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2020 PAYROLL UPDATEFEDERAL CHANGES:IRS Releases new W-4 Form for 20202020 W-4 form (English):?? IRS’?Understanding the 2020 Form W-4 and How to Use it to Calculate Withholding?webinar is now posted to the IRS video portal. This hour-long webinar covers: Reasons for a new design of the W-4Explanation of Steps 1-5 of the 2020 Form W-4Explanation of who must use itIllustration of how to complete two of the five worksheets fromPublication 15-TRecorded Q&A session from the live eventIRS Releases Publication 509 for 2020:? Federal holidays are as follows:January 1- New Year’s DayJanuary 20- Birthday of Martin Luther King JrFebruary 17- Birthday of George Washington (President’s Day):?May 25- Memorial DayJuly 3- Independence Day (Observed)September 7- Labor DayOctober 12- Columbus DayNovember 11- Veterans DayNovember 26- Thanksgiving DayDecember 25- Christmas Day* Remember that a statewide legal holiday does not delay a due date for making a federal tax deposit.?IRS Releases 2019 Form 940:? 15, The Circular E. It is now available on the IRS website:? Releases 2020 Standard Mileage RatesThe IRS released Notice 2019-215 providing the 2020 standard mileage rates. Beginning January 1, 2020, the standard mileage rates for the use of a car (vans, pickups or panel trucks) will be:57.5 cents per mile for business miles driven,?down from?58.0 cents for 201917 cents per mile driven for medical or moving purposes, down from 20 cents for 2019?14 cents per mile driven in service of charitable organizations, unchanged from 2019IRS Releases 2020 Pension Plan Limits: Highlights of Changes for 2020The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased from $19,000 to $19,500. The additional catch-up contribution limit for individuals aged 50 and over increased from $6,000 to $6,500 in 2020, the first increase since 2015.The limit on annual contributions to an IRA remains unchanged from 2019 at $6,000. The additional catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000.The income ranges for determining eligibility to make deductible contributions to traditional Individual Retirement Arrangements (IRAs), to contribute to Roth IRAs and to claim the saver’s credit all increased for 2020.Taxpayers can deduct contributions to a traditional IRA if they meet certain conditions. If during the year either the taxpayer or their spouse was covered by a retirement plan at work, the deduction may be reduced, or phased out, until it is eliminated, depending on filing status and income. (If neither the taxpayer nor their spouse is covered by a retirement plan at work, the phase-outs of the deduction do not apply.) Here are the phase-out ranges for 2020:For single taxpayers covered by a workplace retirement plan, the phase-out range is $65,000 to $75,000, up from $64,000 to $74,000.?For married couples filing jointly, where the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is $104,000 to $124,000, up from $103,000 to $123,000.?For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $196,000 and $206,000, up from $193,000 and $203,000.?For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.The income phase-out range for taxpayers making contributions to a Roth IRA is $124,000 to $139,000 for singles and heads of household, up from $122,000 to $137,000. For married couples filing jointly, the income phase-out range is $196,000 to $206,000, up from $193,000 to $203,000. The phase-out range for a married individual filing a separate return who makes contributions to a Roth IRA is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.The income limit for the Saver’s Credit (also known as the Retirement Savings Contributions Credit) for low- and moderate-income workers is $65,000 for married couples filing jointly, up from $64,000; $48,750 for heads of household, up from $48,000; and $32,500 for singles and married individuals filing separately, up from $32,000.Social Security (OASDI) Program Rates & Limits2020Tax RatesSocial Security (Old-Age, Survivors, and Disability Insurance)?Employers and Employees6.20%Medicare (Hospital Insurance)Employers and Employees1.45%Additional Medicare0.9%(Applies to earned income of more than $200,000. Employers withhold this tax on wages in excess of $200,000 regardless of an employee’s filing status.)Maximum Taxable EarningsSocial Security$137,700Medicare (Hospital Insurance)No?limitEarnings Required for Work CreditsOne Work Credit (One Quarter of Coverage)$1,410Maximum of Four Credits a Year$5,640Earnings Test Annual Exempt AmountUnder Full Retirement Age for Entire Year$18,240For Months Before Reaching Full Retirement Age in Given Year$48,600Beginning with Month Reaching Full Retirement AgeNo?limitMaximum Monthly Social Security Benefit for Workers Retiring at Full Retirement Age $3,011Full Retirement Age66Social Security Wage Base Increases to $137,700 for 2020 On October 10, the Social Security Administration (SSA) announced that the 2020 social security wage base will be $137,700, an increase of $4,800 from $132,900 in 2019 [SSA, Press Release, 10-10-19].The FICA tax rate remains 7.65% for 2020 up to the social security wage base (see the?Social Security Fact Sheet: 2020 Social Security Changes). The maximum social security tax employees and employers will each pay in 2020 is $8,537.40, an increase of $297.60 from $8,239.80 in 2019.2020 Income Tax Withholding Tables: Wage: Federal Minimum Wage remains at $7.25 per hourFederal Minimum Salary changed to $684 per week, or $35,568 annuallyFederal Minimum Salary for employees exempt under the “highly compensated” employee exemption is $130,000.STATE CHANGES:Schedule for California Minimum Wage rate 2020-2023.DateMinimum Wage for Employers with 25 Employees or LessMinimum Wage for Employers with 26 Employees or MoreJanuary 1, 2020$12.00/hour$13.00/hourJanuary 1, 2021$13.00/hour$14.00/hourJanuary 1, 2022$14.00/hour$15.00/hourJanuary 1, 2023$15.00/hour?Minimum Salary:?The exempt salary threshold increases for January 1, 2020 are as follows:Employers with 26 or more employees: $1,040 weekly, $4,506.67 monthly, or $54,080 yearlyEmployers with 25 or fewer employees: $960 weekly, $4,160 monthly, or $49,920 yearly2020 Minimum Wage by State:Alabama$7.25?(Federal Minimum Wage, no state minimum)Alaska$10.19 Arizona$12.00 Arkansas$10.00 California$13 (Employers with 26 or more employees, otherwise $12)Colorado$12.00 Connecticut$11.00 Delaware$9.25 Washington D.C.$15.00 (July 2020)Florida$8.56 Georgia$7.25?($5.15?if not covered by federal regulations)Hawaii$10.10 Idaho$7.25 Illinois$9.25 Indiana$7.25 Iowa$7.25 Kansas$7.25 Kentucky$7.25 Louisiana$7.25?(Federal Minimum Wage, no state minimum)Maine$12.00 Maryland$11.00 Massachusetts$12.75 Michigan$9.65 Minnesota$10.00? – large employers & $8.15 – small employersMississippi$7.25?(Federal Minimum Wage, no state minimum)Missouri$9.45 Montana$8.65 Nebraska$9.00 Nevada$9.00 New Hampshire$7.25?(Federal Minimum Wage, no state minimum))New Jersey$11.00 New Mexico$9.00 New York$11.80 North Carolina$7.25 North Dakota$7.25 Ohio$8.70 Oklahoma$7.25 Oregon$11.25 Pennsylvania$7.25 Rhode Island$10.50 South Carolina$7.25?(Federal Minimum Wage, no state minimum)South Dakota$9.30 Tennessee$7.25?(Federal Minimum Wage, no state minimum)Texas$7.25 Utah$7.25 Vermont$10.96 Virginia$7.25 Washington$13.50 West Virginia$8.75 Wisconsin$7.25 Wyoming$7.25?($5.15 if federal regulations do not apply)U.S. Virgin Islands$10.50 Puerto Rico$7.25 Employers covered by the Federal Fair Labor Standards ActGuam$8.75 (March 2020)Automatic Updates:?The new minimum salary levels will not update automatically every year as originally proposed, but they will be adjusted every three years beginning January 1, 2020. The salary level will be pegged to the 40th percentile of full-time salaried workers in the lowest-wage Census region. ................
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