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Payroll Management Guide
  • Rhode Island clarifies extended filing date, offers hurricane relief
  • Minimum wage on federal contracts increasing to $10.35, $7.25 for tipped workers
  • Wolters Kluwer projects inflation-adjusted tax brackets and other amounts for 2018
Unemployment Insurance Reports with Social Security
  • Illinois unveiled new UI tax process
  • Tennessee contribution rates


Payroll Management Guide

Rhode Island clarifies extended filing date, offers hurricane relief

The Rhode Island Division of Taxation (DOT) reminded taxpayers that calendar-year C corporations are allowed a six-month income tax return filing extension. Thus, for calendar-year C corporations who are filing on extension for the 2016 tax year, the extended due date is October 16, 2017. Even though federal law continues to state that calendar-year C corporations have a five-month extension, for an extended due date of September 15, the DOT has decided to grant calendar-year C corporations a six-month extension, which is reflected in Rhode Island Form RI-7004, Automatic Extension Request for RI-1120C, RI-1120S and RI-1065 Filers.

In addition, the DOT announced that individuals and businesses in an area that has been directly impacted by the recent hurricanes may ask for tax deadline relief. The DOT will consider relief requests on a case-by-case basis. In general, the DOT will follow the IRS's guidance regarding postponing certain deadlines for taxpayers who reside or have a business in the disaster area. Taxpayers should send a letter requesting relief and explaining their circumstances to: Rhode Island Division of Taxation Hurricane: XXXXX Tax Relief One Capitol Hill Providence, RI 02908 In place of the "XXXXX" in the address, the taxpayer should write the tax type.

Even if a taxpayer directly impacted by one of the recent natural disasters is approved for an extension, it is only an extension for filing, not for paying. Payments are still due on the usual deadline. If a taxpayer is unable to make payment on time, the DOT will consider waiving penalties, but cannot waive interest. If, for whatever reason, a taxpayer later receives a Notice that includes a penalty, the taxpayer should send the DOT a letter of explanation to abate the penalty. (Advisory for Tax Professionals 2017-28 , Rhode Island Department of Revenue, Division of Taxation, September 14, 2017.)

        (Read Intelliconnect) »

Minimum wage on federal contracts increasing to $10.35, $7.25 for tipped workers

The Labor Department's Wage and Hour Division issued a notice announcing that the applicable minimum wage rate to be paid to workers performing work on or in connection with federal contracts covered by Executive Order 13658 is $10.35 per hour beginning January 1, 2018. On that same date, the required minimum cash wage that generally must be paid to tipped employees performing work on or in connection with covered contracts will increase to $7.25 per hour. The notice was published in the Federal Register September 15, 2017 (82 FR 43408).

Executive Order 13658. Signed in February 2014, Executive Order 13658, "Establishing a Minimum Wage for Contractors," raised the hourly minimum wage paid by contractors to workers performing work on covered federal contracts to: $10.10 per hour beginning January 1, 2015; and, beginning January 1, 2016, and annually thereafter, an amount determined by the Secretary of Labor in accordance with a specified methodology. The Secretary's determination of the minimum wage rate also affects the minimum hourly cash wage that must be paid to tipped employees performing work on or in connection with covered contracts. The Secretary is required to provide public notice of the new minimum wage rate at least 90 days before the new rate is to take effect.

Updated wage rate. The applicable minimum wage under Executive Order 13658 is currently $10.20 per hour, and the applicable minimum cash wage that generally must be paid to tipped employees performing work on or in connection with covered contracts is currently $6.80 per hour, both of which rates have been in effect since January 1, 2017. Pursuant to the executive order and its implementing regulations, the Wage and Hour Division is giving notice that beginning January 1, 2018, the minimum wage rate that generally must be paid to workers performing work on or in connection with covered contracts will increase to $10.35 per hour; the required minimum cash wage that generally must be paid to tipped employees performing work on or in connection with covered contracts will increase to $7.25 per hour.

        (Read Intelliconnect) »

Wolters Kluwer projects inflation-adjusted tax brackets and other amounts for 2018

As a service to our readers, Wolters Kluwer has prepared projected inflation-adjusted tax brackets for the 2018 Tax Rate Tables, the standard deduction, personal exemption and other tax amounts for use in year-end and 2018 tax planning. The projected figures are based on the inflation-adjustment provisions of the Internal Revenue Code (IRC) as currently in force. Those adjustments use the average inflation index for the 12-month period ending on August 31, 2017, published in the Consumer Price Index for All Urban Consumers (CPI-U) by the U.S. Department of Labor on September 14, 2017. This year's index used in these annual adjustments showed the greatest increase, year-over-year, since 2007. The IRS is expected to release its official figures later this year. Also to be noted is the possibility of changes made by any tax reform legislation that may be enacted.

Tax rates. For 2018, for married taxpayers filing jointly and surviving spouses, the maximum taxable income for the 10-percent bracket is $19,050 (up from $18,650 for 2017); for the 15-percent tax bracket, $77,400 (up from $75,900 for 2017); for the 25-percent tax bracket, $156,150 (up from $153,100 for 2017); for the 28-percent tax bracket, $237,959 (up from $233,350 for 2017); for the 33-percent tax bracket, $424,959 (up from $416,700 for 2017); and for the 35-percent tax bracket, $480,050 (up from $470,700 for 2017). Above that 35-percent maximum income amount, taxpayers will fall within the top 39.6-percent tax bracket.

For heads of household for 2018, the maximum taxable income for the 10-percent bracket is $13,600 (up from $13,350 for 2017); for the 15-percent tax bracket, $51,850 (up from $50,800 for 2017); for the 25-percent tax bracket, $133,850 (up from $131,201 for 2017); for the 28-percent tax bracket, $216,700 (up from $212,500 for 2017); for the 33-percent tax bracket, $424,950 (up from $416,700 for 2017); and for the 35-percent tax bracket, $453,350 (up from $446,700 for 2017). Above that 35-percent maximum income amount, taxpayers will fall within the top 39.6-percent tax bracket.

For unmarried, single filers who are not heads of household or surviving spouses for 2018, the maximum taxable income for the 10-percent bracket is $9,525 (up from $9,325 for 2017); for the 15-percent tax bracket, $38,700 (up from $37,950 for 2017); for the 25-percent tax bracket, $93,700 (up from $91,900 for 2017); for the 28-percent tax bracket, $195,450 (up from $191,650 for 2017); for the 33-percent tax bracket, $424,950 (up from $416,700 for 2017); and for the top of the 35-percent tax bracket, $426,700 (up from $418,400 for 2017). Above that 35-percent maximum income amount, taxpayers will fall within the top 39.6-percent tax bracket.

For married taxpayers filing separately for 2018, the maximum taxable income for the 10-percent bracket is $9,525 (up from $9,325 for 2017); for the 15-percent tax bracket, $38,700 (up from $37,950 for 2017); for the 25-percent tax bracket, $78,075 (up from $76,550 for 2017); for the 28-percent tax bracket, $118,975 (up from $115,725 for 2017); for the 33-percent tax bracket, $212,475 (up from $208,350 for 2017); and for top of the 35-percent tax bracket, $240,025 (up from $235,350 for 2017). Above that 35-percent maximum income amount, taxpayers will fall within the top 39.6-percent tax bracket.

For estates and trusts for 2018, the maximum taxable income for the 15-percent bracket is $2,600 (up from $2,550 for 2017); for the 25-percent tax bracket, $6,100 (up from $6,000 for 2017); for the 28-percent tax bracket, $9,300 (up from $9,150 for 2017); and for the top of the 33-percent tax bracket, $12,700 (up from $12,500 for 2017). Above that 33-percent maximum income amount (there is no 35 percent rate for estates and trust), taxpayers will fall within the top 39.6-percent tax bracket.

See, also the Projected 2018 Inflation-Adjusted Tax Brackets.

Standard deductions. The 2018 standard deduction will rise $150, to $6,500 for single taxpayers. For married joint filers, the standard deduction will rise $300, to $13,000. For heads of household, the standard deduction will rise to $9,550, up from $9,350 for 2017. The additional standard deduction for blind and aged married taxpayers will rise by $50 to $1,300. For unmarried taxpayers who are blind or aged, the amount of the additional standard deduction will also rise by $50 (to $1,600).

For 2018 the so-called "kiddie" deduction used on the returns of children claimed as dependents on their parents' returns remains $1,050 or $350 plus the individual's earned income.

For higher-income taxpayers who itemize their deductions, the limitation on itemized deductions will be imposed as follows:
  • For married couples filing joint returns or surviving spouses, the income threshold will begin to phase out at income over $320,000, up from $313,800 for 2017.
  • For heads of household, the beginning threshold will be $293,350 in 2017, up from $287,650 in 2017.
  • For single taxpayers, the beginning threshold will be $266,700, up from $261,500 for 2017.
  • For married taxpayers filing separate returns, the 2018 threshold will be $160,000, up from $156,900 for 2017.
Personal exemptions. The personal exemption will be $4,150 for 2018, up from $4,050 for 2017. The phaseout of the personal exemption for higher-income taxpayers will begin after taxpayers pass the same income thresholds set forth for the limitation on itemized deductions.

Wolters Kluwer projects that the phase out of the personal exemption will be complete at the following levels:
  • For married couples filing joint returns or surviving spouses, the ceiling threshold will be $442,500, up from $436,300 for 2017.
  • For heads of household, the ceiling threshold will be $415,850, up from $410,150 in 2017.
  • For single taxpayers, the ceiling threshold will be $389,200, up from $384,000 for 2017.
  • For married taxpayers filing separate returns, the 2018 ceiling threshold will be $221,250, up from $218,150 for 2017.
Gift tax. The 2017 gift tax annual exemption will rise for the first time since 2014, rising from $14,000 to $15,000 in 2018.

Estate Tax. The estate and gift tax applicable exclusion will increase to $5,600,000 in 2018, up from $5,490,000 in 2017 (effectively $11,200,000 for married couples in 2018).

Gifts to Noncitizen Spouses. The first $152,000 of gifts made in 2018 to a spouse who is not a U.S. citizen will not be included in taxable gifts, up from $149,000 for 2017.

The American Taxpayer Relief Act of 2012 (ATRA) (P.L. 112-240) provided for the annual inflation adjustment of the exemption from alternative minimum tax (AMT) income. Previously, this inflation adjustment had to be enacted by Congress each year. Wolters Kluwer projects that, for 2017, the AMT exemption for married joint filers and surviving spouses will be $86,200 (up from $84,500 for 2017). For heads of household and unmarried single filers, the exemption will be $55,400 (up from $54,300 for 2017). For married separate filers, the exemption will be $43,100 (up from $42,250 for 2017). For estates and trusts, the exemption will be $24,600 (up from $24,100 for 2017).

Adoption credit. The adoption credit for 2018 increases to $13,840 (up from $13,570 for 2017).

Roth IRA. Roth IRA Contributions. Contributions to a Roth Individual Retirement Account (IRA) are limited for taxpayers with adjusted gross income above certain limits adjusted annually for inflation. For 2018, the allowed Roth IRA contribution amount phases out for married taxpayers filing jointly with income between $189,000 and $199,000 (up from $186,000 and $196,000 for 2017). For heads of household and unmarried filers, the phaseout range is between $120,000 to $135,000 (up from $118,000 to $133,000 for 2017).

IRA contributions.. The maximum amount of deductible contributions that can be made to an IRA will remain at $5,500 for 2018, the same as in 2017. The increased contribution amount for taxpayers age 50 and over will, therefore, also remain the same, at $6,500.

The above-the-line deduction for traditional IRA contributions will begin to phase out for married joint filers whose income is greater than $101,000 if both spouses are covered by a retirement plan at work ($2,000 more than for 2017). If only one spouse is covered by a retirement plan at work, the phaseout begins when modified adjusted gross income reaches $189,000 (up from $186,000 for 2017). For heads of household and unmarried filers who are covered by a retirement plan at work, the 2018 income phaseout range for deductible IRA contributions is $63,000 to $73,000, up $1,000 from 2017.

Education Savings Bond Interest Exclusion. When U.S. savings bonds are redeemed to pay expenses for higher education, the interest may be excluded from income if the taxpayer's income is below a certain range. For 2018, the phaseout range for single filers will be from $79,900 to $94,900 (up from $78,150 to $93,150 in 2017). For joint filers, the 2017 phaseout range will be $119,550 to $149.550 (up from $117,250 to $147,250 for 2017).

Student loans. Phaseout of Student Loan Interest Deduction. For 2018, the $2,500 student loan interest deduction will begin to phase out for married joint filers with modified adjusted gross income (MAGI) above $135,000 (same as for 2017). For single taxpayers, the 2018 deduction will begin to phase out at a MAGI level of over $65,000, which is the level for 2017.

Foreign earned income housing. The amount of the 2018 foreign earned income exclusion under Code Sec. 911 is projected to be $104,000, up from $102,100 for 2017.

        (Read Intelliconnect) »

Unemployment Insurance Reports with Social Security

Illinois unveiled new UI tax process

Beginning September 11, the Illinois Department of Revenue's MyTax Illinois will become a new option for Illinois employers filing unemployment insurance monthly wage reports and quarterly unemployment insurance reports, and for making contribution payments. The transition is a joint effort between the Illinois Department of Revenue (IDOR) and the Illinois Department of Employment Security (IDES) to simplify the tax experience for both new and existing Illinois employers.

"By utilizing MyTax Illinois for IDES' unemployment insurance processes, employers will be afforded an easy, secure method to file and pay unemployment insurance taxes," said Connie Beard, IDOR Director. "With more than 100 taxes and fees collected through MyTax Illinois, we believe it will provide a user-friendly online method to manage employer tax accounts."

Some of the benefits employers can expect to see include the ability to:
  • Register a new business with IDES and IDOR in one secure location;
  • Save time completing and mailing paper reports by filing wage reports and paying unemployment contributions electronically;
  • Make changes to account information quickly and easily;
  • Get immediate online confirmation that reports, and payments have been received and processed timely;
  • View IDES and IDOR correspondence, account balances, and other documents through a secure message center; and
  • File UI-3/40 reports, make payments and report quarterly zero wages online.
"I'm excited because two large state agencies, IDOR and IDES, are working together on this very critical project," said IDES Director Jeff Mays. "We'll be able to serve employers better and more efficiently because employers will have modern tools at their fingertips with a safer and faster way to conduct business with IDES."

Current employers, who already have a withholding account with IDOR, should set up their MyTax Illinois profile as soon as possible to begin taking advantage of the free online account management program to manage all other types of tax accounts. Employers may easily add their unemployment insurance account after September 11, 2017.

For more information on MyTax Illinois, please visit: mytax.illinois.gov.

Employer questions regarding MyTax Illinois may be directed to the IDOR Telephone Assistance Hot Line: 1-800-732-8866 (Illinois e-News Release, 8/28/2017).

        (Read Intelliconnect) »

Tennessee contribution rates

Effective July 1, 2017, through December 31, 2017, Premium Rate Table 6 remains in effect. Employer rates range from 0.01% to 2.3% for positive-balance employers and from 5.0% to 10.0% for negative-balance employers. For the period of July 1, 2017, through June 30, 2018, NAICS-based new employer rates in Tennessee are as follows: new nonconstruction employers, 2.7%; construction employers, 6.0%; manufacturing sectors 31 and 32, 2.7%; manufacturing sector 33, 2.7%; and mining and extraction, 2.7% (DWLD Communication, Tenn. ¶1120).

        (Read Intelliconnect) »




Payroll Resources from Wolters Kluwer
About this Newsletter

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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