Income Tax WithholdingIRS will mail new withholding tables (Publication 15) to reflect changes as of January 1, 2017. When available, the new withholding tables can also be obtained at the Internal Revenue website, www.irs.gov.
Social Security (FICA)
The wage base limit for 2017 will increase to $127,200. The Social Security rate will remain at 6.2% for employers & employees. The maximum social security tax deduction for employees is $7,886.00. The 1.45% Medicare rate for employers & employees (a component of the FICA tax) remains unchanged from 2016, and extends to an unlimited wage base.
Additional Medicare Tax
In addition to the 1.45% Medicare rate, employers must withhold a 0.9% Additional Medicare Tax from wages paid to an employee in excess of $200,000* in a calendar year. The withholding must begin in the pay period in which an employee is paid in excess of $200,000 for the year. The Additional Medicare Tax is imposed on the employee only; there is no employer share of Additional Medicare Tax. *$250,000 for married taxpayers who file jointly, $125,000 for married taxpayers who file separately, $200,000 for single and all other taxpayers
Pennsylvania Income Tax
The current Pennsylvania Income Tax Rate is 3.07%.
Pennsylvania Unemployment Tax – Employer’s Share
The Office of UC Tax Services plans to mail the Pennsylvania Unemployment Compensation (UC) Contribution Rate Notices to employers on December 31, 2016.
Wages subject to Unemployment contributions will increase from $9,500 to $9,750 in 2017.
Pennsylvania Unemployment Tax – Employee’s Share
The employee withholding UC tax rate for 2017 will remain at .07% (.0007). Employee withholding is not limited to the $9,750 taxable wage base; it applies to the total wages paid in 2017.
New Jersey Income Tax
Income tax must be withheld according to the tables which you should have received from the State of New Jersey. The withholding tables can also be obtained at the Division of Taxation website, www.nj.gov/treasury/taxation, under “Withholding Information”.
New Jersey Unemployment Tax
Unemployment and Disability Insurance tax rates are assigned on a fiscal year basis (July 1 – June 30). Every employer receives a “Notice of Employer Rates: (form AC-174.1) at the beginning of each fiscal year.
Wages subject to Unemployment contributions have increased from $32,600 to $33,500 in 2017. Withholding rates are: 003825% Unemployment (UI), .0024% Disability (DI), .000425% Workforce Dev./Supplemental Workforce Funds (SF/SWF) and 0.001000% Family Leave Insurance (FLI).
Federal Unemployment Tax
The wage base remains at $7,000. The effective tax rate for 2017 will be .6% (.006) for employers located in Pennsylvania and New Jersey. If you are not located in Pennsylvania or New Jersey, please contact us so that we may inform you as to what rate applies to your state.
City of Philadelphia Wage Tax
The 2017 wage tax rates will remain at 3.9004% for Philadelphia residents and 3.4741% for non-residents working in Philadelphia. Rates will most likely change on July 1, 2017.
City of Philadelphia Earned Income Tax Credit Employer Notice Requirement
The employer must provide the employee or non-payroll worker with the 2016 Earned Income Tax Credit (EITC) Notice form at the same time it provides a W-2, 1099 or comparable form.
All 1099 series and W-2 are due to recipients by 1/31/17.
Employer copy of W-2 is now due to IRS by 1/31/17, which is earlier than in the past.. When e-filing no W3 is required to be filed with W2s. If paper filing W-3 is required.
PA Copy of W-2 is also due 1/31/17. NJ copy of W-2 is due 2/28/17. DE Copy of W-2 is due 1/31/17.
All employees should complete an updated 2017 Form W-4 to ensure the correct reporting of allowances.
All unincorporated and self-employed vendors should complete a 2017 Form W-9 to ensure proper year end reporting of non-employee compensation, rents, interest, etc. This should be done prior to any work being performed.
Form 1099 MISC with Box 7 amounts is now due to IRS by 1/31/17, which is one month earlier than in the past. When e-filing, no 1096 is required to be filed. If paper filing, a 1096 form is required to be filed.
3/31/17 is due date to e-file to the IRS all other 1099-series and ACA forms 1094/1095-C. If you paper file the due date is 2/28/17.
The IRS forwards 1099-MISC, INT, DIV, B, G, K, OID, PATR, R, and 5498 to participating states. It is your responsibility to be fully cognizant of your state's requirements.
Participating states: Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Georgia, Hawaii, Idaho, Indiana, Kansas, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, South Carolina, Vermont, Virginia, Wisconsin.
Note: Copies must be mailed to Pennsylvania Dept. of Revenue.
All U.S. employers must ensure proper completion of Form I-9 for each individual they hire for employment in the United States. This includes citizens and noncitizens. By Jan. 22, 2017, employers must use only the new version, dated 11/14/2016. Among the changes in the new version, Section 1 asks for “other last names used” rather than “other names used,” and streamlines certification for certain foreign nationals.
Minimum Wage Rates for 2017:
Minimum wage remains at $7.25 in Pennsylvania and increases to $8.44 in New Jersey.