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Social Security Wage Base
Rises to $97,500 in 2007: The Social Security Administration
(SSA) announced on Wednesday, October 18, 2006, that the 2007 social
security wage base will be $97,500, an increase of $3,300 from the 2006
wage base of $94,200. As in prior years, there is no limit to the wages
subject to the Medicare tax; therefore, all covered wages are still
subject to the 1.45% tax.
The FICA tax rate, which is the combined social security tax rate of
6.2% and the Medicare tax rate of 1.45%, remains at 7.65% for 2007. The
maximum social security tax employees and employers will each pay in
2007 is $6,045.00. This is an increase of $204.60 from the 2006 maximum
of $5,840.40.
The social security wage base for self-employed individuals in 2007 will
also be $97,500. There is no limit on covered self-employment income
that will be subject to the Medicare tax. The self-employment tax rate
remains 15.3% (combined social security tax rate of 12.4% and Medicare
tax rate of 2.9%). In 2007, the maximum social security tax for a
self-employed individual will be $12,090.00. This is an increase of
$409.20 from the 2006 maximum of $11,680.80. |
| FICA coverage threshold
stays the same for domestic, election workers: The threshold for coverage under social security and
Medicare for domestic employees will be $1,500 in 2007, unchanged from
2006; the coverage threshold for election workers will be $1,300 in
2007, unchanged from 2006.
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| State of Hawaii HW-4:
Hawaii employers are still required to submit a copy of the HW-4 to the
state when employees claim over 10 exemptions. |
| SSA
Expands Internet SSN Verification: All employers now have the
ability to verify employee names and social security numbers in the
Social Security Administration database. This is a great way to verify
correct names and numbers appear on employees' Forms W-2. Employers can
now submit up to 10 employee names and SSNs to the SSA through the
Internet and receive immediate results. Results for larger files (up to
250,000 names and SSNs) can usually be returned by the next business
day. Those who wish to use the program must register with SSA's Business
Services Online. Find out more about the
SSA's
Social Security Number Verification Service |
IRS: Employers
No Longer Have to Submit W-4s Claiming Exempt or Over 10 Allowances to
IRS.
The IRS has issued temporary regulations virtually eliminating the
requirement to submit copies of certain questionable Forms W-4,
EmployeeâEUR(tm)s Withholding Allowance Certificate, to the IRS.
Effective April 14, 2005, employers are no longer required to submit a
copy of any Form W-4 on which an employee claims more than 10
withholding exemptions or claims complete exemption from withholding and
earns more than $200 a week.
Instead, an employer must submit a copy of any currently effective Form
W-4 only if directed to do so in a written notice to the employer from
the IRS or under future published guidance. The temporary regulations
also address written notices provided to the employer and the employee
by the IRS stating the maximum number of withholding allowances
permitted for an employee, and the use of substitute forms by employers
and employees.
Note: The regulations (temporary and proposed) are available on the APA
Web site at:
http://www.payroll.org/i4a/pages/index.cfm?pageid=139 |
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