2019 Year End Reminders and 2020 Payroll Tax Update

By Rebecca Clemmer, Payroll Specialist

New W-4 Form

The 2020 form W-4 was redesigned to comply with the income withholding requirements following the passing of the Tax Cuts and Jobs Act (TCJA) in December 2017.  The 2020 W-4 form can be found on the Resources tab at dhapayroll.com.  All new employees in 2020 must complete the redesigned W-4 form.  Current employees are not required to complete a new W-4 however, employers should encourage employees to review their withholding each year.  Taxpayers can use an updated paycheck checkup calculator at irs.gov.

 

Social Security Verification

The Social Security Administration (SSA) continues to send its Educational Correspondence (EDCOR) notices to employers containing name and social security number (SSN) mismatches.  Mismatched names and social security numbers will prevent credit earnings to a worker’s record and possibly disqualify workers for Social Security benefits.

 

Employers with 250+ employees

If at any time since 2015 an employer filed over 250 W-2s in one year, reporting requirements to include the cost of Employer Sponsored Health Coverage on the W-2 in box 12 with code DD, remain in effect.  The following is a list of the items that need to be included:

  • Major Medical
  • Hospital Indemnity or specific illness paid pretax basis or by employer
  • Domestic Partner coverage included in gross income

There are several types of insurance that are optional for reporting.

Applicable Large Employers (employer with 50+ full time equivalent employees)

Reporting requirements, using Form 1094-C and Form 1095-C, remain in effect.  Additional reporting requirements, using Form 1095-B apply to employers with self-insured coverage, even if not an applicable large employer.

 

Reporting of Fringe Benefits

If you have any fringe benefits that you’ve given your employees in 2019, they need to be included on their W-2’s.  There are several items that qualify as fringe benefits.  Below is a list of common items that you need to report, however this list in not all inclusive:

  • Health Insurance premiums you paid on behalf of a 2% or greater shareholder if you are an S Corporation
  • Personal Use of Company Car
  • Value of Group Term Life Insurance in excess of $50,000
  • Employer Health Savings Account Contributions
  • List of Retirement Plan Participants including Employer only contributions
  • Cash and Non-cash gifts given to employees, regardless of amount

These are only a few of the items that need to be included on the W-2’s. 

PA SUTA Wage Base

The taxable wage base for employers remains at $10,000 in 2020.  The employee portion remains at 0.07 percent with no wage limit.

CHANGES FOR 2020

2020 FICA Changes

The Social Security Wage Base is increasing to $137,700.  Therefore, the maximum Social Security tax employees and employers will contribute is $8,537.40 each.  Medicare continues to have no wage base limit.  However, when an employee earns over $200,000, they will be subject to an extra .09% Medicare Tax.  The employers do not match this portion of the Medicare tax.

Retirement Contribution Limits for 2020

401(k)                                                                               $19,500

403(b)                                                                               $19,500

Catch-up Contributions for over 50 years old           $6,500

Simple IRA or 401(k)                                                     $13,500

Catch-up Contributions for over 50 years old           $3,000

 

Health Savings Account Limits for 2020    

Self-only Coverage                                                       $3,550 

Family Coverage                                                           $7,100     

Catch-up Contributions for over 55 years old        $1,000                 

Health Flexible Spending Accounts                          $2,750

We hope this information will help you prepare for a productive and prosperous 2020.  As always, you can contact DHA Payroll at payroll@detweilerhershey.com for all of your payroll related issues.

Filed in: Client News