for "transportation in a commuter highway vehicle and any transit pass" (also unchanged). Note that parity for mass transit benefits, which was extended by the American Taxpayer Relief Act of 2012 (ATRA), expired at the end of 2013.

Social Security Wage Base:

The 2015 social security wage base is $118,500; up $1,500 from the current base of $117,000.   

 

The rate does not change. It will still be 6.2% for employees and 6.2% for employer unless Congress passes legislation during sessions after the November elections.  The maximum tax that can be deducted in 2015 is $7,347.00.  That is up $93 from this year. 


The Medicare rate also remains 1.45 percent for both employees and employers and there is no wage limit.  The Additional Medicare Tax still kicks in at $200,000 in wages and still has a rate of 0.9% paid by the employee only.

Standard deduction:
The standard deduction amounts for 2015 increase to $12,600 for married couples filing jointly or surviving spouses (up from $12,400 in 2014), $9,250 for heads of household (up from $9,100 in 2014), and $6,300 for single taxpayers and married taxpayers filing separately (up from $6,200 in 2014). Note that under ATRA the standard deduction for joint filers/surviving spouses remains at 200% of the standard deduction for single filers.

STATE CHANGES:

FUTA Credit Reduction States for 2014:

The Department of Labor (DOL) has announced the final list for states that will have a FUTA credit reduction in 2014.  The states and rates are:

State 

Credit Reduction 

Add On 

Final 2014 FUTA Tax Rate 

        California 

           1.2% 

 

              1.8% 

        Connecticut 

           1.7% 

             .5% 

              2.3% 

        Indiana

           1.5%  

 

              2.1%

        Kentucky

           1.2%

 

              1.8%

        New York 

           1.2%

 

              1.8%

        North Carolina 

           1.2%

 

              1.8%

        Ohio

           1.2%

 

              1.8%

In addition, the Virgin Islands will have a credit reduction of 1.2% and a final FUTA rate of 1.8% 

Alabama:

The SUI taxable wage base will remain $8,000 for 2015. The rates will be continue to be under Schedule D.

Arizona: 2015 SUI wage base remains $7,000.

Arkansas: 2015 SUI wage base remains $12,000.

California: has become second state to mandate paid sick leave. The bill requires employers to provide paid sick leave to employees who work 30 or more days within a year. Employees will earn a minimum of one hour of paid sick leave for every 30 hours worked.

California's New Paid Sick Leave Law: http://www.dir.ca.gov/dlse/Paid_Sick_Leave.htm

California: The Employment Development Department has announced the 2015 unemployment insurance contribution, employment training tax (ETT) and state disability insurance (SDI) withholding tables and rates.   The UI table in effect for 2015 is Schedule F+. The UI and ETT wage base remains $7,000. The ETT rate is 0.1%. The SDI withholding rate is 0.9% and the taxable wage base is $104,378. The maximum to withhold for each employee for SDI is $939.40.

Hawaii: SUI taxable wage base for 2015 will increase to $40,900. This is up from $40,400 in 2014.

Idaho: 2015 SUI wage base is $36,000.

Illinois: passes pay card legislation.  Illinois Governor Pat Quinn has signed legislation that explicitly authorizes the use of pay cards with a number of restrictions and conditions. The bill, H.B. 5622 requires employees to be able to choose an alternative form of payment such as direct deposit or paper check.  The employee must have the option to withdraw entire full net wages, must receive monthly transaction histories and receive account balances at any time with no cost.  

Chicago, Illinois: The City Council has passed an ordinance that will raise the minimum wage for all Chicago workers to $13 per hour by 2019. July 1, 2015 it will increase to $10 per hour. To $10.50 on July 1, 2016. It will increase to $11 on July 1, 2016. Then on each July 1 it will increase $1 per hour until it reaches $13 per hour on July 1, 2019.     

Kansas: The 2015 income tax withholding tables have been released. They apply to wages paid on or after January 1, 2015.  

Maine: The Maine Revenue Services has released the 2015 Maine employer withholding guide.   

 

Maryland: The state's 2015 SUI rates will show an increase from 2014. Table B will be used with rates ranging from 0.6% to 9.0%. The SUI wage base will remain $8,500 for 2015.

Montana: The SUI taxable wage base for 2015 is $29,500.

Nebraska: The unemployment tax rates will range from 0.0% to 5.4% for 2015. The wage base will remain $9,000.

 

New Mexico: The state unemployment insurance rates for 2015 will be computed based on a new benefit ratio system and will increase to a range of a minimum of 0.33% to a maximum of 6.4%. The taxable wage base will remain $23,400 for 2015.

 

New York: New York has issued the New York State and Yonkers withholding tables for wages paid on or after January 1, 2015.

New York: Cities are starting to mandate transit benefits to help out employees in that city. The latest is New York City whose Mayor Bill de Blasio signed into law a requirement that employers with 20 or more employees give their full-time New York City employees an option to purchase their transit benefits with pre-tax dollars.  The law was signed on October 20th and is effective January 1, 2016. It does not apply to parking benefits and there are civil penalties.   

New York: Mandates Withholding Tax Filings. Electronic filing is mandatory for withholding tax filings NYS-45 and NYS-1 for 2015. For withholding tax returns due on or after April 30, 2015, you must electronically file and pay your withholding tax returns electronically.  Filers of paper returns may be subject to penalties and delays in processing.

The department offers three methods for electronically filing withholding tax returns:

  • Tax Department Web File - You can make withholding payments; file withholding tax returns, and report wage and UI (unemployment insurance) information.
  • Tax Department Web upload - The fastest and easiest way to make withholding payments, file returns, and report withholding tax, wage, and UI information

North Carolina: The SUI taxable wage base will increase to $21,700 for 2015.  

Supplemental withholding rate for 2015 is 5.75%. This is down from 5.8% for 2014.

South Dakota: The 2015 Unemployment Insurance rates are based on a new lower rate schedule and will range from 0.0% to 9.5%. The SUI taxable wage base will increase to $15,000. This is up from $14,000 for 2014.

Virginia: The SUI wage base remains $8,000 for 2015.

Washington: The Department of Labor & Industries has announced the final workers compensation insurance premiums will increase by an average of 0.8% for 2015. This is lower than the proposed 1.8% increase that was made in September of this year.

The SUI wage base for Washington state has increased for 2015. It will now be $42,100.  This is up from $41,300 in 2014.  The SUI rates remain unchanged.

Wyoming: SUI wage base for 2015 will increase to $24,700.

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