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PAYROLL TAX HIGHLIGHTS

 

YEAR 2012

 

Below, we have summarized the major changes, as of this date, which will affect your payroll tax calculations

effective January 1, 2012.

 

Federal Individual Income Tax

 

New Jersey Individual Tax

 

 

 

The federal individual tax rates remain the same for 2012. Some of the tax bracket amounts have changed slightly after inflation adjustments. The phase-out of personal exemptions remains repealed until December 31, 2012. The personal exemption for 2012 is $3,800. (See schedule 1 for tax brackets, rates and standard deductions)

 

Social Security Tax

 

The social security wage base for 2012 has increased to $110,100. Effective January 1, 2011 the employee Social Security tax rate was reduced to 4.2%.

 

Note: The reduction of the employee Social Security tax rate was scheduled to expire as of December 31, 2011. As of the date of this newsletter, there is legislation pending to extend this reduction through February 29, 2012. The reduction may be further extended through December 31, 2012.

 

Social security tax is broken into two sections, Social Security and Medicare. The following is each section's rate and base for 2012:

 

 

New Jersey individual tax rates remain the same for 2012. The tax rates start at 1.4% with a graduating tax schedule rising to a maximum tax rate of 8.970%. (See schedule 2 for tax brackets and rates)

 

Pennsylvania Individual Tax

 

The Pennsylvania individual income tax withholding rate remains at 3.07% for 2012.

 

Philadelphia Wage Tax

 

The withholding rate for Philadelphia City Wage Tax remains the same for residents (3.928% or .03928) and for non-residents (3.4985% or .034985) through June 30, 2012.

 

Pennsylvania Act 32

 

Effective January 1, 2012, Pennsylvania Act 32 requires all Pennsylvania employers to comply with the reforms to the local earned income tax collection system. Act 32 does not impact Philadelphia.

 

 

Social Security

 

 

Medicare

 

Federal Unemployment Tax

 

 

Rate - Employer

Rate - Employee

 

Base

 

Maximum Employer

Portion

 

Maximum Employee

Portion

 

6.2%

6.2%

 

$110,100

 

 

$6,826.20

 

$6,826.20

 

 

1.45%

1.45%

 

Unlimited

 

 

Unlimited

 

Unlimited

 

 

The FUTA tax rate decreased to 6.0% beginning July 1, 2011. The maximum state credit is 5.4% for a net tax of 0.6% (.006) on the first $7,000 of wages per employee.  Federal law provides for a reduction in the FUTA tax credit when a state has outstanding federal loans for two years. New Jersey and Pennsylvania’s maximum state credit is 5.1% in 2011, for a net tax of 0.9% (.009) because they are credit reduction states. The 2012 credit reduction information is not available at this time.

 

 

Pennsylvania Unemployment

 

The maximum taxable wages for Pennsylvania Unemployment remains at $8,000 per employee. The surcharge on employer contributions remains at 5.8% (.058). The employer additional contribution remains at  0.65% (.0065). In 2011, the additional employer interest factor tax was 0.44% (.0044). The percentage of employee wages required to be withheld as unemployment compensation tax remains at 0.08% (.0008).  This 0.08% tax does not have a wage limit. The Pennsylvania Department of Labor has not released the 2012 employer surcharge rates as of the date of the Payroll Tax Highlights.

 

Prior to Act 6, a credit week was any week in which an employee earned at least $50. Beginning with the fourth quarter of 2011, this limit was increased to $100.

 

 

New Jersey Unemployment

 

The maximum taxable wages for New Jersey Unemployment and Disability will increase to $30,300 per employee.  The withholding rate will decrease to 0.7050% (.00705).  The employee percentage for January 1, 2012 to December 31, 2012 is divided as follows:

 

      0.3825%           Unemployment

      0.0425%           Workforce Development

      0.2000%           Disability

      0.0800%           Family Leave Insurance

      0.7050%          

 

401(k) Limits

 

The maximum employee contributions has increased from $16,500 to $17,000 for 2012.  Please note that this contribution is limited to the lesser of $17,000 or the percentage of wages specified in your 401(k) Plan document.  The maximum employee contributions for employees age 50 or older is $22,500 for 2012.  The contribution is limited to the lesser of $22,500 or the percentage of wages specified in your 401(k) Plan document.

 

 

Quickbooks

 

Please note that if you have payroll with Quickbooks and you keep current with all the payroll updates, Quickbooks makes the changes automatically.

 

Minimum Hourly Wage

 

                     Amount      Effective Date

  Federal             $7.25          July 24, 2009

  New Jersey       $7.25         July 24, 2009

  Pennsylvania    $7.25         July 24, 2009

 

Who to contact

 

If you have any questions please contact:

 

Fred Schutz

Tax Manager

856-722-5300 ext 201

email:  fred.schutz@hfco.com

 

John Kearsley IV

Tax Supervisor

856-722-5300 ext 302

email: john.kearsley@hfco.com

 

 

 

The information contained herein is general in nature and is based on authorities that are subject to change.  It is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Haefele, Flanagan & Co., PC to the reader.    This material may not be applicable to, or suitable for, the specific circumstances or needs, and may require consideration of non-tax and other tax factors.  Contact Haefele, Flanagan & Co., PC prior to taking any action based upon this information.  Haefele, Flanagan & Co., PC assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information obtained herein.

 

SCHEDULE 1

 

FEDERAL PERSONAL INCOME TAX RATES FOR 2012

    

       Taxable Income                              Tax Bracket

                                         But Not                                 

    Over                   Over                                      

    

  Single Individuals

 

 

 

$         -0 -

$    8,700

  10%  of the taxable income

      8,700 -

    35,350

$870.00 plus 15% of the excess over $8,700

    35,350 -

    85,650

$4,867.50 plus 25% of the excess over $35,350

    85,650 -

  178,650

$17,442.50 plus 28% of the excess over $85,650

  178,650 -

  388,350

$43,482.50 plus 33% of the excess over $178,650

  388,350 -

    Over

$112,683.50 plus 35% of the excess over $388,350

 

    Standard Deduction $5,950

    There is no phase-out of personal exemptions for 2012

 

 Married Filing Jointly and Surviving Spouses

 

 

 

$         -0 -

$  17,400

  10%  of the taxable income

    17,400 -

    70,700

$1,740.00 plus 15% of the excess over $17,400

    70,700 -

  142,700

$9,735.00 plus 25% of the excess over $70,700

  142,700 -

  217,450

$27,735.00 plus 28% of the excess over $142,700

  217,450 -

  388,350

$48,665.00 plus 33% of the excess over $217,450

  388,350 -

    Over

$105,062.00 plus 35% of the excess over $388,350

 

    Standard Deduction $11,900

    There is no phase-out of personal exemptions for 2012

 

 Married Filing Separately

 

 

 

$         -0 -

$    8,700

  10%  of the taxable income

      8,700 -

    35,350

$870.00 plus 15% of the excess over $8,700

    35,350 -

    71,350

$4,867.50 plus 25% of the excess over $35,350

    71,350 -

  108,725

$13,867.50 plus 28% of the excess over $71,350

  108,725 -

  194,175

$24,332.50 plus 33% of the excess over $108,725

  194,175 -

    Over

$52,531.00 plus 35% of the excess over $194,175

 

    Standard Deduction $5,950

    There is no phase-out of personal exemptions for 2012

 

Head of Household

 

 

 

$         -0 -

$  12,400

  10%  of the taxable income

    12,400 -

    47,350

$1,240.00 plus 15% of the excess over $12,400

    47,350 -

  122,300

$6,482.50 plus 25% of the excess over $47,350

  122,300 -

  198,050

$25,220.00 plus 28% of the excess over $122,300

  198,050 -

  388,350

$46,430.00 plus 33% of the excess over $198,050

  388,350 -

    Over

$109,229.00 plus 35% of the excess over $388,350

 

    Standard Deduction $8,700

    There is no phase-out of personal exemptions for 2012

 

*See IRS Notice 1036 or Circular E (Publication 15 and 15-A) for withholding amounts that should be made through payroll.

 

SCHEDULE 2

 

 

NEW JERSEY INCOME TAX RATES FOR 2012

 

            Please note that these rates are New Jersey Income Tax Rates, not Withholding Tax Rates. 

 

FOR MARRIED PEOPLE FILING JOINTLY, MARRIED/CU PARTNERS FILING JOINTLY, HEADS OF HOUSEHOLDS

AND SURVIVING SPOUSES

 

Taxable Income                                                                          Tax Rate

 

Not over $20,000

1.4%

$20,001 - $50,000

$280 plus 1.750%

 

of excess over $20,000

$50,001 - $70,000

$805 plus 2.450%

 

of excess over $50,000

$70,001 - $80,000

$1,295.50 plus 3.500%

 

of excess over $70,000

$80,001 - $150,000

$1,645 plus 5.525%

 

of excess over $80,000

$150,001 - $500,000

$5,512.50 plus 6.370%

 

of excess over $150,000

Over $500,000

8.97% of excess over $500,000

 

 

 

 

FOR TAXPAYERS WHOSE FILING STATUS IS

SINGLE OR MARRIED PEOPLE FILING SEPARATE RETURNS, MARRIED/CU PARTNER FILING SEPARATE RETURN

AND ESTATES AND TRUSTS THE RATES ARE:

 

 

Taxable Income                                                                         Tax Rate

 

Not over $20,000

1.4%

$20,001 - $35,000

$280 plus 1.750%

 

of excess over $20,000

$35,001 - $40,000

$542.50 plus 3.500%

 

of excess over $35,000

$40,001 - $75,000

$717.50 plus 5.525%

 

of excess over $40,000

$75,001 - $500,000

$2,651.25 plus 6.370%

 

of excess over $75,000

Over $500,000

 

8.97% of excess over $500,000