NEW INFORMATION: Employee Social Security Tax Deferral - On August 8th the President released a Memorandum on Deferring Payroll Tax Obligations in light of the ongoing COVID-9 Distaster. The IRS has provided guidance for employers on exactly what this means related to implementation. Most importantly, it is a tax deferral, not a tax credit. Employers may choose to not deduct the employee portion of Social Security taxes on paychecks between Sept 1,2020 and Dec 31, 2020 that are less than $4,000 in gross wages (before deductions). But employees will be required to pay that deferred amount between January 1st and April 30, 2021 (Not yet determined is whether employers must deduct the deferred amount in addition to the regular amount on checks paid between January 1, 2021 and April 30, 2021, or if employees will be required to pay that amount when they file their 2020 taxes.) Because Payroll recognizes that 10-month employees already see additional deductions starting each January to cover the cost of summer insurance, which can make their net (take home) pay lower, we are opting to simply continue Socical Security deductions as usual at this time. It will be less impactful for most employees to continue having Social Security wages deducted from each paycheck September through December and avoid having to pay those deferred taxes from January through April. Payroll will continue to monitor additional guidance or updates to the deferral status and post information as it becomes available.
Article from American Payroll Association: IRS Releases Guidance on Employee Social Security Tax Deferral
You can now enter your federal and state withholding elections on-line through Employee Self Service! Also, year end w-2 forms are available through self service as well!. Employees can check out the help sheet below that will assist in understanding w-2 information.
Income tax withholding from regular paychecks is based on the W-4 filled out by the employee. NEW in 2020 - Because the IRS no longer uses "withholding allowances", anytime you complete a new federal W-4 form, you will also need to complete a separate W4-MN form for state withholding. We accept withholding changes at any time during the year, with a new withholding election form completed each time. Please note that it can take up to 2 payroll cycles to updated your withholding if you submit a paper form. For immediate changes, please enter your federal and state withholding elections through Employee Self Service.
Any employee that claims exempt status on either federal or state taxes, must complete a new federal W4 and state W4-MN form in January of each year because exempt status is only valid for 1 year before it expires. If a new W4 and W4-MN form is not received by the time the old one expires, Payroll is required to change withholding to the federal and state default withholding rates.
All retro pay and certain types of supplemental pay are subject to a mandatory 22% federal withholding and 6.25% state withholding in addition to the regular FICA and Medicare deductions.
Social Security (FICA) deductions for 2020 are at a rate of 6.2% with a salary maximum of $137,700 and Medicare deductions are at a rate of 1.45% (no maximum).
(Tax withholding election forms and documentation are below. The payroll staff cannot provide recommendations for withholding or other tax advice. Please consult your tax advisor if you have questions about how much tax to withhold.)2021 Federal W-4 Form (send ONLY page 1 of this form to payroll)FAQ about the new 2020 W-4 Form (link to FAQ on IRS website)Federal Tax Withholding Estimator (link to calculator on IRS website)2021 IRS Publication 15-T (Includes federal tax tables)2021 MN State W-4MN Form (Complete for state withholding when updating your federal withholding)Helpsheet for MN State W-4MN form (How to correctly complete the W-4MN form)MN State Tax Withholding Estimator (link to calculation on MN Dept Revenue website)2021 MN State Withholding table - not yet published