Category Archives: Payroll

Form 941 for 2013

The new Form 941 for 2013 is here:
http://www.irs.gov/pub/irs-pdf/f941.pdf
The instructions are here:
http://www.irs.gov/pub/irs-pdf/i941.pdf

The major changes to Form 941 are on lines 5a through 5f. The Social Security (OASDI) tax rate on lines 5a (Taxable Social Security wages) and 5b has increased from 10.4% to 12.4%. The 2% increase is due to the expiration of legislation that temporarily reduced the employee Social Security tax rate from 6.2% to 4.2% through Dec. 31, 2012.

Line 5d, Taxable wages & tips subject to Additional Medicare Tax withholding, has been added to Form 941. Beginning in 2013, in addition to withholding Medicare tax at 1.45%, employers must withhold an additional 0.9% Medicare tax from wages paid to an employee in excess of $200,000 in a calendar year. Employers must begin withholding the additional Medicare tax in the pay period in which wages are in excess of $200,000, and continue to withhold it until the end of the calendar year. The tax is only imposed on employees. All wages that are subject to Medicare tax are also subject to additional Medicare tax withholding if paid in excess of the $200,000 withholding threshold.

There are still lines on the 2013 Form 941 for COBRA premium assistance payments/subsidy (lines 12a and 12b) because some involuntarily terminated workers may still be eligible to receive a COBRA premium subsidy, even though the subsidy was not available to most workers beyond Aug. 31, 2011.

Payroll and Self-Employment Taxes for 2013

The Social Security Administration has announced that the wage base for computing the Social Security tax (OASDI) in 2013 increases to $113,700 from $110,100, which was the wage base for 2012. The $3,600 increase, which is about 3.27%, is due to an increase in average total wages.

The Federal Insurance Contributions Act (FICA) imposes two taxes on employers, employees, and self-employed workers—one for Old Age, Survivors and Disability Insurance (OASDI; commonly known as the Social Security tax), and the other for Hospital Insurance (HI; commonly known as the Medicare tax).

For 2013, the FICA tax rate for employers is 7.65% each—6.2% for OASDI and 1.45% for HI. For 2013, an employee pays:
• 6.2% Social Security tax on the first $113,700 of wages (maximum tax is $7,049.40 [6.20% of $113,700]), plus
• 1.45% Medicare tax on the first $200,000 of wages ($250,000 for joint returns; $125,000 for married taxpayers filing a separate return), plus
• 2.35% Medicare tax (regular 1.45% Medicare tax + 0.9% additional Medicare tax) on all wages in excess of $200,000 ($250,000 for joint returns; $125,000 for married taxpayers filing a separate return). (Code Sec. 3101(b)(2))

(For 2012, the OASDI rate for employees is 4.2%; the OASDI rate for employers is 6.2% and the HI rate for both employers and employees is 1.45%).

For 2013, the self-employment tax imposed on self-employed people is:
• 12.4% OASDI on the first $113,700 of self-employment income, for a maximum tax of $14,098.80 (12.40% of $113,700); plus
• 2.90% Medicare tax on the first $200,000 of self-employment income ($250,000 of combined self-employment income on a joint return, $125,000 on a separate return), (Code Sec. 1401(a), Code Sec. 1401(b)), plus
• 3.8% (2.90% regular Medicare tax + 0.9% additional Medicare tax) on all self-employment income in excess of $200,000 ($250,000 of combined self-employment income on a joint return, $125,000 for married taxpayers filing a separate return). (Code Sec. 1401(b)(2))

(For 2012, the self-employment tax rate is 13.3%: 10.4% for OASDI, reflecting the two percentage point drop in the OASDI rate for employees, plus 2.9% for HI).

FUTA TAX FOR 2012

Quick FUTA Facts

  • The FUTA tax rate for 2012 = .6% on the first $7,000 of wages or $42 per employee for most employers.
  • No requirement to pay quarterly towards the “credit reduction” amounts assessed on the annual Form 940 as of this date (April 25, 2012).

Instructions to the Form 940 for 2011: 

http://www.irs.gov/pub/irs-pdf/i940.pdf

This is where it states under the “What’s New” section in the upper left, that those employers in the credit reduction states, “…. employer must pay additional federal unemployment taxes when filing its Form 940“.  The 2012 Form 940 is due on January 31, 2013, so that’s when the credit reduction states’ employers will owe that additional FUTA tax.

The 2011 Schedule A which identifies all of the credit reduction states and the Schedule A instructions are located here:

http://www.irs.gov/pub/irs-pdf/f940sa.pdf

This Schedule may change for 2012, depending upon the monies borrowed by the individual states during 2012, or monies repaid to the federal government.

941 for 2012

Yes, the 2% payroll tax cut for employees has been extended through December 31, 2012.  Here’s the IRS fill-in Form 941 just released:  http://www.irs.gov/pub/irs-pdf/f941.pdf

 

Social Security Wage Base Increases for 2012

On October 19, 2011, the Social Security Administration announced that the 2012 Social Security contribution and benefit base will be $110,100. This is $3,300 more than the base of $106,800 which has been in effect the last three years.

Optional Health Insurance Reporting

If it’s OPTIONAL, there is no need to comply.  Compliance costs both your time and your money. 

The latest rules released by the IRS explained here:  http://www.irs.gov/newsroom/article/0,,id=237870,00.html require that small employers (less than 250 W-2’s per year) do not have to report health insurance benefits paid on behalf of their employees.  Others will have to comply in 2013 when reporting 2012 W-2’s.

Draft of Form 940 for 2011

http://www.irs.gov/pub/irs-dft/f940–dft.pdf

Above is the latest draft release of Form 940 for 2011, which requires that you separate FUTA taxable wages for the first six months of the year from the last six months of the year.