Ultimate 2014 Guide to Payroll Tax and Limits [Infographic]

PAYDAY's Tax & Limits Quick-Help

Compliance is very important to us. 

That’s why we created a 2014 version of our Tax and Limits Quick Help – your ultimate 2014 guide to payroll taxes, contribution limits, minimum wage and more!  There are also a few items on this infographic that we’d like to highlight, including CA minimum wage increase, the additional Medicare taxes on high wage earners and the limits on employee contributions to health-related savings accounts.

2014 Payroll Tax Rates and Limits

Download the full version here!

Minimum Wage Increase

California passed House Bill AB10 in September 2013 to approve the state’s first minimum wage increase in six years. California’s minimum wage will increase from $8 per hour to $9 per hour on July 1, 2014. This is close to the proposed Federal Minimum Wage increase to $9 per hour that President Obama asked Congress for in his 2013 State of the Union Address. This minimum wage change must be reflected in approved California minimum wage posters on the first of July.

Additional Medicare Taxes on Wages over $200k

2014 continues the Medicare surtax, which adds another 0.9 percent to the 1.45 percent Medicare tax on earnings over $200,000. When an employee’s cumulative pay reaches $200,000, employers must increase the amount of Medicare tax they withhold for the remainder of the year.

Because of this Medicare surtax, there are a few important things for wage earners to remember in 2014:

  • The $200,000 earnings include fringe benefits, tips, third-party sick pay, amounts deferred under a nonqualified deferred compensation plan and the cost of group-term life insurance. So even if employee wages are less than $200,000, if employees receive any of these benefits that are applied as income for the Medicare surtax, employees will owe the additional tax even though employers won’t withhold the additional amount through payroll.
  • The surtax applies to joint incomes of $250,000 or more, but if one spouse earns $200,000 and the other earns $50,000, the lower-income spouse’s employer will not withhold the surtax, leaving the couple to pay the additional tax due on their own, either through estimated quarterly tax payments or as an amount owed when filing personal taxes.
  • Couples who earn a combined total of $250,000 or more, but whose individual total pay is under $200,000, owe the additional tax but employers aren’t liable to withhold it from pay.

Health Savings Employee Deferrals and Contributions Maximums for 2014

Employee contributions maximums for flexible spending accounts stay the same as 2013 but health savings accounts increase slightly. Individual HSAs increase by $50 to $3,300 and family HSAs increase by $100 to $6,550.

Flexible spending accounts do have one possible change for 2014, as employers can amend their FSA plans to allow employees to carry over $500 of unspent contributions to the following year, instead of losing it.

Looking for More?

PAYDAY Workforce Solutions can help you understand 2014 payroll taxes and can provide other payroll-related assistance. Trust us to help you with 401(k) plans, employee benefits, background checks, time and attendance, workers compensation, Federal and state tax credits, benefits administration, HRIS and unemployment claims management.  Give us a call or send us a note – we’d be happy to talk with you!

Categories

About the Author:

As Director of Operations, Jessica oversees the day-to-day operations for payroll, human resources, tax, finance and client affairs. She also plays an active role in formulating corporate strategy and developing client programs. Jessica believes a company’s success begins with its people. She strives to build a team encompassing excellence and professionalism, and to play a large role in developing the staff on an ongoing basis. Her passion for strong client relationships drives her in ensuring that clients receive the highest level of personal service and the best products in the industry. Jessica joined PAYDAY in 2004, and quickly advanced to Development Coordinator in 2006, when she took charge of Human Resources. She was promoted to Director of Operations in September, 2011.

Google