Starting in 2020 the IRS redesigned the form W-4 that employees use to declare withholding parameters. The changes required a significant reprogramming of the payroll tax calculations. With this product at 'end-of-life' those changes were not done. Fortunately, the government is publishing compatible tables that can still be used with the existing parameters from 2019. So the tables below are designed to be used with the old pre-2020 parameters from the W-4. Follow the procedure outlined below to update your existing tables. This table can be found in IRS pub 15-T on page 64, the ANNUAL Payroll Period.
The wage limit on Social Security tax has changed this year to the new limit of $160,200 (see the FICA table).
You should perform this maintenance AFTER you have done your Year-End Maintenance in payroll for all companies, and you should be in the current year when you do it. These changes only need to be done in one company. (Tax Tables are shared among companies.)
CAUTION: The last line of a tax table usually has the upper limit defined with a series of nines. In most cases, this number is eight nines, followed by a decimal and two nines, 99999999.99. In some systems this could be nine nines instead of eight. It is imperative that you match the correct number of nines for your system. This is more than just a numeric value; it has to be the specific numeric value as defined by your formula for the tax calculation to work correctly. So don’t be creative, match the number exactly as it has been in the past. This comes into play most often when the number of brackets change and you must move the line with the nines up or down.
PROOF: Every year I get calls in January that the federal taxes are not correct for some individuals. It always comes down to the fact that the tables were not adjusted properly. You should always check your first payroll after you have changed the tables to make sure the taxes make sense. Use the Edit Register after you calculate checks and look at the company totals. Assuming the wages are approximately close to the ‘normal’, then the Federal Income Tax (FWH) should be less. Of course, many companies at the start of the year have several things going on at once: pay changes, pre-tax deduction changes, etc. So look closely at a couple of individual employees to proof the tax is correct. You can use IRS publication 15 to proof that the taxes are appropriate for any individual. Also check the FICA (OAS) tax to see the appropriate 6.2% is taken on taxable wages (don’t forget to back out the pre-tax deductions from wages).
*---------------------------------- PATX -------------------------------------* | Table ID FEDM Description Federal Income Tax: Married Table | | Number of Cols 3 Column Length 12 Type N | | Over --- Base + % Over | |------------ ------------ ------------ | | .00 .00 .00 | | 14800.00 .00 10.00 | | 36800.00 2200.00 12.00 | | 104250.00 10294.00 22.00 | | 205550.00 32580.00 24.00 | | 379000.00 74208.00 32.00 | | 477300.00 105664.00 35.00 | | 708550.00 186601.50 37.00 | | 99999999.99 4300.00 .00 | | .00 .00 .00 | | .00 .00 .00 | | .00 .00 .00 | | | *- Company 1 -----------------------------------------------------------------*
*---------------------------------- PATX -------------------------------------* | Table ID FEDS Description Federal Income Tax: Single Table | | Number of Cols 3 Column Length 12 Type N | | Over --- Base + % Over | |------------ ------------ ------------ | | .00 .00 .00 | | 5250.00 .00 10.00 | | 16250.00 1100.00 12.00 | | 49975.00 5147.00 22.00 | | 100625.00 16290.00 24.00 | | 187350.00 37104.00 32.00 | | 236500.00 52832.00 35.00 | | 583375.00 174238.25 37.00 | | 99999999.99 4300.00 .00 | | .00 .00 .00 | | .00 .00 .00 | | .00 .00 .00 | | | *- Company 1 -----------------------------------------------------------------*
*---------------------------------- PATX -------------------------------------* | Table ID FICA Description OASDI and Medicare Tables | | Number of Cols 6 Column Length 12 Type N | | Employee FICA Employer FICA Min. Wage DCB Limit | |------------ ------------ ------------ ------------ ------------ ------------| | 6.20 160200.00 6.20 160200.00 7.25 5000.00| | 1.45 99999999.99 1.45 99999999.99 .00 .00| | .00 .00 .00 .00 .00 .00| | .00 .00 .00 .00 .00 .00| | .00 .00 .00 .00 .00 .00| | | *- Company 1 -----------------------------------------------------------------*
NOTE: if your state minimum wage is higher than the federal minimum, then you should replace the 7.25 in the min. wage column with your state minimum.
SPECIAL NOTE: Since 2013 these is a special surtax on Medicare wages that exceed $200,000 per year. If you have any high wage earners that this may affect, give us a call if we have not already put in place this needed change. We need to make a special modification to the formula for this tax.