2012 State of the Payroll Address
Following is a checklist to help employers with year-end payroll and prepare for 2012.
Social Security card and payroll name match:
- The name on your employee’s Social Security card and the Form W-2 must match in the following manner: first name, middle initial and last name. For example: If Mary Ann Jones is on the Social Security card, then the Form W-2 should read Mary A. Jones.
- If any of your employees are currently using a name that does not match their Social Security card due to marriage, divorce, citizenship change, or any other reason, they need to obtain a new card from the Social Security Administration (SSA)
Form W-4. If you have any employees claiming exempt from federal withholding on their Form W-4 for 2011, this form expires January 1, 2012. They have a grace period until February 16, 2012 to submit a new 2012 form to you. If the new form is not received by that date, IRS regulations require you to change the allowances to “zero” and the filing status to “single” until a new form is received. You may download a 2012 W-4 at www.irs.gov or you may contact our office.
Software updates. If you process your own payroll, please insure you are using the correct employee payroll tax withholding rates before processing the first payroll in 2012. Be sure all necessary updates have been completed and you are on the most recent version. For help, contact your software provider. The 2012 IRS tax tables are available on the IRS website at www.irs.gov.
2012 Social Security tax for the employee. The employee and employer match is 6.2%: (Be advised that there is talk in Congress to extend the FICA holiday. This has not passed as of yet. Please continue to monitor our website for updates www.yeoandyeo.com.)
- Wage Base: $110,100
- Rate: 6.2%
- Maximum deduction: $6,826.20 ($110,100 x 6.2% = $6,826.20)
2012 Medicare tax:
- Wage base: No wage limit.
- Rate: 1.45%
Michigan Income Tax Withholding for 2012 remains at 4.35%. The personal exemption amount remains at $3,700.
In January 2012, the FUTA rate is .006 on the first $7,000 of wages per employee. Michigan is no longer a credit reduction state.
Federal Standard Mileage Rates. The 2012 mileage rates are as follows: standard business mileage rate is 55.5 cents per mile; charitable rate is 14 cents per mile; and medical or moving rate is 23 cents per mile.
Social Security numbers. The Social Security Number Privacy Act prohibits the display of all or more than four sequential digits of the social security number on the paycheck stub. An example of an acceptable format would be XXX-XX-6123.
Retirement Plan Limits. The 2012 limits are as follows:
- 403(b); non-profit employers; public schools - $17,000
- 457; state & local government; tax exempt - $17,000
- 401(k) plans - $17,000
- SIMPLE plans - $11,500
- Catch-up contributions for employees over age 50 - 401(k), 403(b), 457 - $ 5,500
- Catch-up contributions for employees over age 50 (SIMPLE plan) - $ 2,500
S-Corp Health Insurance Premiums. If you are organized as an S-Corporation, include company-paid health insurance premiums for each shareholder on their W-2.
Group Term Life Insurance. If you provide group term life insurance, add the taxable amount to the last paycheck of the year so that the information will appear on your employee’s W-2.
Auto usage. If your employee uses a company vehicle, determine the value of the car, the number of personal miles used, the total number of miles driven and the name of the employee so a value can be calculated and added to the last payroll of the year. Worksheet to calculate the value (Excel document).
Employer HSA contributions. Any employer contributions for 2011 must be added to the 2011 W-2.