Important Year-End Updates

Important Year-End Updates

It’s hard to believe that the end of 2019 (and the end of a decade!) is nearly upon us. That means new tax and minimum wage changes are on the horizon. In preparation for the new year, we’ve compiled a list of important changes that will help you prepare your staffing company for 2020.

Earned Income Tax Credit Notice Information:
For 2019, you are encouraged to notify the following employees that they may be able to claim EIC on their 2019 tax returns:

  • Employees with one qualifying child and wages less than $41,094.  The employee’s copy of Form W-2 TRICOM prepares has the required statement about the EIC on the back of the form.  

There are seven states that require employers to provide some additional notification to their employees about their possible eligibility for Earned Income Tax Credit. The following states allow employers to use Federal Notice 797:

  • California
  • Illinois
  • Louisiana
  • Texas

The following states require the use of a state-specified form:

  • New Jersey
  • Virginia
  • Maryland

Once these documents are updated for the current year, they will be available on TRICOM’s website under: http://tricom.com/resources/tax-tools. Please contact your TRICOM Accounting representatives if you have any questions.

Minimum Wage Increases:
2020  Wage Changes
 

State

2020

2019

Change

Alaska

10.19

9.89

0.30

Arizona

12.00

11.00

1.00

Arkansas 10.00 9.25 0.75

California -1

13.00

12.00

1.00

Colorado

12.00

11.10

0.90

Florida

8.56

8.46

0.10

Illinois 9.25 8.25 1.00

Massachusetts

12.75

12.00

0.75

Maine

12.00

11.00

1.00

Maryland 11.00 10.10 0.90
Michigan 9.65 9.45 0.20

Minnesota-3

10.00 9.86 0.14

Missouri

9.45

8.60

0.85

Montana

8.65

8.50

0.15

New Jersey-4

11.00

8.85

2.15

New Mexico 9.00 7.50 1.50

New York-2

11.80

11.10

0.70

Ohio-5

8.70

8.55

0.15

South Dakota 9.30 9.10 0.20

Vermont

10.96

10.78

0.18

Washington

13.50

12.00

1.50

1- Listed for employers with 26 or more employees-employers with 25 or less is $12.00

2- Listed rate for most NY employers; Minimum wage for New York City is $15.00 for large employers

3- Rate listed for large employers (annual sales of $500,00 or more) small employers have minimum wage of $8.15

4- Rate for most employers; $10.30 for seasonal or small employers (fewer than 6 employees); $10.30 for agricultural employers

5- Rate is listed for large employers ($319,000 in gross receipts); $7.25 (Federal Rate, for small employers)

2020 Unemployment Wage Bases:

STATE

 

STATE

 

WAGE

WAGE

BASE

BASE

Alabama

$8,000

Nebraska

9,000

Alaska

 

Nevada

32,500

Arizona

7,000

New Hampshire

14,000

Arkansas

7,000

New Jersey

35,300

California

7,000

New Mexico

25,800

Colorado

13,600

New York

11,600

Connecticut

15,000

North Carolina

25,200

Delaware

16,500

North Dakota

 

District of Columbia

9,000

Ohio

9,000

Florida

7,000

Oklahoma

18,700

Georgia

9,500

Oregon

 

Hawaii

 

Pennsylvania

10,000

Idaho

 

Puerto Rico

 

Illinois

12,740

Rhode Island (Tier 1)

 

Indiana

9,500

Rhode Island (Tier 2)

 

Iowa

31,600

South Carolina

14,000

Kansas

14,000

South Dakota

15,000

Kentucky

10,800

Tennessee

7,000

Louisiana

 

Texas

9,000

Maine

12,000

Utah

 

Maryland

8,500

Vermont

16,100

Massachusetts

15,000

Virgin Islands

24.200

Michigan

 

Virginia

8,000

Michigan (delinquent employers)

 

Washington

52,700

Minnesota

 

West Virginia

12,000

Mississippi

14,000

Wisconsin

14,000

Missouri

11,500

Wyoming

26,400

  • Yellow highlighted areas indicate those states that have not yet released their wage bases. This information will also be listed on TRICOM.com and updated as information becomes available.

FUTA Reduction States:
For tax year 2019, only the Virgin Islands has not repaid their Federal Unemployment Tax loans. Their FUTA Credit reduction rate for 2019 will be 2.7%.

State Tax Table Changes:
The following states have changed their tax tables for 2020 (please keep in mind other states may be added to this list):

  • Kentucky
  • Arizona
  • Iowa

Federal Tax Changes:

  • Social Security Wage Limit has increased from $132,900 to $137,700.  This is an increase for both the employee and the employer of $297.60. The additional .9% Medicare tax on employee wages over $200,000 is still in place for 2020.
  • 401K Limit for 2020 is at $19,500, which is a $500 increase from 2019; the limit on the contribution for individuals aged 50 and over is increased from $6,000 to $6,500.
  • SIMPLE Retirement Plan is at $13,500, a $500 change from 2019.

Standard Deduction Changes:
The following are additional standard deduction changes:

  • Single & Married Filing Separately: $12,400
  • Married Filing Jointly: $24,800
  • Head of Household: $18,650

Additional State & Federal Tax Topics:

  • For 2020, Oregon’s workers’ compensation premium assessment rate will increase to 8.4% from 7.8%. In addition, Oregon Worker’s Benefit Fund will decrease from 2.4 cents to 2.2 cents per hour. One-half of this amount is paid by the employer.
  • On September 24, 2019 the US Department of Labor (DOL) released the final rules increasing the minimum salary level for the Fair Labor Standards Act (FLSA). Beginning on January 1 2020, “white collar” exemptions must make the equivalent of $684 per week or $35,568 a year. This is up from the $455 or $23,660 per year. For current exempt employees who earn salaries between $455 and $684 per week, employers will have to decide whether to increase the employees’ pay or pay overtime.
  • The IRS announced it will discontinue the W-2 Verification Code pilot program. The new early file wage requirements have sufficiently decreased the amount of fraud, thus removing the need for a verification code.
  • Three states started FMLA tax collecting in 2019, DC (4/1/2019); Massachusetts (10/1/2019); Washington (1/1/2019). Massachusetts and Washington have an employee component to the tax. Amounts deducted from the employees check will be reported in box 14 of the employee’s W-2.
  • The IRS has issued a directive to their audit staff to accept WOTC credits in the year the certification is received instead of just the year the work was performed. Later certifications by the states have caused a hardship for employers and has required them to file amended forms when certifications are received after the tax return is due. Contact the TRICOM accounting department if you have questions.
  • Effective July 1, 2020, the city of Eugene, Oregon will require employers and employees to pay a payroll tax to fund community services. The employee rate will vary with the rate of pay for the employee. The employer rate for all employers with over 2 employees will be .21%.
  • California 2020 SDI rate is 1.0% on the first $122,909 of wages.
  • All TRICOM Full Service and Administrative-Only Clients should have received their Year End Questionnaire from the TRICOM team. Please make sure to respond promptly and return to the Accounting Representative that sent it to you.

For more legislative and year-end updates, please refer to TRICOM.com. We’ll post the latest legislative and tax updates, as well as tax tools and other resources for 2020 as they become available. For specific questions, please contact Mary Jo Heim in the TRICOM Accounting Department at 262-509-6214 or your TRICOM Accounting Representative.

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