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Employer Guide to 2021 Tax Withholding Changes

Employer Guide to 2021 Tax Withholding Changes

Overview
As an annual service to our members, NJBIA explains the changes in tax withholding rates and taxable wage bases that employers face in the year ahead. Outside of payroll taxes, it is important to note that legislation signed into law in 2020 reinstated the 2.5% corporate business tax surtax originally imposed in the 2018 state tax law changes. The 2.5% surcharge had been scheduled to be lowered to 1.5% for the 2020 tax year.

It is also important to be aware that the high unemployment resulting from the pandemic will probably lead to an unemployment insurance payroll tax increase for employers in July of 2021, in addition to the employee change below. The exact employer rate increase has not been determined yet and will depend on potential state and federal responses.

Unemployment Insurance & New Jersey Workforce Development Taxes
Employee and employer state Unemployment Insurance and Workforce Development/Supplemental Workforce Funds tax rates will apply to the first $36,200 of an employee’s earnings in 2021 (up from $35,300 in 2020).

For 2021, employees are subject to a 0.0425% (.000425) Workforce Development/Supplemental Workforce Funds tax rate – the same as 2020. The employee Unemployment Insurance tax rate remains at 0.3825% (.003825) of taxable payroll.

New Jersey Temporary Disability (TDI) & Family Leave Insurance (FLI) Taxes
The 2021 TDI and FLI Taxable Wage base for employees-only is $138,200 – up from 2020’s $134,900. The TDI Taxable Wage Base for employers-only is $36,200 – a slight increase from 2020’s $35,300.

The 2021 disability tax rate for employees rises to 0.47% of taxable wages, up from 0.26%.

The tax rate for existing employers for the state plan is based on each employer’s claims experience.

Family Leave Insurance tax rate for employees rises to 0.28% of taxable wages, up from 0.16% in 2020.

Explanation of Federal Unemployment Tax Act (FUTA)
FUTA is a tax that employers pay to the federal government to help states pay for unemployment benefits. Due to actions taken in 2013 to stabilize the state Unemployment Insurance Trust Fund and repay federal loans, New Jersey employers will pay a FUTA tax rate of only 0.6% on the first $7,000 of an employee’s wages in 2021.

FICA and Medicare
The Social Security portion of the FICA tax that both employers and employees pay remains unchanged at 12.4% (6.2% each). The maximum amount of earnings subject to the Social Security payroll tax will increase to $142,800, up from the 2020 amount of $137,700.

Most Americans will pay a 2.9% Medicare FICA tax, which is split evenly between employees and employers (1.45% each). However, it should be noted that unlike the Social Security FICA tax, there is no limit on the amount of wages subject to the Medicare portion of the tax.

The Affordable Care Act imposed an additional tax of 0.9% on the employee-paid portion of the Medicare FICA tax for high-wage earners. The threshold amounts are $250,000 for married taxpayers who file jointly, $125,000 for married taxpayers who file separately, and $200,000 for single and all other taxpayers. While the additional Medicare tax for the individual wage earner’s portion on compensation will rise to 2.35% (1.45% plus 0.9%), the employer-paid portion of the Medicare tax on these amounts remains at 1.45%.

Self-employed individuals are responsible for the entire FICA tax rate of 15.3% on the first $142,800 of self-employment income. They are also responsible for the 2.9% Medicare FICA tax on income above $142,800, as well as the additional 0.9% Medicare tax established under the ACA if income meets the aforementioned “high wage earner” thresholds.

NOTE: Employers are advised to check with the IRS regarding information on federal income tax withholdings. Information can be found at http://www.IRS.gov.

Employee Benefits Increase in 2021
Employee maximum weekly benefits for Workers’ Compensation, Unemployment Compensation, and Temporary Disability are adjusted annually to reflect increases in average taxable wages of covered employees. Amounts applicable in 2021 are set forth below:

New Jersey Unemployment Insurance
The 2021 Maximum Unemployment Insurance weekly benefits rate is $731 (up from $713 in 2020).

Temporary Disability & Family Leave Insurance
The 2021 Maximum TDI weekly benefit rate is $903 (up from $881 in the second half of 2020 and $650 in the first half of 2020).

Workers’ Compensation
The 2021 Maximum Workers’ Compensation weekly benefit rate is $969 (up from $945 in 2020).

For More Information
If you need additional information, please contact NJBIA’s Member Action Center at 1-800-499-4419, ext. 3 or [email protected].

 

This information should not be construed as constituting specific legal advice. It is intended to provide general information about this subject and general compliance strategies. For specific legal advice, NJBIA strongly recommends members consult with their attorney.

Sours: https://njbia.org/resources/fast-facts/employer-guide-to-2021-tax-withholding-changes/

NJ 2020 wage base and tax rates for SUI, SDI and FLI

Beginning January 1, 2020 there will be a significant adjustment in the taxable wage base for New Jersey employees to accommodate benefit increases that will take effect on July 1, 2020. 

 

The employee taxable wage base for TDI and FLI will increase from $34,400 to $134,900. 

 

The TDI rate will increase from 0.17% to 0.26% for 2020. With the taxable wage base of $134,900, an employee’s maximum TDI contribution for 2020 will be $350.74, up from $58.48 from 2019. 

 

The FLI rate will increase from 0.08% to 0.16% in 2020. With the taxable wage base of $135,900, this makes the employees max FLI contribution $215.84, up from $27.52 from 2019. 

 

The employee's SUI will remain at 0.425% in 2020 with a taxable wage base $35,300.This is a moderate increase from the 2019 wage base of $34,400. Based off this, an employee’s maximum SUI contribution in 2020 will be $150.03. 

 

The employer taxable wage base for State Unemployment Insurance (SUI) and Temporary Disability Insurance (TDI) will be $35,300 for 2020, a rise from $34,400 from the 2019 threshold. 

 

Please note that BeyondPay’s Tax & Compliance Department will properly withhold the SUI, SDI and FLI contributions. 


Sours: https://support.beyondpay.com/s/article/NJ-2020-wage-base-and-tax-rates-for-SUI-SDI-and-FLI
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New Jersey Payroll Topics

The Garden State has a progressive income tax system where the income taxes are some of the highest in the United States. Use the New Jersey paycheck calculators to see the taxes on your paycheck.

New Jersey Tax Information

Withholding Requirements

  • Register as an employer on the New Jersey Employment Development website

  • Employee's Withholding Tax Exemption Certificate

    : NJ-W4

  • Withholding Method

    : Formula

  • Supplemental Rate

    : Add to regular wages for current or preceding payroll period, compute tax on total, and subtract tax withheld from regular wages

New Jersey State Unemployment Insurance (SUI)

  • New Jersey Wage Base

    : $36,200 for 2021

  • New Jersey SUI Rates range from

    : 0.4% to 5.4% for 2021

  • New Jersey new employer rate

    : 1.1 to 2.8% for 2021

  • New Jersey new employer rate includes: 0.3825% Unemployment Compensation Fund and 0.0425% Workforce Development Fund for 2021

New Jersey State Disability Insurance (SDI)

  • New Jersey SDI wage base

    : $35,300 for 2021

  • New Jersey SDI Rate

    : 0.26%

Family Leave Insurance (FLI)

  • New Jersey FLI wage base

    : $135,900 for 2021

  • New Jersey FLI: 0.16 for 2021

New Jersey State Labor Laws

  • New Jersey Minimum Wage

    : $12.00 per hour effective

  • New Jersey Termination Pay

    :
    • Employee is fired — next regular payday
    • Employee quits — next regular payday

New Jersey New Hire Reporting

Remit Withholding for Child Support to

New Jersey Reciprocal States

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New Jersey Withholding Forms

  • NJ-W4

    — Employee's Withholding Allowance Certificate
    Type: Resident
  • NJ-165

    — Employee's Certificate of Nonresidence in New Jersey
    Type: Nonresident

New Jersey Payroll Calculators

Calculate your New Jersey net pay or take home pay by entering your pay information, W4, and New Jersey state W4 information.

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Sours: https://www.paycheckcity.com/payroll-resources/new-jersey
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  1. First, we calculate your average weekly wage. We do this by dividing your base year earnings by the number of base weeks. 

In 2020, a "base week" is any week you earn $200 or more. In 2021, a "base week" is any week you earn $220 or more.

2. Now, we can determine your weekly benefit rate. Claimants are paid 85% of their average weekly wage, up to the maximum weekly benefit rate set for that calendar year.

In 2020, the maximum weekly benefit rate is $881 per week.

In 2021, the maximum weekly benefit rate is $903 per week. 

For example, let’s say Steve's first day of disability is Friday, March 5, 2021. To see how much he would receive weekly on Temporary Disability Insurance, we look at his reported wages for the first four of the last five completed quarters: 

 

Previous Completed QuartersTimeframe CoveredTotal EarningsNumber of Base Weeks
Quarter 5 

10/1/20 - 12/31/20

$5,50013 base weeks
Quarter 4 

7/1/20 - 9/30/20

$5,00012 base weeks
Quarter 3 

4/1/20 - 6/30/20

$5,00012 base weeks
Quarter 2 

1/1/20 - 3/31/20

$4,00010 base weeks
Quarter 1 

10/1/19 - 12/31/19

$4,20011 base weeks


Quarters 1 through 4 are the regular base year and the timeframe used to calculate his benefits.

Total base year earnings: $18,200 which we divide by 45 (the number of base weeks)

This gives us an average weekly wage of $404.

Steve’s weekly benefit rate is 85 % of his average weekly wage: $343.

Sours: https://myleavebenefits.nj.gov/worker/tdi/

Sdi nj

State of New Jersey SealOfficial Site of The State of New Jersey

New Employer

U.I.

D.I.

W.F./S.W.F.

  
0.026825

0.000000

July 1, 2021 to June 30, 2022

0.026825

 

0.001175 

 

0.000000

July 1, 2020 to June 30, 2021

 
Worker

U.I.

D.I.

W.F./S.W.F.

F.L.I

 

0.003825

0.000425

0.0028

January 1, 2021 to December 31, 2021


Worker - Governmental Reimbursable Employer

U.I.

D.I.

W.F./S.W.F.

 

0.0028

January 1, 2021 to December 31, 2021


U.I.
- Unemployment Insurance
D.I. - Disability Insurance
W.F./S.W.F. - Workforce Development/Supplemental Workforce Funds
F.L.I -Family Leave Insurance

For calendar year 2021, the maximum unemployment insurance, temporary disability insurance and workers' compensation benefit rates, the alternative earnings and base week amounts, and the taxable wage base are listed below.

  • 2021 Maximum Workers' Compensation weekly benefit rate: $969
  • 2021 Maximum Unemployment Insurance weekly benefits rate: $731
  • 2021 Maximum Temporary Disability Insurance weekly benefit rate: $903
  • 2021 Alternative earnings test amount for UI and TDI : $11,000
  • 2021 Base week amount: $220
  • 2021 Taxable Wage Base ( UI and WF/SWF - workers and employers, TDI – employers ): $36,200
  • 2021 Taxable Wage Base (TDI , FLI – workers only): $138,200

In accordance with N.J.A.C. 12:16-4.8, the following are the calculated dollar equivalents for board and room, meals and lodging furnished by employers in lieu of money wages paid for services rendered by employees during the calendar year 2021:

Full Room and Board, Weekly

$243.70

Lodging per week

$104.40

Meals per day

$27.80


If less than three meals per day, individual meals shall be valued as follows:

Breakfast

$8.30

Lunch

$8.30

Dinner

$11.10


These amounts are used when the employer does not assign a value to such payments.

Sours: https://www.nj.gov/labor/ea/employer-services/rate-info/
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NJ Income Tax – UI/DI/FLI Credits

You can take credit on your New Jersey tax return for any excess unemployment insurance (UI)/workforce development partnership fund (WF)/supplemental workforce fund (SWF) contributions, disability insurance (DI) contributions, and/or family leave insurance (FLI) contributions withheld by two or more employers. For 2020, the maximum employee contributions were:

  • UI/WF/SWF — $150.03;
  • DI — $350.74;
  • FLI — $215.84.
How to Claim a Credit
If you had two or more employers and you contributed more than the maximum amount(s), you should complete Form NJ-2450to claim a credit. If you had only oneemployer, you cannot file Form NJ-2450. If any single employer incorrectly withheld more than the maximum amount(s), you must contact that employer for a refund. If you are filing a joint return and both of you had excess contributions withheld, you must complete separate forms for each of you.

Your W-2s must show the employer's New Jersey Taxpayer Identification Number or approved private plan number. In addition, the amounts of your UI/WF/SWF, DI, and FLI contributions must be shown on the W-2s you provide. Your claim will be denied if your W-2s do not include this information.

Note:The contribution amounts are different every year. You must file the NJ-2450 for the same tax year as the tax return you are filing. Prior year forms are available online.

If Your Claim is Rejected
If your credit is denied because allNew Jersey Department of Labor and Workforce Development requirements are not met, you must refile your claim using the Labor Department's Form UC-9A, “Employee’s Claim for Refund of Excess Contributions.”

Additional information on these contributions is available on the Department of Labor and Workforce Developmentwebsite.
Sours: https://www.state.nj.us/treasury/taxation/njit16.shtml

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