This is one in a continuing series on the 2009 Form W-2, Wage and Tax Statement, which employers must generally furnish to employees no later than February 1, 2010. Forms mailed on the due date are considered furnished if properly addressed. Employers unable to meet that deadline may file a request for extension of time to furnish the forms. Today we review Box 7, social security tips.
Box 7 shows the amount of tips reported by employees. In many situations, the cash wages paid are insufficient to collect the entire amount of social security and Medicare tax. Reported tips must still be shown in this box, even if social security or Medicare tax was not withheld on them. For 2009, the combined total of Boxes 3 and 7 cannot exceed $106,800. The reported tips should be included with amounts reported in Box 1, wages, tips, other compensation and Box 5, Medicare wages and tips. Since social security benefits are based on the amount of social security tips reported to the Social Security Administration (SSA), it is important that employees periodically review their social security earnings record and provide the SSA with the Form W-2 to update any incorrectly posted earnings records.
The next topic in this continuing series will be Box 8, allocated tips. Contact Vision Payroll with any questions on the 2009 Form W-2.
This is one in a continuing series on the 2009 Form W-2, Wage and Tax Statement, which employers must generally furnish to employees no later than February 1, 2010. Forms mailed on the due date are considered furnished if properly addressed. Employers unable to meet that deadline may file a request for extension of time to furnish the forms. Today we review Box 6, Medicare tax withheld.
Box 6 shows the total amount of employee Medicare withheld, including the amount withheld on tips. It does not include any employer contribution toward Medicare on the employee’s behalf. The 2009 rate was 1.45% and unlike social security, there is no taxable wage base. Therefore, there is no upper limit to the amount entered in this box. If the employer paid the employee’s share of such taxes rather than withholding them, the tax must be grossed up and included in boxes 1, 3, and 5.
The next topic in this continuing series will be Box 7, social security tips. Contact Vision Payroll with any questions on the 2009 Form W-2.
This is one in a continuing series on the 2009 Form W-2, Wage and Tax Statement, which employers must generally furnish to employees no later than February 1, 2010. Forms mailed on the due date are considered furnished if properly addressed. Employers unable to meet that deadline may file a request for extension of time to furnish the forms. Today we review Box 5, Medicare wages and tips.
Box 5 shows the total amount of wages subject to Medicare tax. For most employees, this amount equals the sum of boxes 3 and 7, with one exception. There is no limit on the amount of Medicare wages as there is with social security wages. Additionally, depending on the date of hire, some governmental employees may have Medicare wages, but not social security wages.
The next topic in this continuing series will be Box 6, Medicare tax withheld. Contact Vision Payroll with any questions on the 2009 Form W-2.
This is one in a continuing series on the 2009 Form W-2, Wage and Tax Statement, which employers must generally furnish to employees no later than February 1, 2010. Forms mailed on the due date are considered furnished if properly addressed. Employers unable to meet that deadline may file a request for extension of time to furnish the forms. Today we review Box 4, social security tax withheld.
Box 4 shows the total amount of employee social security tax withheld, including the amount withheld on tips. It does not include any employer contribution toward social security on the employee’s behalf. Since the 2009 rate was 6.2% and the taxable wage base was $106,800, the amount in this box should not exceed $6,621.60. If the employer paid the employee’s share of such taxes rather than withholding them, the tax must be grossed up and included in boxes 1, 3, and 5.
The next topic in this continuing series will be Box 5, Medicare wages and tips. Contact Vision Payroll with any questions on the 2009 Form W-2.
This is one in a continuing series on the 2009 Form W-2, Wage and Tax Statement, which employers must generally furnish to employees no later than February 1, 2010. Forms mailed on the due date are considered furnished if properly addressed. Employers unable to meet that deadline may file a request for extension of time to furnish the forms. Today we review Box 3, social security wages.
Box 3 shows the amount wages paid subject to social security tax. It does not include social security tips reported in box 7 or allocated tips reported in box 8. Wages should be reduced by amounts withheld for non-taxable benefits elected under §125 plans, certain clergy housing allowances, and third-party sick pay after the end of six calendar months after the calendar month that the employee last worked for the employer. For 2009, the combined total of boxes 3 and 7 cannot exceed $106,800. Since social security benefits are based on the amount of social security wages reported to the Social Security Administration (SSA), it is important that employees periodically review their social security earnings record and provide the SSA with the Form W-2 to update any incorrectly posted earnings records.
The next topic in this continuing series will be Box 4, social security tax withheld. Contact Vision Payroll with any questions on the 2009 Form W-2.
This week’s question comes from Scott, a small-business owner. I own a business in Michigan. I’ve heard that for 2009, Michigan is a credit reduction state. What is a credit reduction state? Answer: For 2009, Michigan is the only “credit reduction state”. This means that employers in Michigan are not allowed the full credit against the federal unemployment tax act (FUTA) tax. Wages paid that are subject to the unemployment compensation laws of the state of Michigan do not receive the full credit of 5.4%; a credit reduction of 0.3% applies so that such wages receive a credit of 5.1% for 2009. Employers that have wages that are subject to the unemployment compensation laws of the state of Michigan must use Schedule A of Form 940 to calculate the FUTA due. Contact Vision Payroll if you have any further questions on credit reduction states.
In IR-2009-094, the Internal Revenue Service (IRS) announced that for 2010 the Highly Compensated Employee Limitation under §414(q)(1)(B) of the Internal Revenue Code of 1986 will remain unchanged. Non-discrimination testing in some types of retirement plans limits the deferral rate of “highly compensated employees” (HCEs) based upon the deferral rate (ADP) of the “non-highly compensated employees”. For 2010, an HCE is anyone who was a “5-percent owner” at any time during 2009 or 2010 or anyone who received in excess of $110,000 in compensation during 2009 and, if elected by the employer, is in the top twenty percent of employees based upon compensation. The HCE limit was $100,000 for 2008 plan testing and $105,000 for 2009 plan testing. Since the law includes a look-back provision, employees who earned more than $105,000 in 2008 are generally considered HCEs for 2009 plan year testing, employees who will earn more than $110,000 in 2009 are generally considered HCEs for 2010 plan year testing, and employees who will earn more than $110,000 in 2010 are generally considered HCEs for 2011 plan year testing. Contact Vision Payroll if you have questions on changes to the HCE definition for 2009 and 2010 or get further information at Important Facts and Figures.
The United States Department of Transportation (DOT) recently released updated Standard Industry Fare Level (SIFL) rates which are used to value employee personal use of company aircraft. The revised rates are 25.01¢ per mile for 500 or fewer miles traveled, 19.07¢ per mile for greater than 500 miles traveled and up to 1,500 miles traveled, and 18.33¢ per mile for greater than 1,500 miles traveled. The terminal charge is $45.71. These rates apply to the period from July 1, 2009 to December 31, 2009.
Contact Vision Payroll if you have any questions on SIFL changes.
Under Title 26, Chapter 7, Subchapter 3, §664, of the Maine Revised Statutes, the minimum wage for the state of Maine will increase to $7.50 per hour effective October 1, 2009. Tip credits and occupational exemptions may apply so that a lower wage may be paid in certain circumstances. Contact Vision Payroll if you have any questions on the Maine minimum wage increase or visit our Minimum Wage Chart.
According to information provided by the Iowa Department of Revenue, the withholding tables for Iowa income tax will not change for 2010. The current tables, used for 2009 withholding, became effective April 1, 2006. Contact Vision Payroll if you have any questions on Iowa withholding.
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