2024 Payroll Tax Updates

@SoniaEchols90 Do you know if there are known issues with the April tax update regarding the US federal income tax withholding calculations. We’ve seen some employees withholdings change incorrectly after applying the tax update. 

I just had the same thing reported.  Client has salaried employees so taxable wages and and FIT are very consistent.  They just performed Tax Maintenance and FIT tax dropped significantly.  What is going on with the Tax Maintenance?

Paychecks with different withholding amounts are:

– Ref # 1509 – Previous FIT WH: $103.84 – New FIT WH: $131.54

– Ref # 1508 – Previous FIT WH: $405.52 – New FIT WH: $277.59

 – Ref # 1510 – Previous FIT WH: $717.35 – New FIT WH: $549.56

 – Ref # 1511 – Previous FIT WH: $275.36 – New FIT WH: $318.36

@SoniaEchols90 - I did Case #368907 was created a few minutes ago.  FYI...I have another client reporting issues with FIT but this one indicates the FIT went up.  I still need to research this one.  I will create a case on it if I find the same situation.

Just an update that we are actively looking into this issue.  Impacted employee are using the 2020+ W4.

Update: 6/19/2024

We have transitioned from Symmetry's legacy Location Code Service (LCS) to Symmetry Location Service (SLS).  Action Required 

This is a new and improved geocoding Location Service.

NOTE:  We have an application change that will be delivered in a future release before customers can reap the full benefit of the new service as described below.

With the SLS in place, the engine will be able to precisely identify the applicable taxes at a more granular local level. It returns more precise location codes allowing you to pinpoint additional tax jurisdictions that may exist inside (or partially inside) traditional city boundaries.  Which will help resolve the determination of whether JEDDs and other local taxes are applicable/ subject to withholding.   

Action Required:

1. Navigate to Tax Maintenance (PR208000)
2. Update Taxes under Tax Maintenance (PR208000)
3. Assign Taxes to Employees
4. Navigate to Employee Payroll Settings (PR203000) ~ TAXES
5. Review tax setup of problematic employees with local taxes to ensure taxes are properly set up.

Canada

Federal/Quebec CPP and QPP Tax - Action Required - Effective 1/1/2024

If the employee reached the First ceiling of wages and did not exceed the Second ceiling of wages for CPP/QPP then the subsequent payrolls did not collect the Second ceiling CPP/QPP amounts.  A change has been made so that the Second ceiling CPP/QPP wages will be collected.  However, with this solution the limit will not be respected, and amounts will continue to be collected unless you follow the steps below.  A permanent solution will be delivered later this year. 

ACTION REQUIRED: The workaround until the permanent solution is delivered is to store the YTD values of the Second ceiling in tax settings.

1. Run the Taxes by Employee (PR641067) report for Year: 2024 and Tax Code: CAN CPP.  Do not check Include Unreleased.
2. Export to Excel.
3. Find any employees with YTD Tax Wages greater than $68,500.  Take YTD Tax Wages less $68,500 to arrive at the employee’s Second Ceiling Wages YTD. 

For example, an employee’s YTD Tax Wages are $71,175.01.  $71,175.01 – $68,500 = $2,675.01

4. Next take YTD Tax Amount less $3,867.60 to arrive at the Second Ceiling Tax YTD. 

For example, an employee’s YTD Tax is $3,974.50.   $3,974.50 - $3,867.50 = $107

5. Navigate to Employee Payroll Settings (PR2030PL) ~ TAXES ~ CAN CPP for the employee. 
6. In the YTD Second Additional CPP Tax Contribution enter the employee’s Second Ceiling Tax YTD. 

For example, $107.

7. In the YTD Second Additional CPP Wage Contribution enter the employee’s Second Ceiling Wages YTD.

For example, $2,675.01

8. Calculate payroll as normal.

NOTE: You will need to do this for every payroll until the employee has reached the max tax and max taxable wages for the Second Ceiling and you have set YTD Second Additional CPP Tax Contribution to $188 and the YTD Second Additional CPP Wage Contribution to $4700 under Employee Payroll Settings (PR2030PL) ~ TAXES ~ CAN CPP.

The same logic will be used for QPP.  Please Note that the Max Tax for QPP is different from CPP, see table below.   Also, the fields to be updated under Employee Payroll Settings (PR2030PL) TAXES ~ CAN QPP will be YTD Second Additional QPP Tax Contribution and YTD Second Additional QPP Wage Contribution. 

NOTE:  If an employee transferred mid-year to or from Quebec to or from another province then enter the YTD tax and Taxable Wages for the Frist Tier only.  Use the Second Additional Transferring Into for the Second-Tier amounts.

For example, an employee transfers from Ontario to Quebec.  They have $70,000 YTD CPP Taxable Wages and $3,927.50 YTD CPP Tax.   Under Employee Payroll Settings (PR203000) ~ TAXES ~ CAN QPP Set:

• CPP YTD Tax to 3867.50
• CPP YTD wages to 68500
• YTD Second Additional CPP Tax Contribution Transferring Into to 60
• YTD Second Additional CPP Wage Contribution Transferring Int to 1500

YMPE - Year’s Maximum Pensionable Earnings is set by the government every year in January based on increases in the average wage in Canada (First ceiling).

YAMPE - Amount of the second earnings ceiling starting in 2024. It will be 7% higher than the First ceiling.

Federal/Quebec Wage Type – Effective 6/19/2024

Corrected an issue that caused earnings to be incorrectly taxed when an Earnings Type Codes (PR102000) Wage Type: set to “Custom” and had a Taxability Setting of “Cash Non-Subject Non-Taxable for a Tax Code”.

United States

Federal HSA Effective – Effective 6/19/2024

When setting up a Deduction and Benefit Codes (PR101060) form with a Code Type: “HSA” under US TAX SETTINGS will now default with a Reporting Type: “Under Box12W - W - Company's Contribution to an Employee's Health Savings Account (HSA)” under EMPLOYER CONTRIBUTION.  Previously, Reporting Type:  under EMPLOYER CONTRIBUTION was defaulting to “Box12DD - DD - Cost of Employer-Sponsored Health Coverage”.

Optional: Review your set up of current HSA accounts to ensure Employer Contributions are correctly mapped to Box 12W on the Employee's W-2.

Federal Simple IRA - Effective 6/19/2024

Corrected SIMPLE IRA scenario involving year-to-date Section 125 contributions.  Section 125 employee contribution amounts are automatically subtracted from compensation when calculating SIMPLE IRA employer contributions, but any year-to-date Section 125 employer contributions will now be correctly included in the calculation when Allow employer SIMPLE IRA contributions is checked.

Allow employer SIMPLE IRA contributions is found under Tax Maintenance (PR208000) ~ COMPANY TAX ~ FED OR Employe Payroll Settings (PR203000) ~ TAX SETTINGS ~ FED.

Federal Simple IRA - Effective 6/19/2024

Added a new flag Use increased SIMPLE IRA limit to Tax Maintenance ~ Company Tax Data and to Employee Payroll Settings ~ TAX SETTINGS to support Secure Act 2.0. For 2024, there are new increased limits available.  Employees participating in a SIMPLE IRA plan can use an increased deferral limit of $17,600 (i.e, a 10% on the $16,000 annual contribution limit) if the employer meets one of the follow conditions:

• Employer has 25 or fewer employees receiving at least $5000 of compensation or
• Employer has more than 25 but not more than 100 employees and makes either a 4% matching contribution or a 3% nonelective contribution.
  • NOTE: If the employer elects to make a 4% matching contribution, the employer contribution must be entered as a percentage rather than a flat amount.

All States Income Tax – Action Required - Effective 6/19/2024

Employees can be marked as exempt by selecting the Is Exempted Flag under Employee Payroll Settings ~ Taxes~ Tax Settings for the state SIT selected.  We will be removing the flag Employee is exempt from state withholding under Employee Payroll Settings ~ Tax Settings in a future release.

Action Required: Ensure that employees exempt from a State Income tax are flagged as exempt using the Is Exempted flag under Employee Payroll Settings ~ Taxes~ Tax Settings for the state SIT.

Multi-State Calculations Income Tax – Effective 6/19/2024

Corrected a rounding issue that would occur in multi-state calculations when all the following conditions were met:

• You are using the combined calculation method
• The resident state is one of the following: Maine, Minnesota, Missouri, West Virginia
  • If Minnesota, then you must have set up the tax to either use default rounding or to always round (Minnesota recommends rounding, but it is not mandatory like the other three listed)
• The nonresident work state is NOT returning a rounded result.

In this scenario, any credit from the nonresident state was applied after the rounding, causing the resident state to incorrectly return an unrounded tax amount. The credit will now be applied prior to the resident state tax getting rounded.

Kentucky, Corbin City OLF – Effective 6/19/2024

Corbin City exists both inside and outside of Whitley County. We have confirmed with the Whitley County Occupational Tax Administrator that Whitley County collects the occupational tax for the portion of the City of Corbin within its borders. Therefore, the Corbin OLF will now only be returned for the portion of the city outside of Whitley County.

Massachusetts Employer Medical Assistance Contribution (EMAC) - Effective 6/19/2024

On (Tax Maintenance (PR208000) ~ TAX CODES ~MA ER EMAC)

• If the Override Wage Base miscellaneous parameter is NOT set:

The tax engine will now correctly obey the wage base and will stop withholding once crossed by the combined year-to-date wages and year-to-date employer benefit contributions to a 401(k) or Roth 401(k).

• If the Override Wage Base miscellaneous parameter is set:

While the description for Override Wage Base states that is intended to be a "Year-to-date Subject Wages Override," it was previously acting like a gross wages override and was re-adding year-to-date employer benefit contributions to 401(k)s or Roth 401(k)s. The tax engine will no longer re-add these when Override Wage Base has been set.

Massachusetts Income Tax – Effective 1/1/2024

Massachusetts State Tax began calculating a 4% surtax on annual income over $1,053,750. Previously, this surtax could only be calculated on regular wages. With this release, we've added support for calculating this surtax on payrolls that only include supplemental (bonus) wages.

Calculations involving only regular wages, or involving both regular and supplemental wages, are unaffected by this update.

A new flag, Annual Wages has been added to support “flat” supplemental calculation method.  When determining the surtax amount for flat supplement payrolls the tax engine will add current supplemental wages + Year-to-date supplemental wages + value set for Annual Wages.

Annual Wages flag is found under Tax Maintenance (PR208000) ~ COMPANY TAX ~ MA OR Employe Payroll Settings (PR203000) ~ TAX SETTINGS ~ MA.

Ohio Bellefontaine City Income Tax – Effective 7/1/2024

Rate increased from 1.333% to 1.6%.

Ohio Bucyrus City Income Tax – Effective 7/1/2024

Corrected tax credit from 100% to 88.89%

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Ohio Coal Grove City Income Tax – Effective 6/4/2024

Added an address exception with the tax engine so that Coal City Grove City Tax was returned for 1238 County Road 24, Ironton, OH 45638

Ohio Coshocton City Income Tax – Effective 1/1/2016

Corrected tax credit from 100% to 50%.

Ohio Marengo-Bennington Township JEDD Tax - Effective 4/17/2023

Added with a rate of 1%.  RITA will administer this tax.

Ohio Mercy West JEDD III Tax – Effective 10/1/2024

Rate decreased from 1.5% to 1%.

Ohio JEDD Tax – Effective 6/19/2024

Corrected potential for tax credit limit to be exceeded when an employee lives in one city and works in another city, and that work location is part of a JEDD, then the credit to the resident city was being applied for both the work city and the JEDD, causing the resident credit limit to be exceeded.  Also, Resident City Tax Calculation Option is NOT set to None. 

Resident City Tax Calculation Option is found under Tax Maintenance (PR20800) ~ COMPANY TAX ~OH OR Employe Payroll Settings (PR203000) ~ TAX SETTINGS~ OH.

Pennsylvania Income Tax Effective 6/19/2024

Corrected an intermittent issue with calculation results that could occur when you are running a calculation that involves two (or more) different Pennsylvania addresses that meet all of the following conditions:

• The addresses result in the same location code
• The addresses have different applicable EITs (due to different school districts within the same city, etc.)
• The EITs have the same tax rate

Previously, the tax engine would return the withholding results under one of those EITs at random. Now, it will consistently use the correct EIT.

Vermont Child Care Contribution – Effective 7/1/2024

Support for Vermont's new Child Care Contribution (CCC) tax for both employees and employers has been added.  The total tax is 0.44%, but employers can optionally elect to withhold up to 25 percent of the required contribution (i.e., 0.11%) from employee wages.  The employer may choose to withhold a smaller portion of employee wages or choose not to withhold any amount from employees.  Any input values greater than 0.11% for the Employee Percentage will cause the tax engine to use the maximum percentage of 0.11%.  Unless specified otherwise, the tax engine will assume that the employer is not withholding any amount from employees (i.e., that the employer is paying the full 0.44% by default).

Employee Percentage flag is found under Tax Maintenance (PR208000) ~ TAX CODES ~ VT CCC OR Employe Payroll Settings (PR203000) ~ TAXES ~ VT CCC.

Virginia Income Tax - Effective 4/1/2024

The standard deduction amount increased from $8000 to $8500.

Washington Cares (LTI) - Effective 6/19/2024

Resolved an issue where WA Cares wages appear to be doubling the taxable wage using Government Reporting (PR504000) on WA PFML FORM.

Wisconsin Income Tax – Effective 1/1/2024

We've added support for Wisconsin's nonresident withholding threshold. No withholding will occur for a Wisconsin nonresident employee if their annual wages are less than the threshold.

• Effective 1 January 2009, the Wisconsin State Tax nonresident minimum withholding threshold is $1,500.
• Effective 1 January 2024, the Wisconsin State Tax nonresident minimum withholding threshold is $2,000.

The Wisconsin Department of Revenue has released the April 2024 Wisconsin Tax Bulletin which includes this withholding requirement threshold increase for nonresidents, retroactive to the beginning of the year.