2014 Year-end Payroll tax information and 2015 updates
Dec 16, 2014
Social Security and Medicare withholding The employee’s and employer’s portion of social security taxes withheld has remained unchanged (6.2%). The wage base for 2014 is $117,000. In 2015 the wage base will increase to $118,500.
For 2014 and 2015 the Medicare tax calculation rates are unchanged. The employee’s and employer’s Medicare tax remains at 1.45% with no wage limits. Earners making more than $200,000 in a year are subject to an extra 0.9% Medicare tax. The extra 0.9% tax is not matched by the employer like the 1.45% Medicare tax.
940 FUTA Unemployment tax The 2014 and 2015 FUTA rate remains at 0.6%. This rate includes the 5.4% credit for State Unemployment paid. There are still credit reduction states published by the IRS and listed on Schedule A (Form 940). A “credit reduction state” is a state that has borrowed money from the federal government to pay unemployment benefits and has not yet repaid this money. In 2014, there are 7 states listed on this credit reduction list. Some of the state changes include:
- Ohio – .012
- Indiana .015
- New York – .012
- North Carolina – .012
This means that instead of paying the 0.6% in 2014, there is an additional 1.2 % added (or 1.5% for IN), for a total of 1.8% for Ohio. The credit reduction will add up to approximately $84- $126 of extra tax liability per employee for this year. Each year the % will increase another .003 until the state is no longer on the list published by the IRS each fall. Line 11 of the 2014 940 Form is where the amount from Schedule A, calculating your state credit reduction amount is entered. The extra 940 deposit will need to be paid thru EFTPS.gov by January 31, 2015.
1099 Misc forms These forms are the most common. They are issued to independent contractors who received $600 or more for their services in the calendar year. Make sure you have their address and social security/Federal ID number and any DBA company name in your software. Now is the time to contact the vendors for any missing information and ask them fill out a W-9 form with their current information. If you have any other questions with other 1099 forms, please contact our company.
Sandra Stone, Accountant