EMPLOYMENT TAX CHANGES 2017

The filing deadline for 2016 W-2s is 1/31/17. This applies to both employee and Social Security Administration copies.

The 1/31/17 deadline also applies to 2016 Form 1099-Misc with amounts reported in Box 7 (nonemployee compensation).  If there is not an amount in Box 7 the filing deadline remains 2/28/17 for paper and 3/31/17 for electronic filings.

Employers with 50 or more full-time equivalent employees and all self-insured plan are required to file Forms 1095-B or 1095-C for 2016 regarding health insurance coverage.  The forms are required to be mailed to the recipients by 3/2/17 and e-filed with the IRS by 3/31/17. If filing under 250 forms, you may submit paper forms to the IRS by 1/31/17.

The Social Security wage base limit increased to $127,200 for 2017.  The Social Security of 6.2% on wages is paid for each the employee and employer.

The Medicare tax rate is 1.45% each for the employee and employer on all wages.

Employers must withhold “Additional Medicare Tax” of 0.9% from wages in excess of $200,000 during 2017.  There is no employer match of the Additional Medicare Tax.

New income tax withholding tables will be issued for wages paid after 12/31/16.  If you use an accounting package to prepare your payroll, the software must be updated for income tax changes.   If you use QuickBooks, you should install updates as requested by the program.

The 401(k) limit remains unchanged at $18,000 for 2017.  Participants 50 years old on or before 12/31/17 can contribute an additional $6,000 for a total of $24,000.  The Department of Labor requires that 401(k) deferrals withheld from employees be deposited as soon as it is possible.  We strongly suggest deposits be made no later than five days after being withheld. 

The SIMPLE deferral limit remains unchanged at $12,500 for 2017.  Participants 50 years old on or before 12/31/17 can contribute an additional $3,000 to their SIMPLE for a total of $15,500.

The IRS should instruct you as to depositing payroll taxes monthly or semi-weekly in 2017.  You must deposit any undeposited tax of $100,000 or more by the next banking day.  Federal tax deposits must be made by electronic funds transfer using the Electronic Federal Tax Payment System (EFTPS).  Employers not required to make Form 941 tax deposits (generally those with a tax liability of less than $2,500 per quarter) may pay with Form 941.

The taxable wage base for federal unemployment tax (FUTA) remains at $7,000 per employee for 2017. The FUTA rate is .6% (.006).  (An electronic tax deposit is required in any quarter that your cumulative FUTA tax liability exceeds $500.00.) The taxable wage base for Tennessee state unemployment tax (SUTA) remains at $8,000 per employee for 2016.

If you have any questions regarding the above, please do not hesitate to call our office.