WE TAKE PRIDE IN KEEPING YOU INFORMED OF TAX CHANGES.
FEDERAL
NEW JERSEY
New - Social Security: The wage base increases to $128,400. Both employer and em-
ployee contribution rates have remained the same at 6.2%.
Medicare: The wage base remains unlimited. The employer contribution rate also re-
mains at 1.45%. However, the employee contribution rate will be 1.45% for the wages up to
$200,000 and 2.35% (1.45% plus additional 0.9% tax) for the wages paid in excess of $200,000.
Important Note: An individual is liable for the additional 0.9% Medicare tax if the individ-
ual’s wages and other compensation are above the threshold. The threshold amounts are
$250,000 for joint filers and $200,000 for single filers. However, the statute requires an employer
to withhold the additional 0.9% Medicare tax on wages it pays to an employee in excess of
$200,000, regardless of the employee’s filing status. The excess withholding will be credited
against the employee’s total income tax liability shown on his or her tax return.
Federal Unemployment Tax Act (FUTA): The wage base remains at $7,000. The rate is
6.0% and the maximum credit is 5.4% of the taxable wages. Therefore, the nominal net rate is
0.6%. However, the credit is reduced for a state that borrows money from federal and defaults
on the loan. In such case, the credit is reduced by 0.3% for each year the loan remains unpaid.
For 2017, New Jersey and Pennsylvania are eligible for the maximum credit. Therefore, the em-
ployers in these states will pay FUTA tax at the net rate of 0.6% for 2017. The rate for 2018 will
be announced in November 2018.
Federal minimum wage remains at $7.25 per hour.
Withholding rates vary from 1.5% - 7.0% for wages up to $500,000. Wages in
excess of $500,000 have a withholding rate of 9.9%.
New - The unemployment tax wage base increases to $33,700 and the employ-
ee contribution rate decreases to 0.705% (0.3825% unemployment fund, 0.0425% workforce
development, 0.19% disability, 0.09% family leave insurance). The maximum employee con-
tribution is $237.59 annually.
New - New Jersey minimum wage increases to $8.60 per hour.
The State of New Jersey requires all employers to file and pay their Employer’s Quarterly Re-
port (Forms NJ-927, NJ-927W, NJ-500), the annual Household Employer’s Annual Report
(Form NJ-927H) and the Employer Report of Wages Paid (Form WR-30) electronically. Please
visit the state website at www.state.nj.us/treasury/taxation to file the reports and or contact
your CPA for further information.
New - Please be advised that on February 1, 2017 a new state law went into effect
that established 19 as the age at which New Jersey child support obligations terminate. The
law will allow for child support to be continued up to age 23 if certain circumstances are met.
As the law is implemented employers may receive an increased amount of Amended Income
Withholding Orders and/or changes to Medical Coverage notices shortly after May 1, 2017
and August 1, 2017. For more information, please visit www.njchildsupport.org or call 1-877-
655-4371.
Payroll Information
Baratz & Associates has compiled
this 2018 Payroll Tax Reference
Sheet as a good starting point for
our clients in the region. Follow-
ing is a list of scheduled payroll
tax, pension plan, and new hire
reporting changes effective in
2018. As additional changes are
released, we will update this in-
formation and keep you posted.
As you are aware, it is important
to be familiar with changes in
payroll taxes each year to accu-
rately process payroll. The infor-
mation on this page is subject to
change at any time based on tax
regulation updates. To stay cur-
rent on payroll processing issues
and payroll tax news, please sub-
scribe to our newsletter and con-
tact your CPA.
You may contact us via email at
2018 PAYROLL REFERENCE SHEET COMPILED FOR YOU BY BARATZ & ASSOCIATES, P.A.
baratzcpa.com ▪ 856.985.5688
STATE CHANGES CONTINUED...
PENNSYLVANIA
The withholding rate continues to be 3.07%. Pennsylvania minimum wage remains at $7.25 per
hour.
New - Employer unemployment tax wage increases to $10,000.
New - Employee unemployment contribution rate decreases to 0.06% of total wages.
All employers are required to make payments and file quarterly reports electronically
effective January 2014. All other filing methods have been discontinued. Please visit E-tides web-
site at https://www.etides.state.pa.us for the employer withholding tax payments (Form PA-501)
and the quarterly filings (Form W-3). The State of Pennsylvania Department of Labor & Industry
has transitioned the unemployment compensation reporting from E-Tides to a new system called
Unemployment Compensation Management System (UCMS). Please visit UCMS website at
www.paucemployers.state.pa.us for the quarterly filings of Forms UC-2 and UC-2A.
PHILADELPHIA CITY TAX RULES
New - The current wage tax withholding rates are 3.8907% for the City residents and 3.4654%
for the City non-residents. We will keep you informed of any rate changes announced by the City
for the year 2018.
Payroll Information
Baratz & Associates has compiled
this 2018 Payroll Tax Reference
Sheet as a good starting point for
our clients in the region. Follow-
ing is a list of scheduled payroll
tax, pension plan, and new hire
reporting changes effective in
2018. As additional changes are
released, we will update this in-
formation and keep you posted.
As you are aware, it is important
to be familiar with changes in
payroll taxes each year to accu-
rately process payroll. The infor-
mation on this page is subject to
change at any time based on tax
regulation updates. To stay cur-
rent on payroll processing issues
and payroll tax news, please sub-
scribe to our newsletter and con-
tact your CPA.
You may contact us via email at
DEFERRAL LIMITATIONS AND PENSION CONTRIBUTIONS
FEDERAL ELECTIVE DEFERRAL LIMITATIONS New - 401(k) maximum annual deferral increases to $18,500 and special catch up provision for those 50 and older remains $6,000 for 2018. Simple IRA Plan 408(p) maximum annual deferral remains $12,500 and special catch up provi-sion for those 50 and older remains $3,000 for 2018. PENSION CONTRIBUTIONS Simple Employee Plan (SEP): maximum contribution is the smaller of $55,000 or 25% of partici-pant's compensation.* Defined Contribution Plan: profit sharing - maximum contribution is the smaller of $55,000 or 25% of participant's compensation.* Defined Contribution Plan: money purchase - maximum contribution is the smaller of $55,000 or 25% of participant's compensation.* Defined Benefit Plans: maximum contribution is the amount needed to provide an annual bene-fit no larger than the smaller of $220,000 or 100% of the participant's average compensation for his or her highest three consecutive calendar years. *Compensation is generally limited to $275,000.
baratzcpa.com ▪ 856.985.5688
REVIEW THE RULES NOW AND PREPARE FOR THE NEW YEAR.
The Internal Revenue Service established an Electronic Federal Tax Payment Sys-
tem (EFTPS) in 2008. All employers are required to make federal tax payments
electronically using EFTPS. Failure to do so could result in 10% penalty. Visit
https://www.eftps.gov/eftps/ to enroll with the EFTPS.
New Jersey Electronic Filing
New Jersey, under its Electronic Funds Transfer (EFT) program, has a threshold of
$10,000. New Jersey requires that a taxpayer with a prior year's tax liability of
$10,000 or greater in any one tax to remit all tax payments to the Division of Reve-
nue using EFT. Visit http://www.state.nj.us/treasury/revenue/enrolleft.shtml to
enroll with EFT.
Annual Base Period
Federal deposit schedule determination is made by examining employment taxes
reported for the previous 12-month period of July 1 of the second preceding calen-
dar year through June 30 of the year prior. A CPA can advise you if you have diffi-
culty in deciding which schedule applies.
Safe Harbor
An employer who under deposits will not be penalized if the shortfall is less than or
equal to $100, or less than 2% of the amount which should have been deposited,
whichever is greater.
New Hire Reporting and I-9 Requirements
A Federal Regulation mandates that all employers are
to report information for any new hire or rehire within
20 days of their start date. You must report employ-
ee's name, address, social security number, date of
birth, and hire date along with the employer's name,
address and Federal identification number. Infor-
mation should be mailed or faxed within the 20-day
period to: New Hire Directory, P.O. Box 4654, Tren-
ton, New Jersey 08650-4654. The fax number is
(800) 304-4901. Information can also be reported
online at www.nj-newhire.com.
Form I-9 Requirements
New - Federal Form I-9 was developed by the U.S.
Department of Justice, Immigration and Naturaliza-
tion Services. The purpose of the form is to document
the verification of an individual’s eligibility to work in
the U.S. All employees, citizens and non-citizens,
hired after November 6, 1986 must complete and sign
Section 1 of the form at the time of hire. The em-
ployer is responsible for ensuring that Section 1 is
timely and properly completed. Any employees hired
after September 18, 2017 must complete the new I-9
Form that was released on July 17, 2017.
Employers are responsible for completing Section 2 of
the form by examining evidence of the applicant’s
identity and employment eligibility within three busi-
ness days of the date employment begins. If the
applicant is unable to produce the required docu-
ments within three business days they must present a
receipt for the application of the required documents
within three business days and the actual documents
within ninety days.
Employers must complete Section 3 of the form when
updating or re-verifying the I-9 information. Employ-
ers must re-verify employment eligibility of their em-
ployees on or before the document expiration date
recorded at the time of hire.
Employers must retain completed I-9s for three years
after the date of hire or one year after the date em-
ployment ends, whichever is later.
DEPOSIT FRQUENCY
DETERMINING FACTOR
DEPOSIT REQUIREMENTS PAY
DATE DEPOSIT DATE
Monthly If the accumulated tax
liability is less than or
equal to $50,000 for the
annual base period
Any Day Deposit monthly by
the 15th of the follow-
ing month.
Semi-weekly If the accumulated tax
liability is greater than
$50,000 for the annual
base period
Wednesday,
Thursday or
Friday
Saturday,
Sunday,
Monday or
Tuesday
Deposit the following
Wednesday.
Deposit the following
Friday.
Exception Rules Tax Liability Amount Deposit Require-
ments
$2,500 Rule If the accumulated tax
liability is less than
$2,500 for the entire
quarter
Remit the liability with
the quarterly tax re-
turn.
$100,000 Rule If the accumulated tax
liability is $100,000 or
more on any single day
Deposit the liability on
the next business day.
baratzcpa.com ▪ 856.985.5688