HCM Insights December

HCM Insights December 2020

Upcoming Holidays

Christmas & New Year's Day

Happy HolidaysIn observance of the upcoming holidays, CBIZ HCM offices will be closed on Thursday, December 24, 2020, and Friday, December 25, 2020, as well as Friday, January 1, 2021. Please keep in mind that December 25, 2020, and January 1, 2021, are Federal Reserve Bank Holidays, which means that payroll draft dates may need to be adjusted.

Important Payroll Deadlines

Check Date

Check Processing Date

Monday, December 28, 2020       

Wednesday, December 23, 2020

Tuesday, December 29, 2020

Wednesday, December 23, 2020

Monday, January 4, 2021

Wednesday, December 30, 2020

Tuesday, January 5, 2021

Thursday, December 31, 2020

As always, your CBIZ HCM team is here to help should you have questions. We appreciate your continued partnership, and we wish you and your business the best of health. Please contact your payroll services team if you have any questions.

 

 Holiday & Year-End Shipping Reminder

Happy Holidays

The holiday season is here, which means it’s the busiest time of year for our payroll couriers! Between the holidays, increased shipping demand due to COVID-19, and the possibility of inclement weather this time of year, we encourage you to process payroll one or two days earlier than usual to ensure there is no delay in shipment. Please note that there will be no impact on bank drafts in the event payrolls are processed early. 

All payrolls must be submitted by 2:00 p.m. EST two days prior in order to guarantee expected shipment dates.

 

 

New Form 1099-NEC

HCM_Insights_1099

The IRS has made big changes to the 1099-MISC form by reviving the 1099-NEC form. Beginning with the 2020 tax year (to be filed by February 1, 2021) the new 1099-NEC form will be used for reporting non-employee compensation (NEC) payments. 

What this means is that businesses who previously reported payments to independent contractors on Form 1099-MISC will use Form 1099-NEC for non-employee compensation over $600 paid during 2020. If CBIZ prepares and files your 1099s, we will map your non-employee compensation to the new Form 1099-NEC. Keep in mind that certain items, which might be in the payroll system, are still reported on Form 1099-MISC. For example, payments to deceased employees. CBIZ will file those as well.  If you prepare your own 1099s you can find additional information on the IRS website or on CBIZ.com.

 

 

Connecticut Paid Family Medical Leave

Connecticut Paid Family Medical Leave (FMLA) begins on January 1, 2021, and all Connecticut employers must register with Connecticut Paid Family Leave by December 31, 2020.

Beginning January 1, 2021, Connecticut employers are required to participate in the Connecticut Paid Leave program by withholding .5% of employee wages, on wages up to the social security capped wage amount ($142,800 for 2021).  There is no required employer contribution, and employers who offer a private plan that meets certain criteria may apply to the Connecticut Paid Leave Authority for an exemption from the program. More information about the Paid Leave program is available at CTPaidLeave.org.

Connecticut employers should have already received a separate communication from CBIZ which provides additional information and details concerning registration. If you have not received this information or have not returned it, please reach out to your CBIZ team. Also, keep in mind that CBIZ will need to be attached to your account so we may file returns and remit tax payments. Once registration is complete, please send an email to cbizpayrolltax@cbiz.com, and we will reach out to the agency and request access to your account.

Other Paid Sick Leave Updates

Colorado, Maine, and New York have new paid sick leave laws for 2021.  Please contact your CBIZ team if you want accruals to be tracked in our system.  For more information see these links.

 

 

COVID-19 Updates

HCM_Insights_Covid

As we approach the end of 2020, the three relief packages extended by the CARES and FFCRA regulations will be ending. Below is a summary of each relief package along with information about its ending period:

  • The Families First Coronavirus Response Act (FFCRA), enacted on March 18, 2020, provides certain employers tax credits necessary to reimburse the required sick and family leave wages. Employers paying qualified sick and/or family leave wages in 2021 will be allowed to receive the credit as long as the coverage period is on or before December 31, 2020. Any qualified FFCRA wages paid to employees that resulted in a tax credit for the employer will be reported in Box 14 of the employee’s W-2.
  • Section 2302 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) allows employers to defer the deposit and payment of the employer share of social security taxes. The deferred amount of the employer share of social security tax is only available for deposits due on or after March 27, 2020, and before January 1, 2021, as well as deposits and payments due after January 1, 2021, that are required for wages paid on or after March 27, 2020, and before January 1, 2021. One-half of the employer's share of social security tax is due by December 31, 2021, and the remainder is due by December 31, 2022. The IRS will provide additional information on how to repay those amounts, and CBIZ will communicate that to clients after it is finalized.
  • The Employee Retention Credit provided through the CARES Act allows eligible employers to receive a credit of up to 50% of $10,000 of qualified wages. The employee retention credit is only reported on the wages paid to employees from March 13, 2020, to December 31, 2020. Any wages should be paid on a check date prior to 1/1/2021 so that it is recorded on the 941 for Quarter 4.

The US Department of Education announced an extension of relief for federal student loan borrowers in light of the Covid-19 emergency. Employers should suspend Federal student loan garnishments through January 31, 2021. Click here for more information.

CBIZ HCM will continue to provide guidance on these COVID relief packages should future legislation extend it past December 31, 2020. If there are any questions regarding payment or reporting of these packages, please contact your service team.

 

 

NACHA Operating Rules & Guidelines

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The National Automated Clearing House Association (NACHA) manages the development, administration, and governance of the ACH Network in the United States. The following information is provided to update CBIZ clients about several recent and upcoming changes made by NACHA to its Operating Rules and Guidelines. These excerpts were taken from information posted directly on the NACHA website. The rules changes noted below are those considered to have a potential impact on CBIZ clients based on the nature of the transactions CBIZ initiates today on their behalf. Rules changes that were outside the scope of the services CBIZ provides to clients have not been included in the summary below.

 

Implemented Revisions to the NACHA Operating Rules & Guidelines

Same-Day ACH Limits – Implemented March 1, 2020 – The limit for Same Day ACH transactions increased to $100,000 to help accommodate the approximately 2% of transactions that exceeded the prior threshold of $25,000.

 

Upcoming Revisions to the NACHA Operating Rules & Guidelines

Same-Day ACH Cutoff TimesExpected to be effective March 19, 2021 – The current cutoff for submitting Same Day ACH transactions is 2:45 pm EST. This change will allow Same Day ACH files to be submitted through 4:45 pm EST. This expanded time-frame will allow for the processing of urgent transactions without requiring wire transfers, which often come with higher fees. This expansion is also intended to minimize the impacts on end-of-day operations at financial institutions and their re-opening activities the following business day. CBIZ HCM will evaluate opportunities to extend our internal processing windows once our processing banks determine revised deadlines for submission of Same Day ACH through their systems.

 

 

State Unemployment Tax Rates 

Many state unemployment tax agencies have begun mailing 2021 tax rates to employers. Please send this information to CBIZPayrollTax@cbiz.com once received.

SUI Rates Available November - December 2020

Alaska, Arkansas, California, Colorado, Delaware, District of Columbia, Florida, Idaho, Illinois, Iowa, Indiana, Kansas, Kentucky, Louisiana, Maine, Minnesota, Missouri, Montana, Nebraska, Nevada, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, South Dakota, Texas, Utah, Virginia, West Virginia, and Wisconsin.

Please note that Georgia employers will need to obtain their rates online beginning mid-November 2020.

SUI Rates Available - January 2021

Arizona, Connecticut, Hawaii, Maryland, Massachusetts, Michigan, Mississippi, New York, Rhode Island, South Carolina, Washington, and Puerto Rico.

 

Email Your 2021 SUI Rates to CBIZPayrollTax@cbiz.com
If you have questions call 833-224-9426

 

 

Minimum Wage Updates

desk_calculator

As of December 31, 2020, minimum wage changes will take place in New York.  On January 1, 2021, minimum wage changes are set to take place in Alaska, Arizona, Arkansas, California, Colorado, Florida, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Montana, New Jersey, New Mexico, Ohio, South Dakota, Vermont, and Washington.   

Connecticut, Nevada, Oregon, and Virginia will experience minimum wage changes on or after July 1, 2021. Visit The Department of Labor website to view a state resource map with minimum wage laws.

 

Minimum Wage Change Effective December 31, 2020

New York

  • Hourly minimum wage New York City Employers: $15.00 (unchanged)
  • Hourly minimum wage Nassau, Suffolk & Westchester counties: $14.00 (up from $13.00)
  • Hourly minimum wage the rest of the state: $12.50 (up from $11.80)

Minimum Wage Changes Effective January 1, 2021

Alaska

  • Hourly minimum wage: $10.34 Indexed for Inflation (up from $10.19)  

Arizona

  • Hourly minimum wage: $12.15 Indexed for Inflation (up from $12.00)
  • Tipped Employee hourly minimum: $9.15 (up from $9.00) based on a tip credit of $3.00

Arkansas

  • Hourly minimum wage: $11.00 Indexed for Inflation (up from $10.00)
  • Tipped Employee hourly minimum: $2.63 based on a tip credit of $8.37 (up from $7.37)

California

  • Employers with at least 26 employees hourly minimum wage: $14.00 (up from $13.00)
  • Employers with fewer than 26 employees hourly minimum age: $13.00 (up from $12.00)

 Colorado

  • Hourly minimum wage: $12.32  Indexed for Inflation (up from $12.00) 
  • Tipped Employee hourly minimum: $9.30 (up from $8.98) based on a tip credit of $3.02.

Florida

  • Hourly minimum wage: $8.65  Indexed for Inflation (up from $8.56) 
  • Tipped Employee hourly minimum: $5.63 (up from $5.54) based on a tip credit of $3.02.

Illinois

  • Hourly minimum wage: $11.00 (up from $10.00) 
  • Tipped Employee hourly minimum: $6.60 (up from $6.00) based on a tip credit of $4.40 (up from $4.00).

Maine

  • Hourly minimum wage: $12.15 (up from $12.00) 
  • Tipped Employee hourly minimum: $6.08 (up from $6.00) based on a tip credit of $6.08 (up from $6.00).

Maryland

  • Employers with at least 15 employees hourly minimum wage: $11.75 (up from $11.00). 
  • Employers with no more than 14 employees hourly minimum wage: $11.60 (up from $11.00). 
  • Employers with at least 15 employees Tipped Employee hourly minimum: $3.63 based on a tip credit of $8.12 (up from $7.37).
  • Employers with no more than 14 employees Tipped Employee hourly minimum: $3.63 based on a tip credit of $7.97 (up from $7.37).

Massachusetts

  • Hourly minimum wage: $13.50 (up from $12.75) 
  • Tipped Employee hourly minimum: $5.55 (up from $4.95) based on a tip credit of $7.80.

Michigan

  • Hourly minimum wage: $9.87 (up from $9.65) except suspended if for 2020 the unemployment rate is at least 8.5%.
  • Tipped Employee hourly minimum: $3.75 (up from $3.67) based on a tip credit of $6.12 (up from $5.98)

Minnesota

  • Large employers hourly minimum wage Indexed for Inflation: $10.08 (up from $10.00)
  • Small employers hourly minimum wage Indexed for Inflation: $8.21 (up from $8.15)

Missouri

  • Hourly minimum wage: $10.30 (up from $9.45)
  • Tipped Employee hourly minimum: $5.15 (up from $4.725) based on a tip credit of $5.15 (up from $4.725)

Montana

  • Hourly minimum wage Indexed for Inflation: $8.75 (up from $8.65)

New Jersey

  • General hourly minimum wage: $12.00 (up from $11.00)
  • Seasonal employers and small employers with no more than five employees hourly minimum wage: $11.10 (up from $10.30)
  • Agricultural employers hourly minimum wage: $10.30
  • General Tipped Employee hourly minimum: $3.13 based on a tip credit of $8.87 (up from $7.87)
  • Seasonal employers, agricultural employers, and small employers with no more than five employees hourly minimum: $3.13 based on a tip credit of $7.87 (up from $7.17)

New Mexico

  • Hourly minimum wage: $10.50 (up from $9.00)
  • Tipped Employee hourly minimum: $2.55 (up from $2.35) based on a tip credit of $7.95 (up from $6.65)

Ohio

  • Hourly minimum wage: $8.80 Indexed for Inflation (up from $8.70)
  • Tipped Employee hourly minimum: $4.40 (up from $4.35) based on a tip credit of $4.40 (up from $4.35)

South Dakota

  • Hourly minimum wage Indexed for Inflation: $9.45 (up from $9.30)
  • Tipped Employee hourly minimum: $4.725 (up from $4.65) based on a tip credit of $4.725 (up from $4.65)

Vermont

  • Hourly minimum wage: $11.75 (up from $10.96)
  • Tipped Employee hourly minimum: $5.88 (up from $5.48) based on a tip credit of $5.88 (up from $5.48)

Washington

  • Hourly minimum wage Indexed for Inflation: $13.69 (up from $13.50)

 

 

 

2021 Retirement Limits & Social Security Adjustments

Tax Rates

The Internal Revenue Service recently announced information on defined benefit and defined contribution plan limits for 2021. Additionally, the Social Security Administration announced a Social Security wage base adjustment for 2021.


On October 26, 2020, the IRS released the 2021 cost of living adjustments (IRS Notice 2020-79) applicable to defined benefit and defined contribution plans (highlights below). The majority of these limits remain unchanged from 2020.



   2021  2020

  Elective deferral limit for purposes of cash or deferred
  arrangements [401(k) plans] and tax-sheltered
  annuities [403(b) plans]

 $19,500       $19,500     
  Maximum deferral limit for 457 plans   $19,500   $19,500

  >Age 50 catch-up contribution limit to 401(k),
  403(b) or 457(b) plans 

 $6,500  $6,500
  Maximum deferral limit for SIMPLE plans   $13,500  $13,500
  >Age 50 catch-up contribution limit to SIMPLE plans  $3,000  $3,000

 

2021 Social Security Cost-of-Living Adjustment 

The Social Security wage base in 2021 will increase to $142,800 from the 2020 wage level of $137,700. The combined Social Security and Medicare tax rate remains at 7.65% and the Social Security portion is 6.2% on wages up to the applicable maximum taxable amount; the Medicare portion is 1.45% on all wages.

The Affordable Care Act imposes an additional 0.9% Medicare tax on high wage earners, applicable on earnings in excess of $200,000 in a calendar year.

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The information contained in this HCM Insights is not intended to be legal, accounting, or other professional advice, nor are these comments directed to specific situations. This information is provided as general guidance and may be affected by changes in law or regulation. This information is not intended to replace or substitute for accounting or other professional advice. You must consult your own attorney or tax advisor for assistance in specific situations. This information is provided as-is, with no warranties of any kind. CBIZ shall not be liable for any damages whatsoever in connection with its use and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein.