To our valued clients:
Listed below are a few key points to keep in mind when preparing payroll tax returns and making payroll tax deposits for 2020:
2020 PAYROLL TAX RATES
1) The ceiling on which social security taxes are imposed on wages and self-employment income increased to $137,700 for 2020. The social security tax rate for both employers and employees remains at 6.2%. The Medicare tax rate for both employers and employees remains at 1.45% on all wages. An employer must withhold additional Medicare tax of 0.9% from wages it pays to an individual in excess of $200,000 in a calendar year, without regard to the individual’s filing status or wages paid by another employer.
2) The self-employment tax rate for 2020 is computed as follows: 12.4% for social security taxes on the first $137,700 of self-employment income, 2.9% for Medicare taxes on all self-employment income, and an additional 0.9% Medicare tax on self-employment income over $200,000 if filing single or $250,000 if filing jointly.
3) The ceiling on which FUTA tax is imposed remains at $7,000 for 2020. The FUTA rate for 2020 is 0.6%.
4) The ceiling on which Michigan UIA tax is imposed remains at $9,000 for 2020 for employers who are not delinquent in paying unemployment contributions, penalties, or interest and remains at $9,500 for delinquent employers.
All employers must be registered online with the electronic federal tax payment system (EFTPS) to remit federal employment taxes. Please contact our office if you need assistance with this registration process.
In addition, all employers must be registered online with the Michigan Web Account Manager (MiWAM) to electronically file and pay their quarterly Michigan Unemployment taxes (UIA Form 1028). Please contact our office if you need assistance with this process.
The 401(k) annual elective deferral increases to $19,500 for 2020. Catch-up contributions for individuals aged 50 or over increases to $6,500 for 2020.
The standard business mileage rate decreases to 57.5 cents for 2020.
Sincerely,
