As 2018 begins, it’s important to ensure your business is operating at its best in the New Year. This includes ensuring the proper updates have been made to your accounting software to reflect new limits, changes to minimums and more. All of these items affect your company’s finances and how you run your business.
Here are some changes to keep in mind:
The Social Security Administration increased the 2018 Social Security wage base to $128,400. This is a $1,200 increase from the 2017 wage base of $127,200. Learn more here.
Unemployment Insurance Tax
If you have employees, you are probably familiar with unemployment insurance, a federal-state program financed through federal and state employer payroll taxes. State unemployment insurance taxes are based on a percentage of taxable wages you pay as the employer.
State unemployment insurance taxable wage bases vary by state. However, the Federal Unemployment Tax Act (FUTA) requires each state’s taxable wage base be at least equal to the FUTA wage base of $7,000 per employee.
It’s important to pay attention in your respective state as the wage base can change from year to year. In 2018, for instance, the following states have changed their wage base:
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- Rhode Island
You can find more information here, or in our W2/1099 book.
Last year, the IRS changed the filing deadline for 2016 Form W-2 to January 31. This was a big deal as the previous deadline allowed employers to file as late as March.
This year, the deadline for federal filing of Form W-2 is still January 31. Several states have also followed suit and moved their filing deadline for Form W-2 to January 31. This rule also applies to Form 1099-MISC.
Medical Savings Account
There are also new rules for high deductible plans in 2018:
|Health Savings Account||2017||2018|
|High Deductible Health Plan Individual Annual Deductible||$1,300||$1,350|
|High Deductible Health Plan Family Annual Deductible||$2,600||$2,700|
|High Deductible Health Plan Individual out of pocket expenses limit||$6,550||$6,650|
|High Deductible Health Plan Family out of pocket expenses
|Maximum Annual Contribution – Individual||$3,400||$3,450|
|Maximum Annual Contribution – Family||$6,750||$6,900|
|Maximum Annual Catch-up Contribution||$1,000||$1,000|
The current federal minimum wage is $7.25 per hour. However, the federal ruling does not trump state or local laws when they are more favorable to employees. Therefore, it’s important to understand not only the federal minimum wage, but also the state increases in minimum wage.
States with minimum wage changes effective January 1, 2018 or before, include:
|State||New minimum wage|
|California||$11/hr with 26 employees or more
$10.50/hr with less than 26 employees
|Minnesota||$9.65/hr for large employers (annual gross revenue of $500,000 or more)
$7.85/hr for small employers (annual gross revenue of less than $500,000)
|New York||$11/hr for Nassau, Suffolk and Westchester counties
$10.40/hr for the remainder of New York
$12/hr for NYC Small employers (10 or less)
$13/hr for NYC Large employers (11 or more)
$13.50/hr for fast food employees in NYC
$11.75/hr for fast food employees outside NYC
|Ohio||$8.30/hr (gross receipts of $305,000 or more)
$7.25/hr (gross receipts under $305,000)
The moral of the story …
In case you didn’t think accounting and the financial side of your business was complex enough, there’s the issue of continually ensuring you have the most up to date rates and information. These updates must be complied with and they can be complicated.
So make sure your accounting software is up to date and your personnel knows about the changes. If in doubt, ask. We’re here to help.
P.S. Want to know more updates for 2018? Check out our W2/1099 Year End Planning book.