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American Payroll Association (APA) Basic Guide to Payroll, 2013 Edition
It's more important than ever to be in compliance with payroll laws and regulations! How do you stay in compliance and avoid penalties? The APA Basic Guide to Payroll is written to make understanding the laws and regulations as easy as possible. And this single-volume guide is filled with tools to help you apply the law and make proper calculations – with ease!
The IRS has issued IRS Pub. 15 (Circular E), Employer’s Tax Guide and IRS Pub. 15-B, Employer’s Tax Guide to Fringe Benefits. Among, other things, Pub. 15 contains all of the withholding tables for wages paid on and after January 1, 2014. The percentage method withholding tables are reproduced in this Report Letter on pages 8--9. All of the withholding tables will be reproduced in the Payroll Management Guide in a future release at ¶11 through ¶21 and ¶25.
What’s new
Social security and medicare tax for 2014.--The social security tax rate is 6.2% each for the employee and employer, unchanged from 2013. The social security wage base limit is $117,000. The medicare tax rate is 1.45% each for the employee and employer, unchanged from 2013. There is no wage base limit for medicare tax. Social security and medicare taxes apply to the wages of household workers that are paid $1,900 or more in cash or an equivalent form of compensation. Social security and medicare taxes apply to election workers who are paid $1,600 or more in cash or an equivalent form of compensation.
Withholding allowance.--The 2014 amount for one withholding allowance on an annual basis is $3,950.
Change of responsible party.--Beginning January 1, 2014, any entity with an employer identification number (EIN) must file Form 8822-B, Change of Address or Responsible Party Business, to report the latest change to its responsible party. Form 8822-B must be filed within 60 days of the change. If the change in the identity of the responsible party occurred before 2014, and the IRS has not been previously notified of the change, file Form 8822-B before March 1, 2014, reporting only the most recent change. For a definition of “responsible party,” see the Form 8822-B instructions.
Same-sex marriage.-- For federal tax purposes, individuals of the same sex are considered married if they were lawfully married in a state (or foreign country) whose laws authorize the marriage of two individuals of the same sex, even if the state (or foreign country) in which they now live does not recognize same-sex marriage. For more information, see Revenue Ruling 2013-17, 2013-38 I.R.B. 201, available at www.irs.gov/irb/2013-38_IRB/ar07.html. Notice 2013-61 provides special administrative procedures for employers to make claims for refunds or adjustments of overpayments of social security and medicare taxes with respect to certain same-sex spouse benefits before expiration of the period of limitations. Notice 2013-61, 2013-44 I.R.B. 432, is available at www.irs.gov/irb/2013-44_IRB/ar10.html.
Cents-per-mile.--The business mileage rate for 2014 is 56 cents per mile. This rate may be used to reimburse an employee for business use of a personal vehicle, and under certain conditions, to value the personal use of a vehicle you provide to an employee.
Qualified parking exclusion and commuter transportation benefit.--For 2014, the monthly exclusion for qualified parking is $250 and the monthly exclusion for commuter highway vehicle transportation and transit passes is $130.
Recent changes to certain rules for cafeteria plans.—Notice 2013-71, 2013-47 I.R.B. 532, available at www.irs.gov/irb/2013-47_IRB/ar10.html, discusses recent changes to the “use-or-lose” rule for health flexible spending arrangements (FSAs) and clarifies the transitional rule for 2013-2014 non-calendar year salary reduction elections. See Notice 2013-71 for details on the changes.
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