The season is here when taxes are on everyone’s mind. Now that your individual taxes have been filed, don’t completely push taxes out of mind. While it is fresh, take the opportunity to step back and get a full picture of the payroll changes that took effect this year.
Social security taxes have both withholding maximums and benefit maximums. The withholding maximum is simply the maximum amount that can be taken from an employee’s pay. At the time of retirement, the maximum benefit will be calculated to determine the maximum amount that the individual will receive from the Social Security fund. There was no change last year in the maximum wages subject to withholding, but for 2017 the cap has been increased 7.3% from $118,500 to $127,200. This marks the largest one-year increase since 1983 (thebalance.com).
Also, businesses with highly compensated employees should be aware that depending on their filing status, those employees may be subject to amounts over the statutory threshold. For more information on the threshold and limits visit the IRS website.
If your business offers benefits to contribute to a retirement account, you should be aware that there have been changes in 2017.
There were not any changes in the federal minimum wages under the Fair Labor Standards Act (FLSA), but there are several states that have already passed legislation to raise minimum wage rates higher than the federal standard. Maps and charts of existing legislated rates are available, but more changes could come in 2017.
Your employees don’t have to wait until next April to understand their tax liability for 2017. As you are reviewing the full picture of tax changes, you can share the resources that will affect them including simple tables explaining tax bracket changes (Forbes) and forms to allow them to change their withholdings.
The only constant in tax law is that there will be change. At Future Systems, our clients trust us to stay up to date on change and choose our payroll services. Our Tax Pay & File Service makes it easy to accurately process taxes without having to worry about change. Contact us today to learn more.
- Your Team at Future Systems