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December 31, 2020
(revised January 28, 2020 )
To our clients:
It is that time of year again to update you on the payroll regulations for the 2020 & 2021 calendar years.
The taxable wage base has increased to $142,800 and the Medicare wage base remains with no limit. There is an additional Medicare tax of 0.9% for earnings in excess of $200,000 for single taxpayers and $250,000 for married taxpayers. This is an employee only tax required to be withheld from any employee when their wages exceed $200,000. For self-employed individuals, this will be an additional tax computed with the Self-employment tax.
In California, the tax rate for the State Disability Insurance (SDI) has increased to 1.2%, and the wage base has increased to $128,298.
We have posted our schedule of payroll tax rates and wage bases. As most people employ the use of payroll services, these changes will be done automatically. However, we receive questions regarding the supplemental wages withholding rates. For 2021, generally the Federal and California rates are 22% and 6.6%, respectively. For Federal purposes, when supplemental wages are paid in the amount of $1,000,000 or more, a supplemental rate of 37% is required. For California purposes, the withholding rate on stock options or bonuses (regardless of the amounts paid) is 10.23%.
The Federal and California deposit requirements and timing remain the same as in the past.
Also enclosed is the schedule of Payroll and Information Return deadlines.
If you have any questions, please call your RINA contact for assistance.
Very truly yours,
RINA ACCOUNTANTS & ADVISORS