New Jersey Employer Unemployment and Disability Tax Rates for the fiscal year 2017-2018

The New Jersey Department of Labor (“NJ DOL”) has begun mailing the New Jersey State Unemployment Insurance (“SUI”) and Disability Insurance (“TDI”) annual Rate Notices to all employers.  Upon receipt, a copy of this Notice should be provided to your payroll service provider. 

These Rate Notices cover the fiscal year July 1, 2017 through June 30, 2018.  The assigned rates help determine the state payroll tax cost that each employer must pay, in addition to several Federal employer taxes.

Recognizing that the typical business owner and their accounting personnel have enough to do already, we can review the Rate Notice to ensure that it is correct.  Our experience with these Notices has proven that some of these are routinely incorrect, and errors can result in a significant cost to the employer.  For example, a simple name change, entity-type conversion (i.e. a change from a corporation to an LLC), internal reorganization or just an error in the calculation can cause the rate to be over-stated.

Additionally, the NJ DOL allows employers to make a Voluntary Contribution, which enables them to reduce their SUI rate.  We have found that many times a modest payment can put an employer in a lower “rate bracket”.  Another way of looking at it:  The NJ DOL offers employers the opportunity to “buy down” the rate if it is economical to do so.  However, this must be done within 30 days of the mailing date of the Rate Notice.

In summary, employers should consider an analysis of their Rate Notice to determine if any savings can be realized.

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As payroll taxes can be a significant cost for most employers, we feel that this is an important area that should be addressed, and we can help you by reviewing your rate assignment.  Please contact us to discuss this, or any other issue.

New York Enacts Paid Family Leave Program

New York State has passed legislation that will require all private employers to provide employees with paid family leave.

Insurance Options:  Employers will be required to purchase a paid family leave insurance policy or self-insure. The premium for the policy will be funded solely by employees through a payroll deduction.

Maximum Contributions:  The premium rate and the maximum employee contribution for coverage beginning January 1, 2018 is set at 0.126% of an employee’s weekly wage up to and not to exceed the statewide average weekly wage (currently $1,305.92), meaning a maximum weekly contribution for 2018 of $1.65.

Payroll Deductions:  Withholding will automatically begin for eligible employees starting January 1, 2018. Starting July 1, 2017, voluntary employee deductions can be taken for the 2018 coverage period.

Employee Eligibility and Notice:  To be eligible for the benefit, employees must generally work full-time for their employer for at least 26 consecutive weeks or part-time for at least 175 days. When the need for family leave is foreseeable, employees must generally provide at least 30 days notice to their employer.

Use of Leave:  Beginning January 1, 2018, employees may use paid family leave:

  • To care for a family member with a serious health condition;
  • To bond with the employee’s child during the first 12 months after the child’s birth or after the placement of the child for adoption or foster care; or
  • Because of any qualifying exigency arising out of the fact that the spouse, domestic partner, child, or parent of the employee is on active duty (or has been notified of an impending call or order to active duty) in the armed forces of the United States.

Benefit Caps:

Year:   Duration:         Wage Replacement:
2018   8 weeks           50%
2019   10 weeks         55%
2020   10 weeks         60%
2021   12 weeks         67%
Wage Replacement is based on the lessor of the employee’s average weekly wage or the statewide average wage.

Vacation and Personal Leave:  Employers may offer employees the option of using any accrued, unused paid vacation or personal leave during family leave and receive their full salary. Employers that pay employees their full salary during family leave may request reimbursement from the insurance carrier.

Compliance Recommendations:  Employers with employees in New York State should review their policies, forms, practices, and supervisor training and/or consult with their insurance professional and legal advisor to ensure compliance with the new paid family leave program.

Details of the Recently Proposed Tax Reform Plan

Proposed Changes for Individuals:

  • Consolidate the current seven income tax brackets into three, with rates on ordinary income of 10 percent, 25 percent, and 35 percent, although the income level at which these rates would apply was not announced
  • Double the standard deduction, which would increase to $12,700 for single taxpayers, and to $25,400 for married couples filing jointly
  • Limit itemized deductions to only mortgage interest and charitable contributions, eliminating the deductions for medical expenses, state and local income and sales taxes, investment interest and other miscellaneous deductions
  • Eliminate the Net Investment Income Surtax of 3.8% imposed on unearned income and gains of high-income taxpayers under the provisions of the Affordable Care Act
  • Provide additional tax relief for families with childcare and dependent care expenses
  • Eliminate the Alternative Minimum Tax
  • Eliminate the Estate Tax

Proposed Changes for Businesses:

  • Reduce the maximum corporate income tax rate from 35 percent to 15 percent and extend it to the individual-level taxation of so-called pass-through entities, such as S-corporations and partnerships
  • Implement a territorial system of taxation in which business would only pay tax on income earned in the United States
  • Impose a one-time tax on corporate earnings realized and held overseas and on which tax had been deferred

Of course, these are all preliminary proposed changes, and we expect the actual final tax law will differ in some or many aspects.  We will provide further information as this legislative process moves forward.  Please contact our office if you would like to discuss how these proposals could affect your business and personal tax decisions.

Claiming Social Security at 70 may not always be the Best Choice

When it comes to Social Security, while delaying claiming until 70 is generally a good idea; it is not always the best choice. We can help you not only by “running the numbers” but by developing a detailed claiming strategy for you. Did you know that the much publicized “restricted filing” option has actually not been eliminated? Did you know that for those born before January 1, 1954 this is still an excellent claiming strategy? We can guide you through the process to maximize your Social Security benefits and provide you with a detailed claiming strategy.

Restricted filing works something like this: the lower wage earning spouse claims Social Security upon reaching full retirement age. The higher wage spouse simultaneously claims spousal benefits (up to 50% of the spouse’s full benefits) while delaying his or her own filing until age 70. So, for the years between 66 and 70, they are collecting one and one half times the spouses benefit! That’s a lot of cash to leave on the table by failing to properly develop a claiming strategy. This may vary with individual circumstance, but can produce a better result than just waiting until 70 to file.

Not only should you be cognizant that the restricted filing is still a viable option for many, but also that we can show you how to maximize your Social Security benefits. There is a lot at stake since lifetime benefits for a working couple can be roughly $1,000,000, and clearly thousands of dollars are at stake.

Contact us today to discuss your individual circumstances.