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Payroll Management Guide
  • Puerto Rico issues withholding certificates for 2018
  • 2018 pension plan limitations not affected by Tax Cut and Jobs Act of 2017
  • IRS issues Pub 15 plus W-4 withholding guidance
Unemployment Insurance Reports with Social Security
  • Idaho contribution rates revised
  • Washington contribution rates
  • Totalization agreements between the U.S. and various countries summarized


Payroll Management Guide

Puerto Rico issues withholding certificates for 2018

Section 1062.03 of the 2011 PR IRC establishes the general obligation of all persons, whether individuals or entities, that in the performance of a trade or business or income-producing activity in Puerto Rico makes payments to another person for services rendered, to deduct and withhold 7% from said payments for the income tax. The Secretary is authorized to grant partial and total relief from the 7% Withholding, subject to the terms and conditions established therein. For these purposes, the Department of the Treasury issues to the person receiving the payment a Certificate of Relief from Withholding at the Source on Payments from Services Rendered, if it is determined to qualify.

Informative Bulletin No. 18-01 was issued to report that: (i) Reliefs issued for 2017, whose expiration date was December 31, 2017, will continue in effect through Wednesday, January 31, 2018; and (ii) the process to send Automatic Relief for 2018 began during the last week of December 2017. Therefore, taxpayers should start to receive them in early January 2018. Taxpayers that meet the parameters established to receive Automatic Relief for 2018 and that urgently need it and cannot wait to receive their relief by mail may request a duplicate relief under one of the alternatives listed in this Informative Bulletin. (Internal Revenue Informative Bulletin No. 18-01, Puerto Rico Tax Reports, January 31, 2018.)

        (Read Intelliconnect) »

2018 pension plan limitations not affected by Tax Cut and Jobs Act of 2017

The Internal Revenue Service has announced that the Tax Cut and Jobs Act of 2017 does not affect the tax year 2018 dollar limitations for retirement plans announced in IR 2017-177 and detailed in Notice 2017-64.

The tax law provides dollar limitations on benefits and contributions under qualified retirement plans, and it requires the Treasury Department to annually adjust these limits for cost of living increases. Those adjustments are to be made using procedures that are similar to those used to adjust benefit amounts under the Social Security Act.

As the recently enacted tax legislation made no changes to the section of the tax law limiting benefits and contributions for retirement plans, the qualified retirement plan limitations for tax year 2018 previously announced in the news release and detailed in guidance remain unchanged.

The tax law also specifies that contribution limits for IRAs, as well as the income thresholds related to IRAs and the saver's credit, are to be adjusted for changes in the cost of living using procedures that are used to make cost-of-living adjustments that apply to many of the basic income tax parameters.

Although the new law made changes to how these cost of living adjustments are made, after taking the applicable rounding rules into account, the amounts for 2018 in the news release and the guidance remain unchanged. (IR-2018-19, February 6, 2018.) IR-2018-19

        (Read Intelliconnect) »

IRS issues Pub 15 plus W-4 withholding guidance

The IRS has released IRS Pub 15 other guidance on withholding for 2018. The guidance:
  • extends the effective period of Forms W-4, Employee's Withholding Allowance Certificate, furnished to claim exemption from income tax withholding under section 3402(n) of the Internal Revenue Code (Code) for 2017 until February 28, 2018, and permits employees to claim exemption from withholding for 2018 by temporarily using the 2017 Form W-4;
  • temporarily suspends the requirement under section 3402(f)(2)(B)1 that employees must furnish their employers new Forms W-4 within 10 days of changes in status that reduce the withholding allowances they are entitled to claim;
  • provides that the optional withholding rate on supplemental wage payments under Treas. Reg. § 31.3402(g)-1 is 22 percent for 2018 through 2025; and
  • provides that, for 2018, withholding under section 3405(a)(4) on periodic payments when no withholding certificate is in effect is based on treating the payee as a married individual claiming three withholding allowances. (IRS Pub 15, (Circular E), Employer's Tax Guide For use in 2018; IRS Notice 2018-14, January 29, 2018.) Notice 2018-14 Publication 15
        (Read Intelliconnect) »

Unemployment Insurance Reports with Social Security

Idaho contribution rates revised

On January 31, Gov. Butch Otter signed the Unemployment Insurance Tax Relief Law into effect. The legislation decreases contribution rates for most employers retroactively effective to January 1, 2018. It also decreases the fund size multiplier from 1.5 to 1.3 for the year. A new Rate Class Array table has been issued to reflect the changes in the rates. Employers who paid their first quarter taxes in advance before the law took effect must take any overage and apply it as a credit to a future quarter.

Accordingly, 2018 contribution rates in Idaho under the new array table will range from 0.269% to 0.895% for positive ratio employers and from 1.611% to 5.4% for deficit ratio employers. The standard rate for 2018 decreases to 1.0% (DOL Communication, Ida. ¶1120).

        (Read Intelliconnect) »

Washington contribution rates

For 2018, contribution rates (including the graduated social cost rate) range from 0.10% to 5.70%. There is also an Employment Administration Fund tax in effect for 2018, which makes the total rate range 0.13% to 5.72%. Note, delinquent employer rates range from 0.83% to 7.73% (ESD Communication, Wash. ¶1120).

        (Read Intelliconnect) »

Totalization agreements between the U.S. and various countries summarized

A summary of international Social Security agreements currently in force is set forth below. The summary was prepared by the Social Security Administration's Office of International Programs. These international Social Security agreements, commonly referred to as totalization agreements, eliminate dual benefit coverage of employees and dual taxation of both employees and employers for citizens who work in countries other than their own. The agreements provide coordination between the Social Security systems of the United States and other countries (see ¶12,645 in the "Social Security: Benefits Explained" division).

Australia: The U.S.-Australian Social Security agreement was signed in Canberra on September 27, 2001, and became effective on October 1, 2002.

Austria: The U.S.-Austrian Social Security agreement was signed on July 13, 1990, and entered into force on November 1, 1991. A supplementary agreement dealing primarily with Austrian benefits was signed in Vienna on October 5, 1995, and entered into force on January 1, 1997.

Belgium: The U.S.-Belgium Social Security agreement with final protocol was signed on February 19, 1982, and entered into force on July 1, 1984. An additional protocol was signed on November 23, 1982, and also entered into force on July 1, 1984.

Brazil: The U.S.-Brazilian Social Security agreement was signed on June 30, 2015, but is not yet effective.

Canada: The U.S.-Canadian Social Security agreement was signed on March 11, 1981, and a supplementary agreement was signed on May 10, 1983. A U.S.-Quebec understanding to extend the agreement to Quebec's provincial-level Social Security program was signed on March 30, 1983. All three agreements entered into force on August 1, 1984. A second supplementary agreement primarily intended to authorize U.S. and Canadian Social Security agencies to assist each other in administering their respective programs was signed in Ottawa on May 28, 1996, and entered into force on October 1, 1997.

Chile: On February 16, 2000, the U.S. Ambassador to Chile and the Chilean Acting Foreign Minister signed the U.S.-Chilean agreement at a ceremony in Santiago. The agreement itself entered into force on December 1, 2001.

Czech Republic: The U.S. and the Czech Republic signed an agreement on September 7, 2007. It went into effect on January 1, 2009. A supplementary agreement amending the original one was signed on September 23, 2013, and entered into effect on May 1, 2016.

Denmark: The U.S. ambassador to Denmark, James P. Cain, and the Danish Minister for Social Affairs, Eve Kjer Hansen, signed an agreement on June 13, 2007. It went into effect on October 1, 2008.

Finland: The U.S.-Finnish Social Security agreement was signed on June 3, 1991, and entered into force on November 1, 1992.

France: The U.S.-French Social Security agreement was signed on March 2, 1987, and an administrative agreement was signed October 21, 1987. Both entered into force on July 1, 1988.

Germany: The U.S.-German Social Security agreement was signed on January 7, 1976, and an administrative agreement was signed on June 21, 1978. Both entered into force on December 1, 1979. A supplementary agreement intended primarily to simplify the method used by the U.S. to compute benefits under the agreement was signed on October 2, 1986, and entered into force on March 1, 1988. German reunification extended application of the agreements to former East German territory effective October 3, 1990. A second supplementary agreement designed primarily to extend German benefits to certain ethnic German Jews in the U.S. was signed in Bonn on March 6, 1995, and entered into force on May 1, 1996.

Greece: The U.S.-Greek Social Security agreement was signed on June 22, 1993, and entered into force on September 1, 1994.

Hungary: The U.S.-Hungarian Social Security agreement was signed on February 3, 2015, and entered into force on September 1, 2016.

Ireland: The U.S.-Irish Social Security agreement was signed on April 14, 1992, and entered into force on September 1, 1993.

Italy: The U.S.-Italian Social Security agreement was signed on May 23, 1973, and entered into force on November 1, 1978. A supplementary agreement, which simplifies certain provisions of the original agreement and authorizes the U.S. to use a simplified method of computing benefits under the agreement, was signed on April 17, 1984, and entered into force on January 1, 1986.

Japan: In a ceremony held in Washington, D.C. on February 19, 2004, the U.S. and Japan signed the U.S.-Japanese Social Security agreement. It entered into effect on October 1, 2005.

Luxembourg: The U.S.-Luxembourg Social Security agreement was signed on February 12, 1992, and entered into force on November 1, 1993.

Mexico: Former SSA Commissioner Jo Ann B. Barnhart and Dr. Santiago Levy Algazi, former Director General of the Mexican Social Security Institute, signed a U.S.-Mexican Social Security agreement at a ceremony held in Guadalajara on June 29, 2004. The agreement is not yet in effect.

Netherlands: The U.S.-Netherlands Social Security agreement was signed on December 8, 1987. A supplementary protocol to clarify one of the provisions of the agreement concerning Netherlands benefits was signed on December 7, 1989. Both the agreement and the protocol entered into force on November 1, 1990. A second protocol to the Social Security agreement was signed on August 30, 2001, and entered into force on May 1, 2003.

Norway: The U.S.-Norwegian Social Security agreement was signed on January 13, 1983, and entered into force on July 1, 1984. On November 30, 2001, U.S. and Norwegian officials signed a new agreement that replaced the original U.S.-Norwegian agreement. It improves Norwegian benefit rights and updates and clarifies several provisions in the original agreement. The new agreement entered into force on September 1, 2003.

Poland: The agreement between the U.S. and Poland was signed on April 1, 2008. It went into effect on March 1, 2009.

Portugal: The U.S.-Portuguese Social Security agreement was signed on March 30, 1988, and entered into force on August 1, 1989.

Slovak Republic: The agreement between the U.S. and the Slovak Republic was signed on December 10, 2012, and went into effect on May 1, 2014.

South Korea: The U.S.-South Korean Social Security agreement was signed on March 13, 2000, and entered into force on April 1, 2001.

Spain: The U.S.-Spanish Social Security agreement was signed on September 30, 1986, and entered into force on April 1, 1988.

Sweden: The U.S.-Swedish Social Security agreement was signed on May 27, 1985, and entered into force on January 1, 1987. A supplementary agreement that amends the U.S.-Swedish agreement to take account of recent major reforms in Swedish Social Security law was signed in Stockholm on June 22, 2004. It entered into force on November 1, 2007.

Switzerland: The original U.S.-Swiss Social Security agreement was signed on July 18, 1979, and an administrative agreement (retroactive) was signed on April 17, 1984. Both entered into force on November 1, 1980. A supplementary agreement intended primarily to simplify the method used by the U.S. to compute benefits under the agreement was signed on June 1, 1988, and entered into force on October 1, 1989. A new U.S.-Swiss agreement was signed on December 3, 2012, and went into effect on August 1, 2014. This agreement replaced both the original and supplementary agreements of 1979 and 1988. It updates and revises a number of provisions in the original agreements.

United Kingdom: The U.S.-U.K. Social Security agreement was signed on February 13, 1984. All provisions of the agreement except those concerning the payment of benefits based on totalized (i.e., combined) periods of U.S. and U.K. coverage entered into force on January 1, 1985. The benefit provisions entered into force on January 1, 1988. A supplementary agreement dealing primarily with U.K. disability benefits was signed in London on June 6, 1996, and entered into force on September 1, 1997.

        (Read Intelliconnect) »




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Payroll and Unemployment Insurance NetNews is a current summary of federal and state employment laws and regulations, compliance issues, and other topics related to proper handling of day to day workplace matters. This timely information comes from the Payroll Management Guide and Unemployment Insurance Reporter with Social Security.

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