Monday, December 29, 2008

Changes for 2009 Wage Withholding

Thought this may be helpful information

As in past years the IRS issued a 2009 tax guide for employers. Below is a summary of the new changes for the new year.

1. Social security and Medicare taxes (rate and cutoff)

Employers must stop withholding social security tax after an employee reaches $106,800 in social security wages in 2009. The maximum social security withholding amount in 2008 was $102,000.

2. New employment tax adjustment and claim for refund process

The IRS is introducing two new forms for the 2009 tax year: Form 941-X, Adjusted Employer’s QUARTERLY Federal Tax Return or Claim for Refund, and Form 944-X, Adjusted Employer’s ANNUAL Federal Tax Return or Claim for Refund.

3. Credit card payments

Employers can pay the balance due on Form 943 (Employer’s Annual Federal Tax Return for Agricultural Employees) and Form 945 (Annual Return of Withheld Federal Income Tax) by credit card. Employers can't use a credit card to make federal tax deposits.

4. Social Security Administration and magnetic media

Employers requesting verification of names and social security numbers between 51 and 250,000 employees can no longer use magnetic media to submit their requests to the Social Security Administration. Employers can upload a file through the Social Security Number Verification System (SSNVS).

5. Paid preparers must sign Form 941 and Form 944

The paid preparer’s section is no longer optional and is included in Part 5 of Form 941(Employer’s QUARTERLY Federal Tax Return) and Form 944 (Employer’s QUARTERLY Federal Tax Return).

Employers using an up to date 2009 payroll software to generate payroll and calculate withholding, shouldn't have a problem dealing with any of these changes for tax year 2009.