APS December 2018 Compliance Updates
APS reports on relevant, impactful compliance updates each month to help keep you at the top of your compliance game. This month we are seeing the release of state unemployment wage bases, state withholding tables and methods changes, and extended tax filing deadlines. Here are your December compliance updates:
Tax Interest Rates Rising in 1st Quarter of 2019
The IRS released the following tax interest rates for first quarter of 2019:
- 6 percent for noncorporate overpayments and underpayments.
- 5 percent for corporate overpayments.
- 6 percent for corporate underpayments.
- 3.5 percent for the portion of a corporate overpayment exceeding $10,000.
- 8 percent for large corporate underpayments.
For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term interest rate plus 3 percentage points.
IRS EXTENDS DUE DATE FOR 2018 HEALTH COVERAGE FORMS
The IRS released due date extensions for the following 2018 health coverage forms:
- Form 1095-C (Employer-Provided Health Insurance Offer and Coverage)
- Form 1095-B (Health Coverage)
The deadline to submit 2018 health coverage forms have been extended to March 4, 2019.
IRS RELEASES 2019 PERCENTAGE METHOD WITHHOLDING TABLES
The IRS released the percentage method federal income tax withholding tables for 2019. A withholding allowance is set to increase from $4,150 to $4,200 in 2019 and withholding allowances are to be used in 2019 for the federal withholding methods and the Form W-4.
The withholding allowance amounts by pay period are the following:
- Weekly - $80.80
- Biweekly - $161.50
- Semimonthly - $175
- Monthly - $350
- Quarterly - $1,050
- Semiannually - $2,100
- Daily - $16.20
The 2019 withholding tables have tax brackets of 10 percent, 12 percent, 22 percent, 24 percent, 32 percent, 35 percent, and 37 percent. The 2019 employer and employee tax rate for the Social Security portion of the FICA taxes is 6.2 percent and the Social Security wage base is set at $132,900 for 2019.
IRS RELEASES EMPLOYER’S GUIDE TO FRINGE BENEFITS FOR 2019
The IRS released the publication on employer-provided fringe benefits to employees for 2019. The Employer’s Tax Guide to Fringe Benefits includes information on transit benefits and contribution limits on health flexible spending arrangements for plans starting in 2019. The publication also set the standard business mileage rate for transportation or travel expenses at 58 cents a mile.
IRS RELEASES TABLE ON LEVY EXEMPTIONS FOR WAGES AND SALARY FOR 2019
The IRS released its Tables for Figuring Amount Exempt From Levy on Wages, Salary, and Other Income (Forms 668-W(ACS), 668-W(c)(DO) and 668-W(ICS) for 2019. The tables are used to compute the amount of wages, salaries, and other income that is exempt from a notice of levy to collect delinquent taxes and lists amounts for pay periods that are exempt from the collections.
2019 STATE UNEMPLOYMENT WAGE BASES
- Alabama - $8,000
- Alaska - $39,900
- Arizona - $7,000
- Hawaii - $46,900
- Georgia - $9,500
- Idaho - $40,000
- Michigan - $9,000
- Nebraska - $9,000
For more updates on state unemployment wage base changes, visit our SUTA Wage Bases page.
- New Hampshire - $14,000
- Nevada - $31,200
- North Dakota - $36,400
- Rhode Island - $23,600
- Texas - $9,000
- Tennessee - $7,000
- Utah - $35,300
2019 STATE UNEMPLOYMENT TAX RATES
Alabama’s unemployment rates will be the following:
- 0.65 percent to 6.8 percent for experienced employers.
- 2.7 percent for new employers.
Alaska’s unemployment rates will be the following:
- 1 percent to 1.28 percent for non-delinquent experienced employers.
- 5.4 percent for delinquent experienced employers.
- 1 percent for new public administration employers.
- 1.28 percent for unclassified new employers.
- 1.07 percent for new employers assigned outside of the public administrator category.
Alaska’s unemployment tax rates for employers in 2019 are lower due to a solvency-adjustment credit of 0.4 percent.
Arizona’s unemployment rates will be the following for 2019:
- 0.04 percent to 5.9 percent for positive-rated employers.
- 6.23 percent to 11.8 percent for negative-rated employers.
- 2 percent for new employers.
Delaware’s unemployment tax rates will be the following:
- 2.5 percent for delinquent experience employers, down from 2.9 percent in 2018.
Unchanged from 2018, the tax rate for experience employers will be 0.3 percent to 8.2 percent experience employers.
Georgia’s unemployment tax rates will be the following:
- 0.04 percent to 8.1 percent for experienced employers.
- 2.7 percent for new employers.
- 0.06 percent for an administrative assessment on all tax rates except the minimum and maximum rates for experienced employers.
Idaho’s unemployment tax rates will be the following for 2019:
- 0.251 percent to 5.4 percent for experienced employers.
- 1 percent for new employers.
Illinois’ unemployment tax rates will be the following:
- 0.475 percent to 6.875 percent for experienced employers.
- 3.175 percent for new employers.
- 3.575 percent for new employers in the mining industry.
2019 tax rates will include a fund-building surtax of 0.475 percent in 2019, a decrease from 0.525 in 2018.
Indiana’s unemployment tax rates will be the following:
- 0.5 percent to 3.8 percent for positive-rated employers.
- 4.9 percent to 7.4 percent for negative-rated employers.
- 2.73 percent for new construction employers.
- 2.5 percent for new employers.
There will be no solvency surcharge for 2019.
Montana’s unemployment tax rates will be the following in 2019:
- Zero to 1.42 percent for positive-rated employers.
- 2.92 percent to 6.12 percent for negative-rated employers.
- 1 percent to 2.4 percent for new employers.
Michigan’s unemployment tax rates will be the following in 2019:
- 0.06 percent to 10.3 percent for experienced employers.
- 0.72 percent to 2.42 percent for a bond-obligation assessment paid by experienced employers.
- 2.7 percent for new non-construction employers.
Nebraska’s unemployment tax rates are set to decrease to the following in 2019:
- Zero percent to 1.5 percent for positive-rated employers, down from zero percent to 1.63 percent in 2018.
New Hampshire’s unemployment tax rates for 2019 1st quarter are the following:
- 0.1 percent to 1.2 percent for positive-rated experienced employers with a solvency-threshold tax rate reduction of 1.5 percent.
- 2.8 percent to 7 percent for negative-rated experienced employers.
- 1.2 percent for new employers.
New Jersey’s unemployment tax rates for employees is 0.425 percent for employees, unchanged from 2018. The rate includes a base rate of 0.3825 percent allocated to the state’s unemployment trust fund and 0.0425 percent set for the state’s workforce development-supplemental workforce fund. The state’s temporary disability insurance tax for employees is 0.17 percent and the family-leave insurance tax rate for employees is 0.08 percent in 2019.
Nevada’s unemployment tax rates will be the following:
- 0.3 percent to 5.4 percent for experienced employers.
- 3 percent for new employers.
The tax rates, except the maximum experienced-employer rate of 5.4 percent will include a career enhancement program tax of 0.05 percent.
North Dakota’s unemployment tax rates will be the following:
- 0.15 percent to 1.34 percent for positive-rated employers.
- 6.15 percent to 9.75 percent for negative-rated employers.
- 9.75 percent for new construction employers with a positive or negative unemployment account balance.
- 1.21 percent for new nonconstruction employers who had a positive unemployment account balance by Oct. 31, 2018, and 6.16 percent for those that had a negative account balance.
Rhode Island’s unemployment tax rates for 2019 are the following:
- 1.1 percent to 9.7 percent for experienced employers.
- 1.46 percent for new employers.
The 2019 temporary disability insurance tax rate for employees is 1.1 percent.
Texas’ unemployment tax rates for experienced employers in 2019 is at 0.36 percent to 6.36 percent. The rates include a replenishment tax of 0.26 percent and an employment training investment assessment of 0.1 percent.
Utah’s unemployment tax rates for 2019 are the following:
- 0.1 to 7.1 percent for experienced employers.
- 1.1 to 7.1 percent for new employers and contractors.
Washington’s unemployment tax rates for 2019 are the following:
- 0.13 percent to 5.72 percent for experienced employers.
New employers will be assessed an unemployment tax rate equal to 90 percent of the applicable average unemployment tax rate for employers in their industry category.
2019 STATE WITHHOLDING TABLES AND METHODS
The following states have announced their 2019 withholding tables and methods:
California has released its new meal and lodging withholding values for 2019. The annual standard deduction amount for meals provided by the employers are:
- $2.40 for a breakfast meal.
- $3.65 for a lunch meal.
- $5.75 for a dinner meal.
- $11.60 for three meals a day.
- $4.25 for a meal not identified as a breakfast, lunch, or dinner meal.
The annual standard deduction amount for lodging provided by the employer:
- 66.7 percent of the rental value with a maximum value of $1,528 a month and $49.55 a week.
The state released its 2019 withholding formula by the state revenue department on December 13, 2018. The state’s basic allowance for dependents increased to $2,275, while the value of an additional allowance for age, blindness, or state or federal deductions, remained at $1,000 for 2019. The flat income tax rate for 2019 is at 4.95 percent.
Kentucky released its 2019 withholding formula by the state revenue department on Dec. 10, 2018. The state’s standard deduction is $2,590 (an increase from $2,530 in 2018) and the tax rate is 5 percent of taxable income.
Minnesota’s state revenue department released its withholding formula for 2019. The state also updated its Form W-4MN (Minnesota Employee Withholding Allowance/Exemption Certificate) to add worksheets to help employees calculate how many state allowances they should claim. Employes are now able to submit Forms W-2c (Corrected Wage and Tax Statement) electronically.
Mississippi released its withholding formula for 2019. The amount of tax-free income provided in the formula increased to $2,000, but the formula’s other tax bracket thresholds while tax rates remain unchanged. The standard deduction remains $2,300 for single individuals.
Missouri released its withholding formula and an updated Form MO W-4 (Employee’s Withholding Certificate) for 2019. The withholding formula no longer uses allowances, only a standard deduction based on filing status.
Massachusetts released its new transportation benefit exclusions that are set to increase in 2019. The standard deduction for transportation benefit exclusions are as followed:
- $265 a month for employer-provided parking, an increase from $260 in 2018.
- $140 a month for the combined value of transit pass and commuter highway vehicle benefits, an increase from $135 in 2018.
A new state employee withholding certificate, MW-4 (Montana’s Employee’s Withholding Allowance and Exemption Certificate) is to be used by newly-hired employees in 2019. The new form replaces the federal Form W-4 (Employee’s Withholding Allowance Certificate). The new MW-4 will allow employees to calculate how many state allowances should be used for withholding purposes and to claim an exemption from state tax withholding for a given tax year.
The state’s withholding percentage method remains unchanged from 2018, with an allowance value remaining at $4,150. Employers are still limited to calculating state withholding use up to three allowances, even if they are claiming more. The supplemental withholding rate remains unchanged at 4.9 percent.
New York released withholding tables for the state of New York and the city of Yonkers for 2019. The amount of adjustment for the difference between federal and state withholding allowances is $3,150, an increase from $3,050 in 2018. The standard deduction remains unchanged at $7,400. The state’s supplemental rate remains at 9.62 percent, while Yonkers’ supplemental rate is at 1.61135 percent for residents and 0.5 for nonresidents.
The state tax commissioner’s office released its withholding percentage method for 2019. North Dakota plans to continue to use withholding allowances and the federal Form W-4 for state purposes in 2019. An allowance is worth $4,200 and the supplemental withholding rate remained at 1.84 percent.
The state released its 2019 withholding tables with the withholding exemption value remaining at $650 annually and the supplemental withholding rate remaining at 3.5 percent.
Oklahoma released its 2019 withholding tables with no changes from 2018.
The state released its 2019 withholding formula with the value of a personal exemption increased to $206 and the standard deduction set at $2,270.
Puerto Rico modified thresholds for determining the frequency of withholding deposits to match federal rules. Employers withholding up to $2,500 in a quarter may deposit quarterly, an increase from $500 in 2018.
Rhode Island released its 2019 withholding methods with tax bracket thresholds for the amount of annual income about the value of a withholding allowance becomes zero increased to $226,050.
South Carolina released its 2019 withholding formula with changes to the value of a personal exemption increasing to $2,510 and the standard deduction increases to $3,470, or 10 percent of gross wages.
Wisconsin has implemented a new withholding filing rule that states Wisconsin employers must file all withholding deposit reports before filing an annual reconciliation. Here are a few specifics on the rules:
- Employers must file all Forms WT-6, (Withholding Tax Deposit Report) for the year before filing the annual reconciliation, Form WT-7 (Employer’s Annual Reconciliation of Wisconsin Income Tax Withheld).
- The amount of withholding reported on Form WT-7 must equal the total withholding reported on all Forms WT-6 for the year.
- Forms WT-6 and WT-7 must be filed electronically.
2019 MINIMUM WAGE CHANGES
The following states, cities, and counties have announced changes to their minimum wage rates beginning January 1, 2019:
- Alaska - $9.89
- Arizona - $11.00
- Arkansas - $10.00
- California - $12.00
- Colorado - $11.10
- Delaware - $8.75
- Florida - $8.46
- Maine - $11.00
- Massachusetts - $12.00
- Minnesota - $9.86
- Missouri - $8.60
- Montana - $8.50
- New Jersey - $8.85
- Ohio - $8.55
- Rhode Island - $10.50
- South Dakota - $9.10
- Vermont - $10.78
- Washington - $12.00
STATE ELECTRONIC FILING RULES
The following states have updated state electronic filing rules for 2018 and 2019:
Connecticut has released their 2019 version of the Employee’s Withholding Certificate, Form CT-W4.
The state released their 2019 Oregon Employee’s Withholding Allowance Certificate, Oregon Form OR-W-4. Employees who didn’t file a second federal Form W-4 to be used in 2018 or 2019 should use the newly released form.
District of Columbia
The District of Columbia released its electronic filing specifications for the 2018 version of the Forms W-2. Employers filing at least 25 Forms W-2. Wage and Tax Statement must file online, while employers filing less that 25 forms are able to file on paper.
The state Department of Labor and Industry released new guidelines for Montana employers. Employers with at least 20 employees and third-party agents reporting on behalf of employers must file quarterly unemployment wage reports electronically.
New Mexico’s state Department of Taxation and Revenue released its 2018 electronic filing rules for Forms W-2 and Forms 1099. Employers with at least 25 forms are required to file electronically and the filing deadline was moved to January 31, 2019.
North Carolina’s state Division of Employment announced employers with at least 10 employees are required to filing unemployment tax and wage reports electronically. This rule also applies to third-party administrators.
The state tax department released Vermont’s filling specification for the 2018 Form WHT-434 and Forms W-2. Employers filing at least 25 Forms W-2 must file the forms and annual reconciliation electronically.
2019 STATE UNDERPAYMENT INTEREST RATES
Ten states have announced their underpayment interest rate for 2019. The following states have updated underpayment interest rates for 2019:
- Arizona - 6 percent
- Illinois - 6 percent
- New Jersey - 8.25 percent
- North Carolina - 6 percent
- Missouri - 5 percent
- Maine - 6 percent
- Minnesota - 5 percent
- Massachusetts - 7 percent
- Oregon - 6 percent
- South Carolina - 6 percent
IDAHO RELEASES 2019 EMPLOYEE W-4 WORKSHEET
The state released a 2019 Employee W-4 Worksheet to help Idaho employees determine how many state allowances to claim in 2019.
NEW HAMPSHIRE INCREASES BUSINESS ENTERPRISE TAX THRESHOLD
New Hampshire released updated business enterprise tax thresholds for 2019. Employers are subject to the state’s business enterprise tax if they have gross receipts of more than $217,000 or a business enterprise tax base of $108,000, up from $104,000 in 2018.
For more information on the Business Enterprise Tax Threshold, visit New Hampshire’s Department of Revenue Administration website.
NEW JERSEY PAYROLL TAX
The city council of Jersey City, New Jersey approved an employer-paid payroll tax that takes effect January 1, 2019. The tax will be calculated as one percent of the payroll of private employers, but those wages paid to Jersey City residents will be exempt from the tax.
NEW YORK RELEASES 2019 WITHHOLDING CERTIFICATE
OHIO TAX RATES TO CHANGE IN 2019
Ohio municipalities; Bloomville and Wayne Lakes are set to introduce tax rates of 1 percent in 2019. Two other Ohio municipalities, Mogadore and Macedonia-Northfield Center Joint Economic Development District are set to increase their tax rates to 2.5 percent, up from 2.25 percent in 2018.
WASHINGTON RELEASES 2019 WORKERS’ COMPENSATION PAYROLL TAX RATES
Washington released its 2019 workers’ compensation payroll tax rates allowing employers to make payroll deductions to withhold the employees’ portion of the workers’ compensation payroll tax due.
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