PAYROLL TAX AND ANNUAL FILING REQUIREMENTS 2017 – 2018
Starting January 1, 2018, New York Paid Family Leave (PFL) will take effect. PFL benefits are available to employees of private sector employers with one or more employees. Employers are required to obtain PFL insurance, BUT the cost of coverage is to be funded through employee payroll deduction. The maximum employee contribution for 2018 will be 0.126% of an employee’s weekly wage, and is capped at $.165 weekly. For more information go to: https://ny.gov/programs/newyork-state-paid-family-leave.
Social Security and Medicare for 2018 – The total withholding for social security continues at 6.2% for the employee withholding and 6.2% for the employer match. The wage base for 2018 increases to $128,700 and the maximum tax is $7,979.40 (6.2% of $128,700). There is no limit on the amount of earnings subject to Medicare tax. The Medicare tax rate remains at 1.45%, with the exception of “Additional Medicare Tax” for higher wage earners (explained below). The employer match also remains the same at 1.45% of gross wages with no ceiling.
Additional Medicare Tax – Employers are required to withhold an Additional Medicare Tax of .9% on wages and other compensation that is paid to a single employee in excess of $200,000 in a calendar year. There is no employer match on the compensation subject to Additional Medicare Tax.
Minimum Wage for 2018 – The minimum wage increases to $10.40 per hour for wages paid in the greater area of New York State.
Federal Unemployment Insurance – The federal wage base for unemployment insurance continues at $7,000 for 2018 with the effective tax rate of .6%
NYS Unemployment Insurance – NYS unemployment wage base for 2018 has been raised to $11,100.
Notice and Acknowledgement of Pay Rate and Payday – Forms LS 52 – 57 – You must have a completed Form LS 52, 54, 55, 56 or 57 (depending on the type of employee), on file for all new employees. This form should be updated every time a change in wages occurs. A signed, completed copy must also be provided to the employee. A copy of these forms can be obtained at www.labor.ny.gov/home. (Labor Law 195(1))
Employer Sponsored Health Coverage – For 2018, employers should continue to track health insurance costs by employee for reporting on Form W-2 for the year. For employers who filed less than 250 W-2’s for 2016, it is optional reporting for 2017 W-2’s.
New York State Forms – NYS continues to mandate paperless filing. Forms are available at the Online Center. www.tax.ny.gov/online/
PAYMENT OF WITHHOLDING TAXES
Federal Payment Requirements:
IRS should have notified you during the fourth quarter of 2017 of your depository status for 2018. This status is determined by your history of total withholding liability for the period 07/01/16 through 06/30/17. If that total is more than $50,000, you are required to make semi-weekly deposits. If your accumulated liability for a quarter is over $2,500, you must make monthly deposits. IRS must notify you of being a 944 filer. The computation of liability remains the same:
Total Deposit = (Social Security W/H @ 6.2% X 2) + (Medicare W/H @ 1.45% X 2) + Federal W/H
Payment of payroll tax liability is determined by the following:
REMINDER - for employers using EFTPS, all types of federal tax must be paid electronically.
New York State Payment Requirements:
Liability is computed based on actual total withholding of New York State tax and is summarized as follows: NYS mandates electronic filing of forms NYS-1 and NYS-45.
If you have filed at least once during the calendar quarter (using Form NYS-1) and have an unremitted balance of tax withheld that is less than $700 after the last payroll of the quarter, remit this amount with your quarterly return, Form NYS-45, instead of with Form NYS-1.
QUARTERLY REPORTING REQUIREMENTS
FORM 941 – FEDERAL WITHHOLDING TAXES – "Employer's Quarterly Federal Tax Return", used by employers who withhold income, social security and medicare from employees’ wages, must be filed every quarter (with the exception of seasonal employers), even if employees had no wages.
FORM 940 – DEPOSITS OF FEDERAL UNEMPLOYMENT INSURANCE TAX – "Federal Unemployment Insurance (FUTA Tax) is computed on a quarterly basis at the net rate of 0.6% of the first $7,000 in gross wages paid per employee per calendar year. No deposit is required for any quarter in which the liability plus the accumulated liability for the previous quarters is less than $500 (except for fourth quarter). You must make your deposit using EFTPS if over $500, (see annual reporting requirements below).
FORM NYS–45 AND NYS–45–ATT – NYS COMBINED WITHHOLDING & UNEMPLOYMENT – New York State continues to use Form NYS–45, "Quarterly Combined Withholding Wage Reporting and Unemployment Insurance Report" to report quarterly liability for unemployment insurance along with reconciling NYS withholding for the quarter. The Wage Base for NYS unemployment has been increased to $11,100 for 2018. Form NYS–45–ATT is to be used when there are six or more employees. For fourth quarter only, this form must be filed showing annual gross wages and withholdings. NYS mandates electronic filing of Forms NYS-45 and NYS-45-ATT.
ANNUAL REPORTING REQUIREMENTS
FORM 944 – This is the ANNUAL form that enables small businesses that have less than $2,500 in payroll taxes due for the entire year to file. Payment of tax is made with the form on an annual basis due January 31st of the year after the payroll liability is incurred. Note: IRS will advise if you are a 944 filer, but if your liability increases, you must make monthly payments using the $2,500 rule.
FORM 940 – This is the ANNUAL Federal Unemployment Insurance Tax form for employers, which reconciles all payments made, if any, for the year to quarterly liabilities. The balance, if under $500, may be paid with the form, all others must make the deposit using EFTPS.
FORM W-2 – “Wage and Tax Statement.” Wage statements must be completed and distributed to employees by January 31, 2018. Please review the instructions before completion. Use forms W–2C and W–3C to correct errors on previously filed W–2’s and W–3.
FORM W-3 – “Transmittal of Wage and Tax Statements.” This is a transmittal and reconciliation form required to accompany the W-2 Forms. Form W–3, together with W–2's are to be filed by January 31, 2018 with the Social Security Administration.
FORM 1099 – "Federal Information Return for the Calendar Year 2017." You must provide the recipient with a copy of Form 1099 on or before January 31, 2018. You must issue Form 1099 MISC for payments of $600 or more made in the course of your trade or business to an unincorporated business for services. If you have to report non-employee compensation in Box 7 of Form 1099 MISC, the 1099 must also be filed with the IRS by January 31, 2018. Make sure to withhold tax at 28% if you do not have a valid W-9 on file.
FORM 1096 – “Annual Summary and Transmittal of U.S. Information Returns.” A separate transmittal Form 1096 along with prepared Form 1099’s must be filed with the Internal Revenue Service. Please refer to www.irs.gov/pub/irs-pdf/i1099gi.pdf regarding due date for 1099 filings.
If you do not receive the forms from the taxing agencies, you should contact those agencies and request the missing forms be mailed to you as soon as possible. Telephone numbers of the various agencies are:
Social Security Administration General Questions, 1-800-772-1213
Most forms and publications can be downloaded by going to the following websites:
Internal Revenue Service www.irs.gov
NOTE: This payroll and 1099 requirement letter has been prepared as a guide and does not attempt to take the place of any of the publications provided to you by the various taxing authorities.
If any questions arise, do not hesitate to call our office for assistance at (607) 432-8700.
Mostert, Manzanero & Scott, LLP
4 Associate Drive, Oneonta, NY 13820607-432-8700Fax: 607-432-5122