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Pay Matters: December 2020 Year-End Edition

12-10-2020
Malka Trump, CPA

2020 has been a year like no other. Join us for the year-end edition of Viventium Pay Matters for an analysis of changes we will see for year-end 2020 and what’s in store for 2021.

What’s New for Year-End 2020

W-2 Box 14 FFCRA Reporting

Sick and family leave paid to employees under the Families First Coronavirus Response Act (FFCRA) must be reported in Box 14 of the 2020 Form W-2. The wages must be reported separately for each of the three types of leave: sick leave wages for the employee to care for him/herself, sick leave wages paid for the employee to care for another, and qualified family leave wages.

Form 1099-NEC

The IRS released a new Form 1099-NEC to report non-employee compensation that was previously reported on Form 1099-MISC Box 7.

ICHRA Reporting on Form 1095-C

Starting with the year 2020, employers may offer Individual Coverage Health Reimbursement Arrangements (ICHRAs) under the Affordable Care Act (ACA). The 2020 Form 1095-C includes eight new Series 1 codes and other lines to report ICHRA offers.

California and Rhode Island ACA Reporting

Starting with the year 2020, California and Rhode Island employers are required to file Forms 1095-C with their respective states by March 31, 2021. The California filing requirement is only for employers who offer self-insured health coverage. California and Rhode Island join New Jersey and the District of Columbia, which instituted ACA reporting in 2019.

Head of Household Filing Status

The 2020 Form W-4 created a new filing status “Head of Household.” This new filing status will be reflected on year-end reports for employees who completed a 2020 W-4 and selected “Head of Household” filing status.

2021 Updates

Social Security Wage Base to Rise in 2021

The Social Security Administration (SSA) announced that the 2021 Social Security wage base will rise to $142,800, a $5,100 increase from the $137,700 wage base in 2020. The Social Security tax rate will remain at 6.2%. The maximum Social Security tax employees and employers will each pay in 2020 is $8,853.60, up from $8,537.40 in 2020.

There is no limit to wages subject to Medicare tax. Both the employee and the employer Medicare tax rate for 2021 will remain at 1.45%. Employers are required to withhold an additional 0.9% in Medicare taxes on wages earned by employees in excess of $200,000 in a calendar year. Employers are not required to match this 2.35% employee rate but will continue to pay 1.45% in Medicare taxes on all subject wages earned by employees.

For a copy of the SSA Fact sheet, click here.

2021 Pension and Benefit Contribution Limits

The 2021 limits on the exclusion for elective deferrals for 401(k), 403(b), and most 457 plans will remain at $19,500, unchanged from 2020. The catch-up contribution for employees ages 50 and older will also remain unchanged at $6,500.

The 2021 monthly limit for the qualified transportation fringe benefits and for qualified parking remains at $270, unchanged from 2020. The 2021 health flexible-spending arrangement limit will also remain unchanged at $2,750.

 2021 HSA Limits

Contribution and Out-of-Pocket Limits for Health Savings Accounts and High-Deductible Health Plans
2021 2020 Change
HSA contribution limit 

(employer + employee)

Self-only: $3,600

Family: $7,200

Self-only: $3,550

Family: $7,100

Self-only: +$50

Family: +$100

HSA catch-up contributions 

(age 55 or older)

$1,000 $1,000 No change
HDHP minimum deductibles Self-only: $1,400

Family: $2,800

Self-only: $1,400

Family: $2,800

No change
HDHP maximum out-of-pocket amounts 

(deductibles, co-payments, and other amounts, but not premiums)

Self-only: $7,000

Family: $14,000

Self-only: $6,900

Family: $13,800

Self-only: +$100

Family: +$200

IRS Extends ACA Form 1095-C Furnishing Deadline

The IRS has again extended the deadline for employers to furnish Forms 1095-C to their employees. These government forms provide employees and the IRS with information about health coverage offered by employers and were previously due to employees by January 31, 2021. Employers now have until March 2, 2021, to furnish Forms 1095-C to their employees. This is the sixth consecutive year that the IRS has extended the original deadline. For further details about the IRS extension, see IRS Notice 2020-76.

Note that forms are still due to the IRS if filed electronically by March 31, 2021.

New York Paid Family Leave Rates and Benefits to Rise in 2021

New York Paid Family Leave will be undergoing some changes effective January 1, 2021.

Under the current law, employers are permitted to deduct 0.270% of their employees’ gross wages, up to an annual maximum of $196.72 per employee. Effective January 1, 2021, the PFL rate will increase to 0.511% of employees’ gross wages, with an annual max of $385.34. If the annual max is reached before the end of the year, no further deductions may be made from the employee’s wages.

Benefits for eligible claimants will also increase. In 2020, eligible employees receive 60% of their average weekly wage, capped at $840.70 for each of their allowed 10 weeks of leave. In 2021, eligible employees receive 67% of their average weekly wage, capped at $971.61 for each of their allowed 12 weeks of leave.

For more information on New York Paid Family Leave, click here.

2021 State Minimum Wage

States across the nation are scheduled to increase minimum wage in 2021. We’ve compiled a list of the upcoming changes.

New York

The following is the schedule of rate increases:

Location 12/31/2020 12/31/2021*
NYC – Big Employers (of 11 or more) $15.00 (no change)
NYC – Small Employers (10 or fewer) $15.00 (no change)
Long Island & Westchester $14.00 $15.00
Remainder of New York State $12.50 *

* Annual increases for the rest of the state will continue until the rate reaches $15 minimum wage (and $10 tipped wage).

New York Fast Food Workers

Minimum wage for fast food workers in New York City will remain at $15.00 per hour and in the rest of New York State will increase to $14.50 per hour, on Thursday, December 31, 2020. It will increase again to $15.00 for the rest of New York State on July 1, 2021.

The following states’ hourly minimum wage will increase effective January 1, 2021, unless otherwise noted:

2020 2021
Alaska $10.19 $10.34
Arizona $12.00 $12.15
Arkansas $10.00 $11.00
California $13.00 $14.00
Colorado $12.00 $12.32
Connecticut $12.00 $13.00 on 8/1/21
Florida $8.56 $8.65

$10.00 on 9/30/21

Illinois $10.00 $11.00
Maine $12.00 $12.15
Maryland $11.00 $11.75
Massachusetts $12.75 $13.50
Michigan $9.65 $9.87
Minnesota $10.00 $10.08
Missouri $9.45 $10.30
Montana $8.65 $8.75
Nevada $9.00 $9.75 on 7/1/21
New Jersey $11.00 $12.00
New Mexico $9.00 $10.50
Ohio $8.70 $8.80
Oregon $12.00 $12.75 on 7/1/21
South Dakota $9.30  $9.45
Vermont $10.96  $11.75
Virginia $7.25 $9.50 on 5/1/21
Washington $13.50  $13.69

 Disclaimer: State minimum wage laws frequently change and may have been modified since the publication of this information. In addition, some states may have different minimum wages based on company size and industry, and many localities have passed minimum wage laws. Please consult your legal advisor.

2021 State Wage Bases

States have begun releasing their 2021 SUTA Wage Bases. Below is a chart of the changes released so far.

State 2021 Wage Base 2020 Wage Base
Arkansas $10,000 $7,000
Iowa $32,400 $31,600
Missouri $11,000 $11,500
Montana $35,300 $34,100
Nevada $33,400 $32,500
New Jersey *see details below $36,200 $35,300
New Mexico $27,000 $25,800
New York $11,800 $11,600
North Carolina $26,000 $25,200
Oklahoma $24,000 $18,700
Utah $38,900 $36,600
Vermont $14,100 $16,100
Washington $56,500 $52,700
Wyoming $27,300 $26,400

 *New Jersey Details:

2021 2020
SUTA EE/ER $36,200 $35,300
FLI EE  $138,200 $134,900
SDI EE  $138,200 $134,900
SDI ER $36,200 $35,300
WFD ER $36,200 $35,300

 Disclaimer: SUTA wage base laws frequently change and may have been modified since the publication of this information. Some states may have two-tiered wage bases. Please consult your tax advisor.

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