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American Payroll Association                                            

2019 PAYROLL UPDATE

FEDERAL CHANGES:

IRS Releases Publication 509 for 2019:  https://www.irs.gov/pub/irs-pdf/p509.pdf

2019 Federal holidays are as follows:

  • ·         January 1- New Year’s Day
  • ·         January 21- Birthday of Martin Luther King Jr
  • ·         February 18- Birthday of George Washington (President’s Day): 
  • ·         May 27- Memorial Day
  • ·         July 4- Independence Day
  • ·         September 2- Labor Day
  • ·         October 14- Columbus Day
  • ·         November 11- Veterans Day
  • ·         November 28- 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 2018 Form 940:  https://www.irs.gov/pub/irs-pdf/f940.pdf

IRS Releases 2019 Standard Mileage Rates

The IRS released Notice 2019-02 https://www.irs.gov/pub/irs-drop/n-19-02.pdf providing the 2019 standard mileage rates. Beginning January 1, 2019, the standard mileage rates for the use of a car (vans, pickups or panel trucks) will be:

  • 58 cents per mile for business miles driven, up from 54.5 cents for 2018
  • 20 cents per mile driven for medical or moving purposes, up from 18 cents for 2018 
  • 14 cents per mile driven in service of charitable organizations, unchanged from 2018

IRS Releases 2019 Pension Plan Limits:

§  Highlights of Changes for 2019

The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased from $18,500 to $19,000.

The limit on annual contributions to an IRA, which last increased in 2013, is increased from $5,500 to $6,000. The additional catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000.

The income ranges for determining eligibility to make deductible contributions to traditional Individual Retirement Arrangements (IRAs), to contribute to Roth IRAs and to claim the saver’s credit all increased for 2019.

Taxpayers can deduct contributions to a traditional IRA if they meet certain conditions. If during the year either the taxpayer or their spouse was covered by a retirement plan at work, the deduction may be reduced, or phased out, until it is eliminated, depending on filing status and income. (If neither the taxpayer nor their spouse is covered by a retirement plan at work, the phase-outs of the deduction do not apply.) Here are the phase-out ranges for 2019:

  • For single taxpayers covered by a workplace retirement plan, the phase-out range is $64,000 to $74,000, up from $63,000 to $73,000.
     
  • For married couples filing jointly, where the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is $103,000 to $123,000, up from $101,000 to $121,000.
     
  • For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $193,000 and $203,000, up from $189,000 and $199,000.
     
  • For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.

The income phase-out range for taxpayers making contributions to a Roth IRA is $122,000 to $137,000 for singles and heads of household, up from $120,000 to $135,000. For married couples filing jointly, the income phase-out range is $193,000 to $203,000, up from $189,000 to $199,000. The phase-out range for a married individual filing a separate return who makes contributions to a Roth IRA is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.

The income limit for the Saver’s Credit (also known as the Retirement Savings Contributions Credit) for low- and moderate-income workers is $64,000 for married couples filing jointly, up from $63,000; $48,000 for heads of household, up from $47,250; and $32,000 for singles and married individuals filing separately, up from $31,500.

§  Highlights of Limitations that Remain Unchanged from 2018

The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan remains unchanged at $6,000.

Social Security (OASDI) Program Rates & Limits

2019

Tax Rates

Social Security (Old-Age, Survivors, and Disability Insurance)

 

Employers and Employees

6.20%

Medicare (Hospital Insurance)

Employers and Employees

1.45%

Additional Medicare

0.9%

(Applies to earned income of more than $200,000. Employers withhold this tax on wages in excess of $200,000 regardless of an employee’s filing status.)

Maximum Taxable Earnings

Social Security

$132,900

Medicare (Hospital Insurance)

No limit

Earnings Required for Work Credits

One Work Credit (One Quarter of Coverage)

$1,360

Maximum of Four Credits a Year

$5,440

Earnings Test Annual Exempt Amount

Under Full Retirement Age for Entire Year

$17,640

For Months Before Reaching Full Retirement Age in Given Year

$46,920

Beginning with Month Reaching Full Retirement Age

No limit

Maximum Monthly Social Security Benefit for Workers Retiring at Full Retirement Age

$2,861

Full Retirement Age

66

Social Security Wage Base Increases to $132,900 for 2019

 

On October 11, the Social Security Administration (SSA) announced that the 2019 social security wage base will be $132,900, an increase of $4,500 from $128,400 in 2018 [SSA, Press Release, 10-11-18].

The FICA tax rate remains 7.65% for 2019 up to the social security wage base (see the Social Security Fact Sheet: 2019 Social Security Changes). The maximum social security tax employees and employers will each pay in 2019 is $8,239.80, an increase of $279.00 from $7,960.80 in 2018.

2019 Income Tax Withholding Tables: https://www.irs.gov/pub/irs-pdf/n1036.pdf

Minimum Wage:

  • ·         Federal Minimum Wage remains at $7.25 per hour
  • ·         Federal Minimum Salary remains at $913 per week, or $47,476 annually
  • ·         Federal Minimum Salary for employees exempt under the “highly compensated” employee exemption remains at $134,004.

STATE CHANGES:

Schedule for California Minimum Wage rate 2018-2023.

Date

Minimum Wage for Employers with 25 Employees or Less

Minimum Wage for Employers with 26 Employees or More

January 1, 2019

$11.00/hour

$12.00/hour

January 1, 2020

$12.00/hour

$13.00/hour

January 1, 2021

$13.00/hour

$14.00/hour

January 1, 2022

$14.00/hour

$15.00/hour

January 1, 2023

$15.00/hour

 

Minimum Salary: The exempt salary threshold increases for January 1, 2019 are as follows:
Employers with 26 or more employees: $960 weekly, $4,160 monthly, or $49,920 yearly
Employers with 25 or fewer employees: $880 weekly, $3,813.33 monthly, or $45,760 yearly

  • Alabama: $7.25 (Federal Minimum Wage, no state minimum)
  • Alaska: $9.89 (Annual indexing has begun)
  • Arizona: $11.00
  • Arkansas: $9.25
  • California: $12.00 (employers with 26 or more employees, otherwise $11.00)
  • Colorado: $11.10
  • Connecticut: $10.10
  • Delaware: $8.75
  • District of Columbia: $14.00 (as of 7/1/19)
  • Florida: $8.46
  • Georgia: $7.25 ($5.15 if not covered by federal regulations)
  • Guam: $8.25
  • Hawaii: $10.10 
  • Idaho: $7.25
  • Illinois: $8.25 
  • Indiana: $7.25
  • Iowa: $7.25 
  • Kansas: $7.25
  • Kentucky: $7.25
  • Louisiana: $7.25 (Federal Minimum Wage, no state minimum)
  • Maine: $11.00 
  • Maryland: $10.10 
  • Massachusetts: $12
  • Michigan: $9.45 (Effective in late March 2019)
  • Minnesota: $9.86 ($8.04 for employers with gross annual sales of $500,000 or less)
  • Mississippi: $7.25 (Federal Minimum Wage, no state minimum)
  • Missouri: $8.60
  • Montana: $8.50 ($4 for businesses with gross annual sales of $110,000 or less))
  • Nebraska: $9.00 
  • Nevada: $8.25 
  •  New Hampshire: $7.25 (Federal Minimum Wage)
  • New Jersey: $8.85
  • New Mexico: $7.50
  • New York: $11.10
  • North Carolina: $7.25 
  • North Dakota: $7.25
  • Ohio: $8.55 
  • Oklahoma: $7.25
  • Oregon: $11.25 (7/1/19)
  • Pennsylvania: $7.25
  • Puerto Rico: $7.25 (Employers covered by the Federal Fair Labor Standards Act)
  • Rhode Island: $10.50 
  • South Carolina: $7.25 (Federal Minimum Wage, no state minimum)
  • South Dakota: $9.10
  • Tennessee: $7.25 (Federal Minimum Wage, no state minimum)
  • Texas: $7.25
  • Utah: $7.25
  • Vermont: $10.78
  • U.S. Virgin Islands: $10.50
  • Virginia: $7.25
  • Washington: $12.00
  • West Virginia: $8.75
  • Wisconsin: $7.25
  • Wyoming: $7.25 ($5.15 if federal regulations do not apply)

Automatic Updates: The new minimum salary levels will not update automatically every year as originally proposed, but they will be adjusted every three years beginning January 1, 2020. The salary level will be pegged to the 40th percentile of full-time salaried workers in the lowest-wage Census region. For 2020, the DOL estimates that the minimum will go up to $51,168. The minimum for highly compensated employees will be tied to the 90th percentile of full-time salaried workers in the lowest-wage Census region, which the DOL estimates will be $147,524 in 2020.

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