Payroll Tax Update
NYS Paid Sick Leave:
New York’s paid sick leave law requires employers to provide up to 56 hours (7 days) of paid sick leave to employees, in addition to New York State provisions providing up to 14 hours of emergency sick time due to Covid-19. This requirement is based on the employer’s number of employees and net income. For example, employers with 5 to 99 employees must provide up to 40 hours of paid sick leave per calendar year. Additional details are available on the NYS website at: https://www.ny.gov/programs/new-york-paid-sick-leave and https://dol.ny.gov/system/files/documents/2021/08/covid-sick-leave-employers-8-24-21.pdf
NYS Paid Family Leave:
In 2021, eligible employees can take up to 12 weeks of paid family leave (PFL). Employees taking paid family leave will receive 67% of their average weekly wage (AWW), up to a cap of 67% of the current statewide average weekly wage of $1,450.17. The maximum weekly benefit for 2021 is $971.61. For 2022, this remains the same at 67% of AWW for up to 12 weeks of PFL.
In 2021, the contribution is 0.511% of an employee’s gross wages each pay period.
The maximum annual contribution is $385.34. Employees earning less than the current Statewide Average Weekly Wages of $1,450.17 will contribute less than the annual cap of $385.34, consistent with their actual wages.
For 2022, the contribution remains at 0.511% of an employee’s gross wages, capped at
an annual maximum of $423.71. Additional details available on the NYS website at: https://paidfamilyleave.ny.gov.
Overtime Rules For Exempt Employees:
New York State salary thresholds for exempt employees are as follows. Administrative and executive employees, located outside of New York City and downstate counties, must earn $937.50 per week to be exempt from overtime pay. The exempt salary provisions provide scheduled annual increases for New York employees. Effective December 31, 2021 this rate increases to $990 per week. Note that different rates apply to NYC and downstate areas. More information can be found at:
Due Dates for W-2s:
The due date for filing 2021 Forms W-2 and W-3 with the Social Security Administration (SSA) is January 31, 2022. This is the same date that W-2 forms are due to the employees. Extensions of time to file Form W-2 with the SSA, for a period of 30 days, can be obtained by filing Form 8809. However, the IRS will only grant this extension in extraordinary circumstances or catastrophe.
The IRS has also increased penalty amounts for failing to file and furnish correct W-2 forms by the due date. Instructions for Forms W-2 and W-3 are available on the IRS website at: www.irs.gov/pub/irs-pdf/iw2w3.pdf.
Affordable Care Act Reporting Requirements:
The Affordable Care Act reporting requirements remains in effect for 2021. Applicable Large Employers (ALEs) – those with 50 or more full-time employees (including full-time equivalents) – are required to provide information to the IRS and to their full-time employees on health plan coverage the employer did or did not offer to employees during 2021. ALEs have been given an extension by the IRS to furnish Form 1095-C to employees; these forms must be furnished to employees no later than March 2, 2022 instead of January 31, 2022. No extension of time was granted to employers to file Form 1095-C with the IRS; this filing date remains February 28, 2022 (if filed manually) or March 31, 2022 (if filed electronically). Tronconi Segarra & Associates is offering this compliance service on a per-form fee basis for ALEs. If you are in need of a solution for this compliance requirement or would like to obtain a quote, please contact our office.
In addition to federal ACA reporting requirements, New Jersey, Rhode Island, California and Washington, DC also have employer mandates. If you have employees residing in these states, we will work with you to comply with state-level reporting requirements as well. If you are in need of a streamlined solution for ACA compliance requirements or would like to obtain a quote, please contact Lisa Mrkall (email@example.com).
- It is very important to not ignore any information received from your payroll processing company regarding year-end processing. This will help them to prepare complete and accurate W-2s for your employees. It is costly to prepare the W-2 and year-end reports
a second time.
- When preparing 2021 W-2 forms, or providing your payroll company with W-2 information, be sure to include all the taxable income and benefits an employee earns. Examples are:
- Personal use of a company vehicle.
- Health insurance and dental and long-term care premiums paid on behalf of a greater than 2% S-corporation shareholder (exempt for FICA and FUTA).
- PS-58 cost for group term life insurance benefits in excess of $50,000.
- Dependent care benefits.
- Employee pension information.
- Be sure to include disability income (third-party sick pay) an employee earns. It is important to report this information to your payroll processing company before year end to be included in fourth-quarter reports and W-2s.
- FICA (Social Security) withholdings rates remain unchanged at 7.65%, comprised of 6.2% for Social Security and 1.45% for Medicare. The employer is required to contribute a matching amount when making the tax deposit. The self-employed rate also remains at 15.3%, comprised of 12.4% Social Security and 2.9% Medicare. The maximum amount of taxable annual earnings subject to the Social Security tax and self-employment tax is $142,800 for 2021, increasing to $147,000 for 2022. All earnings are subject to the Medicare tax.
- Additional Medicare Tax: Employees are also subject to a 0.9% additional Medicare tax on all wages and self-employment income in excess of $200,000.
- The minimum-wage rate for New York State employees, outside of NYC and Long Island, for 2020 is $12.50 per hour, increasing to $13.20 per hour on December 31, 2021.
- Minimum wage for tipped food-services workers is $8.35 per hour if they earn $4.15 per hour in tips as of December 31, 2020 and 2021.
- Overtime for tipped workers is calculated at time-and-one-half the minimum wage rate, less the applicable tip credit. For example, the overtime rate for tipped food services workers is $14.60 [($12.50 x 1.5) – $4.15] per hour, increasing to $15.65 [($13.20 x 1.5) – $4.15] per hour on December 31, 2021.
- Minimum wage for fast-food employees, outside of New York City, is $14.50 per hour, increased to $15.00 per hour on July 1, 2021.
- More information on New York minimum wage rates can be found at: https://www.ny.gov/new-york-states-minimum-wage/new-york-states-minimum-wage
- The amount that can be deducted per week for disability insurance remains at .005% of gross wages with a maximum of $.60 per week.
- The Federal unemployment base wage will remain at $7,000 for taxable wages. The federal unemployment rate is .006%.
- The New York State unemployment wage base is $11,800 and $12,000 for 2021 and 2022, respectively. New York will be notifying you of your 2022 unemployment rate around February 1, 2022. If you use a payroll service such as ADP or Paychex, be sure to send them this notification.
- All new employees will need to complete and return to you:
- W-4 form for federal withholdings.
- IT-2104 form for New York state withholdings.
- Form I-9 –Employment Eligibility Verification. Be sure that you are using the current revision of this form with an expiration date of October 31, 2022. Current versions can be obtained at https://www.uscis.gov/i-9.
- You are also required to provide all new employees with the New York State Notice and Acknowledgement of Pay Rate and Payday.
- Federal tax deposits: If you are NOT using a payroll service for payroll tax deposits, you will need to enroll your business and make payments electronically. Information on Electronic Federal Tax Payment System (EFTPS), including how to enroll, can be found at https://www.eftps.gov/eftps or by calling EFTPS Customer Service at 1‑800‑555‑4477.
- Mileage Rate for 2021: 56 cents per mile, down from 57.5 cents per mile in 2020.
Form 1099 Update
Proposed change in e-filing threshold:
The Taxpayer First Act of 2019, authorized the Department of the Treasury and the IRS to issue regulations that reduce the 250-return requirement for 2021 tax returns. The regulations are still pending to be issued, but once issued, the threshold for e-filing the information returns would decrease from 250 to 100, required to be filed during calendar year 2022, and then from 100 to 10 for information returns required to be filed after 2022.
Form 1099-NEC must be filed with the IRS on or before January 31, 2022, using either paper or electronic filing procedures. Form 1099-MISC should be filed with the IRS by February 28, 2022 if paper filed, or March 31, 2022 if filed electronically.
Note: All 1099s are due to the recipients by January 31, 2022.
The Internal Revenue Service requires anyone engaged in trade or business to file Form 1099.
Please confirm that all ID numbers and Social Security numbers are accurate before completing your 1099s.
The IRS can charge a penalty from $50 to $280 per form, depending on the time period past the deadline for issuing the form. If the non-filing or incorrect filing is intentional, the IRS can levy a minimum penalty of $570 per form or up to 10% of the income reported on the form.
You must file Form 1099 for each person, to whom you have paid during the year:
- At least $10 in royalties or broker payments in lieu of dividends or tax-exempt interest.
- At least $600 in rents, prizes and awards, other income payments, medical and health care payments, crop insurance proceeds, section 409A deferrals, nonqualified deferral compensation, and generally, the cash paid from a notional principal contract to an individual, partnership or estate.
- Any fishing boat proceeds.
- Gross proceeds of $600 or more paid to an attorney; or
- Reportable Payments to Corporations – In general, payments to corporations do not need to be reported on a 1099. However, the following payments made to corporations generally must be reported:
- Cash payments for the purchase of fish for resale;
- Medical and health care payments;
- Gross proceeds paid to an attorney; and
- Substitute payments in lieu of dividends or tax-exempt interest;
- Form 1099-K – Payments made with a credit card or payment card and certain other types of payments, including third-party network transactions, must be reported on Form 1099‑K by the payment settlement entity, and are not subject to reporting on Form 1099‑MISC.
Tronconi Segarra & Associates if offering E-file services for Form 1099s. Let us know if you would like us to E‑file your Form 1099s.
As always, we are available to answer any questions you may have. Please do not hesitate to contact us.