WE TAKE PRIDE IN KEEPING YOU INFORMED OF TAX CHANGES.

FEDERAL

NEW JERSEY

New - Social Security: The wage base increases to $128,400. Both employer and em-

ployee contribution rates have remained the same at 6.2%.

Medicare: The wage base remains unlimited. The employer contribution rate also re-

mains at 1.45%. However, the employee contribution rate will be 1.45% for the wages up to

$200,000 and 2.35% (1.45% plus additional 0.9% tax) for the wages paid in excess of $200,000.

Important Note: An individual is liable for the additional 0.9% Medicare tax if the individ-

ual’s wages and other compensation are above the threshold. The threshold amounts are

$250,000 for joint filers and $200,000 for single filers. However, the statute requires an employer

to withhold the additional 0.9% Medicare tax on wages it pays to an employee in excess of

$200,000, regardless of the employee’s filing status. The excess withholding will be credited

against the employee’s total income tax liability shown on his or her tax return.

Federal Unemployment Tax Act (FUTA): The wage base remains at $7,000. The rate is

6.0% and the maximum credit is 5.4% of the taxable wages. Therefore, the nominal net rate is

0.6%. However, the credit is reduced for a state that borrows money from federal and defaults

on the loan. In such case, the credit is reduced by 0.3% for each year the loan remains unpaid.

For 2017, New Jersey and Pennsylvania are eligible for the maximum credit. Therefore, the em-

ployers in these states will pay FUTA tax at the net rate of 0.6% for 2017. The rate for 2018 will

be announced in November 2018.

Federal minimum wage remains at $7.25 per hour.

Withholding rates vary from 1.5% - 7.0% for wages up to $500,000. Wages in

excess of $500,000 have a withholding rate of 9.9%.

New - The unemployment tax wage base increases to $33,700 and the employ-

ee contribution rate decreases to 0.705% (0.3825% unemployment fund, 0.0425% workforce

development, 0.19% disability, 0.09% family leave insurance). The maximum employee con-

tribution is $237.59 annually.

New - New Jersey minimum wage increases to $8.60 per hour.

The State of New Jersey requires all employers to file and pay their Employer’s Quarterly Re-

port (Forms NJ-927, NJ-927W, NJ-500), the annual Household Employer’s Annual Report

(Form NJ-927H) and the Employer Report of Wages Paid (Form WR-30) electronically. Please

visit the state website at www.state.nj.us/treasury/taxation to file the reports and or contact

your CPA for further information.

New - Please be advised that on February 1, 2017 a new state law went into effect

that established 19 as the age at which New Jersey child support obligations terminate. The

law will allow for child support to be continued up to age 23 if certain circumstances are met.

As the law is implemented employers may receive an increased amount of Amended Income

Withholding Orders and/or changes to Medical Coverage notices shortly after May 1, 2017

and August 1, 2017. For more information, please visit www.njchildsupport.org or call 1-877-

655-4371.

Payroll Information

Baratz & Associates has compiled

this 2018 Payroll Tax Reference

Sheet as a good starting point for

our clients in the region. Follow-

ing is a list of scheduled payroll

tax, pension plan, and new hire

reporting changes effective in

2018. As additional changes are

released, we will update this in-

formation and keep you posted.

As you are aware, it is important

to be familiar with changes in

payroll taxes each year to accu-

rately process payroll. The infor-

mation on this page is subject to

change at any time based on tax

regulation updates. To stay cur-

rent on payroll processing issues

and payroll tax news, please sub-

scribe to our newsletter and con-

tact your CPA.

You may contact us via email at

info@baratzcpa.com.

2018 PAYROLL REFERENCE SHEET COMPILED FOR YOU BY BARATZ & ASSOCIATES, P.A.

baratzcpa.com ▪ 856.985.5688

STATE CHANGES CONTINUED...

PENNSYLVANIA

The withholding rate continues to be 3.07%. Pennsylvania minimum wage remains at $7.25 per

hour.

New - Employer unemployment tax wage increases to $10,000.

New - Employee unemployment contribution rate decreases to 0.06% of total wages.

All employers are required to make payments and file quarterly reports electronically

effective January 2014. All other filing methods have been discontinued. Please visit E-tides web-

site at https://www.etides.state.pa.us for the employer withholding tax payments (Form PA-501)

and the quarterly filings (Form W-3). The State of Pennsylvania Department of Labor & Industry

has transitioned the unemployment compensation reporting from E-Tides to a new system called

Unemployment Compensation Management System (UCMS). Please visit UCMS website at

www.paucemployers.state.pa.us for the quarterly filings of Forms UC-2 and UC-2A.

PHILADELPHIA CITY TAX RULES

New - The current wage tax withholding rates are 3.8907% for the City residents and 3.4654%

for the City non-residents. We will keep you informed of any rate changes announced by the City

for the year 2018.

Payroll Information

Baratz & Associates has compiled

this 2018 Payroll Tax Reference

Sheet as a good starting point for

our clients in the region. Follow-

ing is a list of scheduled payroll

tax, pension plan, and new hire

reporting changes effective in

2018. As additional changes are

released, we will update this in-

formation and keep you posted.

As you are aware, it is important

to be familiar with changes in

payroll taxes each year to accu-

rately process payroll. The infor-

mation on this page is subject to

change at any time based on tax

regulation updates. To stay cur-

rent on payroll processing issues

and payroll tax news, please sub-

scribe to our newsletter and con-

tact your CPA.

You may contact us via email at

info@baratzcpa.com.

DEFERRAL LIMITATIONS AND PENSION CONTRIBUTIONS

FEDERAL ELECTIVE DEFERRAL LIMITATIONS New - 401(k) maximum annual deferral increases to $18,500 and special catch up provision for those 50 and older remains $6,000 for 2018. Simple IRA Plan 408(p) maximum annual deferral remains $12,500 and special catch up provi-sion for those 50 and older remains $3,000 for 2018. PENSION CONTRIBUTIONS Simple Employee Plan (SEP): maximum contribution is the smaller of $55,000 or 25% of partici-pant's compensation.* Defined Contribution Plan: profit sharing - maximum contribution is the smaller of $55,000 or 25% of participant's compensation.* Defined Contribution Plan: money purchase - maximum contribution is the smaller of $55,000 or 25% of participant's compensation.* Defined Benefit Plans: maximum contribution is the amount needed to provide an annual bene-fit no larger than the smaller of $220,000 or 100% of the participant's average compensation for his or her highest three consecutive calendar years. *Compensation is generally limited to $275,000.

baratzcpa.com ▪ 856.985.5688

REVIEW THE RULES NOW AND PREPARE FOR THE NEW YEAR.

The Internal Revenue Service established an Electronic Federal Tax Payment Sys-

tem (EFTPS) in 2008. All employers are required to make federal tax payments

electronically using EFTPS. Failure to do so could result in 10% penalty. Visit

https://www.eftps.gov/eftps/ to enroll with the EFTPS.

New Jersey Electronic Filing

New Jersey, under its Electronic Funds Transfer (EFT) program, has a threshold of

$10,000. New Jersey requires that a taxpayer with a prior year's tax liability of

$10,000 or greater in any one tax to remit all tax payments to the Division of Reve-

nue using EFT. Visit http://www.state.nj.us/treasury/revenue/enrolleft.shtml to

enroll with EFT.

Annual Base Period

Federal deposit schedule determination is made by examining employment taxes

reported for the previous 12-month period of July 1 of the second preceding calen-

dar year through June 30 of the year prior. A CPA can advise you if you have diffi-

culty in deciding which schedule applies.

Safe Harbor

An employer who under deposits will not be penalized if the shortfall is less than or

equal to $100, or less than 2% of the amount which should have been deposited,

whichever is greater.

New Hire Reporting and I-9 Requirements

A Federal Regulation mandates that all employers are

to report information for any new hire or rehire within

20 days of their start date. You must report employ-

ee's name, address, social security number, date of

birth, and hire date along with the employer's name,

address and Federal identification number. Infor-

mation should be mailed or faxed within the 20-day

period to: New Hire Directory, P.O. Box 4654, Tren-

ton, New Jersey 08650-4654. The fax number is

(800) 304-4901. Information can also be reported

online at www.nj-newhire.com.

Form I-9 Requirements

New - Federal Form I-9 was developed by the U.S.

Department of Justice, Immigration and Naturaliza-

tion Services. The purpose of the form is to document

the verification of an individual’s eligibility to work in

the U.S. All employees, citizens and non-citizens,

hired after November 6, 1986 must complete and sign

Section 1 of the form at the time of hire. The em-

ployer is responsible for ensuring that Section 1 is

timely and properly completed. Any employees hired

after September 18, 2017 must complete the new I-9

Form that was released on July 17, 2017.

Employers are responsible for completing Section 2 of

the form by examining evidence of the applicant’s

identity and employment eligibility within three busi-

ness days of the date employment begins. If the

applicant is unable to produce the required docu-

ments within three business days they must present a

receipt for the application of the required documents

within three business days and the actual documents

within ninety days.

Employers must complete Section 3 of the form when

updating or re-verifying the I-9 information. Employ-

ers must re-verify employment eligibility of their em-

ployees on or before the document expiration date

recorded at the time of hire.

Employers must retain completed I-9s for three years

after the date of hire or one year after the date em-

ployment ends, whichever is later.

DEPOSIT FRQUENCY

DETERMINING FACTOR

DEPOSIT REQUIREMENTS PAY

DATE DEPOSIT DATE

Monthly If the accumulated tax

liability is less than or

equal to $50,000 for the

annual base period

Any Day Deposit monthly by

the 15th of the follow-

ing month.

Semi-weekly If the accumulated tax

liability is greater than

$50,000 for the annual

base period

Wednesday,

Thursday or

Friday

Saturday,

Sunday,

Monday or

Tuesday

Deposit the following

Wednesday.

Deposit the following

Friday.

Exception Rules Tax Liability Amount Deposit Require-

ments

$2,500 Rule If the accumulated tax

liability is less than

$2,500 for the entire

quarter

Remit the liability with

the quarterly tax re-

turn.

$100,000 Rule If the accumulated tax

liability is $100,000 or

more on any single day

Deposit the liability on

the next business day.

baratzcpa.com ▪ 856.985.5688