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Posts published in “Payroll”

Guide to the 2020 W-2 Form

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Over the next few weeks, as your employees start to receive their 2020 W-2 form, they will most likely have many questions as to what all those numbers mean.  For example, it is not uncommon for a salaried employee who earns $50,000 per year question why their Box 1 Wages only reflects $45,000.  Did they get underpaid? Probably not. If the employee contributes to a pension plan (aka 401(k)) or has pre-tax insurance deductions, then those amounts reduces the “taxable” wage, which is what appears in Box 1. To assist you with questions like that, here is a handy guide…

Withholding Tax Rates Drop Drastically With New W-4 Form

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Almost three years ago, I wrote an article about the steady decline in the amount of federal income tax withheld from an employee’s check over the past three decades. This was prior to the new 2020 Form W-4 redesign, so I thought it would be interesting to revisit this chart and see its effect. As we saw three years ago, the amount of income tax withheld from an employee claiming Single with One allowance or Married with One allowance has steadily decreased, with the exception of 2009 where there was a sharp decrease that eventually returned to its pre-depression state…

2021 W-4 Form News You Can Use

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There has been no change to the 2021 W-4 Form from the recently re-designed 2020 version, other than the tax table, but there has been a bit of confusion. First off, the IRS encourages the use of the new form, but it is not required for 2021. Employees will find a more accurate withholding and, most likely, enjoy a higher net pay on every check if they do complete a new form. Payroll systems that utilize the new tax withholding table have recently been provided the ability to ‘bridge’ the 2019 and earlier form as if they were the the…

State Minimum Wage Increases 2021

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While the Federal minimum wage remains at $7.25 per hour, many states and cities/locals have set increases effective January 1st, 2021 with a few announcing a change during 2021.  With the addition of Florida, there are now 8 states on their way, or at $15.00 per hour.  A list of each state/local, along with the new hourly rate is listed below; All rates are effective January 1st, 2021 unless otherwise noted. Alaska: $10.34 Arizona: $12.15 ($9.15 for tipped employees-$3 less than minimum wage) Arkansas: $11.00 (tipped minimum wage will remain at $2.63) California: $14.00 for businesses with 26 or more…

Information Regarding Your Employees’ Rights for Time Off to Vote

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Do you know the laws on providing time off for your employees to vote? As we approach a major national election, you should review your policy to make sure you are in compliance with the law, as there can be civil and criminal penalties for violations. There is not a federal law on the books, so any time-off policy falls in the hands of the state in which the employee votes. Some states designate an amount of time while others will require paid time off, and just about all prevent you from firing or disciplining an employee for taking time…

State Income Tax Withholding Considerations

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Unless you live and work in one of the following nine states that do not tax wages, you are required to withhold state income tax on wages paid to your employees: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming.  While this may sound simple enough, there are a number of considerations that need to be made, and we will go over them here, including the COVID-19 wrench in the machine. The Form First up is the form itself.  There are a few states that did not adopt their own state withholding tax form, so here is…

Employee Social Security Tax Deferral – an Employer Nightmare with More Questions than Answers

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On August 8, 2020, the President issued an Executive Order (EO) to allow an employee to elect to defer their Social Security tax payment, on wages earned from September 1, 2020 through December 31, 2020, to a later date. Rightfully so, the EO lacked details on implementation, which would be up to the U.S. Treasury to determine. Late Friday afternoon on August 28, 2020, the IRS published Notice 2020-65, and while the notice does provide details, it is still lacking rules and guidance on many points.  Most employers, since March 27, 2020, have had the ability to defer the deposit…

PPP Forgiveness Update August 2020

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Both the SBA and the U.S. Treasury have been busy throughout the month of August.  We have seen the loan approval process close on August 8, the loan forgiveness application process open on August 10 (sort of), forgiveness rules clarification with the August 11th update of their FAQs,  and a new interim final rules published on August 24th.   The closing of the PPP loan program is probably long overdue. After several extensions of the program, it appeared that the demand for the loan funds had come to a halt and there was not much of a demand for it in…

PPP Forgiveness Update

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We have not seen much change in relation to PPP loan forgivness, although there are a few notable updates. Payroll costs includes the wages up to $100,000 of annualized pay per employee. For those using the eight-week covered period, that is a maximum of $15,385 per individual, and for those using the 24-week covered period, that will be a maximum of $46,154 per individual.  A company does not have to wait the full 24-weeks to file for forgiveness if they meet the spending requirements sooner.  Let’s say you spend 100% of the loan amount on payroll costs after just 10…

Paycheck Protection Program (PPP) Forgiveness Part II

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The Small Business Administration (SBA) has released the Loan Forgiveness Application, which has provided answers to many previously-vague conditions of forgiveness.  One problem is that for many, these instructions come towards the end of their eight-week loan proceeds spending and may be too late.  I saw one article state that the loan application failed to provide instructions as to how to build a time machine to go back in time to correct what might have already been done.  We may see a spike in Delorean resales! Rather than repeat what I have provided in the first article https://blog.paymaster.com/sba-paycheck-protection-program-ppp-loan-forgiveness/ , I…