Following are the important payroll tax changes that affect all employers for 2021. The Alloy Silverstein Group strives to provide the information you need to run your business successfully.

EFFECTIVE JANUARY 1, 2021:

Social Security/Medicare holding $1,036.50. The base week Federal Unemployment Tax The wage base increases to $142,800 for 2021 will increase to $220. The wage base remains at $7,000. for Social Security and remains UNLIM- January 1 through Employee % The effective tax rate for 2021 is 0.6%. ITED for Medicare. For Social Security, December 31, 2021 Breakdown the tax rate is 6.20% for both employ- Minimum Wage Unemployment Insurance 0.3825% ers and employees. (Maximum Social The effective rates per hour for 2021 are: Disability Insurance 0.4700% Security tax withheld from wages is Federal $7.25 effective 7/24/09 $8,853.60 in 2021). For Medicare, the Family Leave Insurance 0.2800% New Jersey $12.00 effective 1/1/21 rate remains unchanged at 1.45% for Workforce Development 0.0425% Pennsylvania $7.25 effective 7/24/09 both employers and employees. Total 1.1750% 401(K) Plan Limits Additional Medicare Tax The maximum employee pretax con- Pennsylvania Income Tax A 0.9% additional Medicare tax must tribution remains at $19,500 in 2021. The withholding rate for 2021 remains be withheld from an individual’s wages The “catch-up” contribution limit at 3.07%. paid in excess of $200,000 in a calendar remains at $6,500 for individuals year. There is no employer match for the who are age 50 or older. additional Medicare tax. Pennsylvania Unemployment Tax The employee rate for 2021 remains at SIMPLE Plan Limits 0.06%. Wages subject to unemploy- New Jersey Gross Income Tax The maximum salary deferral contri- ment contributions for employees are The withholding tax rates for 2021 re- bution remains at $13,500 in 2021. unlimited. Wages subject to unemploy- flect graduated rates from 1.5% to The “catch-up” contribution remains at ment contributions for employers re- 11.8%. The 11.8% tax rate applies to $3,000 for individuals who are age 50 mains at $10,000. individuals with taxable income over or older. $1,000,000. Pennsylvania Local Tax Act 32 is a law that reformed and stan- Earnings under Social Security New Jersey Unemployment Tax dardized the local earned income tax A social security beneficiary under full The wage base is computed separately (EIT) system, which requires uniform retirement age can earn $18,960 before for employers and employees. For withholding of earned income taxes benefits are reduced. For every $2 a employers for 2021, the wage base and local services tax with remittance person under full retirement age earns increases to $36,200 for unemployment to a single local collector or Tax Officer. over $18,960, $1 is withheld from ben- insurance, disability insurance and For details visit www.dced.pa.gov. efits. In the year an employee reaches workforce development. Employee’s full retirement age, $1 in benefits will be unemployment and workforce develop- City of Philadelphia Wage Tax withheld for each $3 they earn above ment wage base increase to $36,200, Effective July 1, 2020 tax rates are $50,520 until the month the employee maximum withholding $153.85. How- 3.8712% for Philadelphia residents and reaches full retirement age. Once an ever employee’s disability insurance 3.5019% for nonresidents. These rates employee reaches full retirement age or and family leave insurance wage base are adjusted by the City of Philadelphia older, their benefits are not reduced re- increases to $138,200, maximum with- on July 1 of each year. gardless of how much they earn.

(continued on next page) Forms W-4, I-9 and W-9 us regarding the specific types of health All new employees are required to file benefits to be recorded. Small employers Forms W-4 and I-9 which are to be who file fewer than 250 W-2 Forms are kept on file by the employer. A new exempt. Form W-4 should be obtained when an employee’s filing status or exemption Pennsylvania 1099-MISC/NEC changes. Be sure to request and keep on file a completed Form W-9 from all Withholding Tax Electronic Federal Tax non-corporate taxpayers to whom your There is a withholding requirement for Payment System (EFTPS) company pays commissions, interest, payors of Pennsylvania-source non-em- Employers must pay their Federal Tax rents, etc., totaling $600 or more, and ployee compensation and business in- Liabilities through the Electronic Feder- also payments made to certain incorpo- come to non-resident individuals. In al Tax Payment System unless they pay rated entities such as attorneys for legal addition, lessees of Pennsylvania real less than $2,500 in quarterly payroll tax services and providers of medical and estate making “lease payments” to non- liabilities and pay their liability when fil- health care services. resident lessors in the course of a trade or ing their employment tax returns (Forms business are required to withhold 941 and 944). Filing of Form W-2 and 1099 personal income tax on payments of Federal Reports containing 250 or $5,000 or more annually. The 1099-MISC/ Household Employment– more W-2s must be filed NEC forms will need to be filed with the Domestic Workers electronically via the Social Security’s Pennsylvania Department of Revenue by Household employers are required to Business Services Online (BSO). February 1, 2021 along with the Annual withhold and pay FICA for domestic Visit http://socialsecurity.gov/ for more Withholding Statement (PA Form workers (age 18 and older) if paid cash information about using BSO. Employers Rev-1667). Details can be found at wages of $2,300 or more in 2021. The filing 250 or more Forms 1099 http://revenue. pa.gov. $1,000 per calendar quarter threshold with the IRS must file electronically. continues to apply for FUTA. These tax- Form 1099 must provide the payer New Jersey Paid Sick Leave es are reported on Schedule H of the telephone number or will be subject to New Jersey’s earned sick leave affects employer’s personal tax return (Form penalties. almost every NJ employer. Law states 1040), but must be remitted through New Jersey Filing of Form W-2 and 1099 for every 30 hours worked, 1 hour of withholding or estimated payments sick time is earned up to a maximum of during the year. For PA and NJ, unem- Beginning with Tax Year 2020, you must 40 hours per year took effect October ployment coverage applies for domestic submit Form NJ-W-3 and all W-2, W-2-G, and 29, 2018. Please contact us for the spe- service in an employer’s private home 1099s electronically. cifics regarding this law. for cash wages of $1,000 or more in a W-2 and 1099 Filing Deadline calendar quarter in the current or pre- for Employers New Jersey Electronic Funds ceding calendar year. The due date for filing 2020 Form W-2 Transfer (EFT) with the Social Security Administration is New Jersey taxpayers with a prior year New Hire Reporting Requirements February 1, 2021. A change to the tax liability of $10,000 or more are re- All employers in the states of New Jer- reporting requirement for 2020 for non quired to make tax payments by EFT. sey and Pennsylvania are required to re- employee compensation such as payment Once the taxpayer is required to make port basic information about employees to independent contractors will be EFT deposits applying the threshold, all who are newly hired, rehired and return- reported on Form 1099-NEC instead of future payroll and business tax deposits ing to work after separation of employ- 1099 MISC. The 1099-NEC return is due must be made through EFT, regardless ment or leave of absence, temporary on February 1, 2021. if the threshold is met each year after. employees, and contracted entities. Business taxpayers required to use EFT, Employers must report this information Health Benefits W-2 Reporting and failing to do so, may be subject to within 20 days at www.nj-newhire.com Employers are required to include the severe penalties. Contact us if you have and www.cwds.pa.gov. Failure to report aggregate cost of employer sponsored questions or need assistance complet- a new employee could result in a fine up health benefits on the 2020 W-2’s in Box ing the Business Enrollment Applica- to $25 per violation. For further informa- 12 with code DD. It is for tions, which can be obtained online or tion, contact us or call the State of NJ informational purposes only and will not be by calling 1-800-555-4477 (Federal) or at 1-877-654-4737 or PA at 1-888-PA- included in taxable income. Please contact 609-292-9292 (NJ). HIRES. 2021 WAGE TAX RATE SUMMARY

Federal 2021 Current Year 2020 Prior Year FICA

Employee Rate 6.20 % 6.20 % Maximum Liability—Employee $ 8,853.60 $ 8,537.40

Employer Rate 6.20 % 6.20 % Maximum Liability—Employer $ 8,853.60 $ 8,537.40 Wage Limit $ 142,800.00 $ 137,700.00 MEDICARE

Employee and Employer Rate 1.45 % 1.45 % Maximum Deduction/Liability (each) No Limit No Limit Wage Limit No Limit No Limit

Add’l Employee Rate on wages exceeding $200,000 0.90 % 0.90 % FUTA

Employer Rate 0.60 % 0.60 % Wage Limit $ 7,000.00 $ 7,000.00 SOCIAL SECURITY BENEFITS Earned income may be received without forfeiting benefits: Under Full Retirement Age $ 18,960.00 $ 18,240.00 After Full Retirement Age No Limit No Limit

New Jersey 2021 Current Year 2020 Prior Year WAGES Minimum Wage $12.00 $11.00 UNEMPLOYMENT & WORKFORCE DEVELOPMENT Maximum Taxable Earnings—Employer & Employee $ 36,200.00 $ 35,300.00

Employee Deduction 0.425 % 0.425 % DISABILITY Maximum Taxable Earnings—Employer $ 36,200.00 $ 35,300.00 Maximum Taxable Earnings—Employee $ 138,200.00 $ 134,900.00

Employee Deduction 0.47 % 0.26 % PAID FAMILY LEAVE INSURANCE Maximum Taxable Earnings $ 138,200.00 $ 134,900.00

Employee Deduction 0.28 % 0.16 % Employer Deduction None None

Pennsylvania 2021 C urrent Year 2020 Prior Year WAGES Minimum Wage $ 7.25 $ 7.25 UNEMPLOYMENT Maximum Taxable Earnings $ 10,000.00 $ 10,000.00

Employee Deduction 0.06 % 0.06 %

City of Philadelphia 2021 Current Year 2020 Prior Year CITY WAGE TAX Residents 3.8712 % 3.8712 % Nonresidents 3.5091 % 3.4481 %