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Pay Matters: Year-End 2021

12-21-2021
Malka Trump, CPA

As 2021 draws to a close, join us for the year-end edition of Viventium Pay Matters with an analysis of changes we will see for year-end 2021 and what’s in store for 2022.

Note: As we go to publication, Form W-4 for 2022 has still not been released by the IRS. Employers should continue to accept the 2021 form from their onboarding and current employees.

Similarly, the federal withholding tables (Publication 15-T) for 2022 have still not been released by the IRS. Payrolls with 2022 check dates will still use the 2021 withholding tables until the new ones are released by the IRS. Therefore, your employees may see changes to their federal withholding in their second or third checks of 2022.

What’s New for Year-End 2021?

W-2 FFCRA Reporting

Paid leave for sick and family leave under the Families First Coronavirus Response Act (FFCRA) must be reported in Box 14 of the 2021 Form W-2 or on a separate statement. 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. In addition, the FFCRA leave paid before April 1, 2021, must be reported separately from the FFCRA leave paid after March 31, 2021.

Repayment of Employer Social Security Deferral

The repayment of the first half of the 2020 deferred employer Social Security tax under the Coronavirus Aid, Relief, and Economic Security (CARES) Act is due by January 3, 2022. The IRS has stated that if any portion of the deferral is paid late, penalties will be assessed on the entire deferral. IRS instructions for depositing the deferred tax can be found here. Viventium will not deposit the tax on your behalf.

Higher Dependent Care Assistance Program (DCAP) Limits Impact Form W-2

Under the American Rescue Plan Act of 2021 (ARPA), the pre-tax DCAP limit was increased for 2021 from $5,000 to $10,500 ($2,500 to $5,250 for married employees who file separately). Therefore, some employees will see higher nontaxable amounts in Box 10 of Form W-2. Be prepared for their questions and direct them to the “What’s New” section in the instructions for Form W-2 at https://www.irs.gov/instructions/iw2w3#en_US_2021_publink100059922.

2022 Updates

Social Security Wage Base to Rise in 2022

The Social Security Administration (SSA) announced that the 2022 Social Security wage base will rise to $147,000, a $4,200 increase from the $142,800 wage base in 2021. The Social Security tax rate will remain at 6.2%. The maximum Social Security tax employees and employers will each pay in 2022 is $9,114.00, up from $8,853.60 in 2021.

There is no limit to wages subject to Medicare tax. Both the employee and the employer Medicare tax rate for 2022 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.

2022 Pension and Benefit Contribution Limits

The 2022 limits on the exclusion for elective deferrals for 401(k), 403(b), and most 457 plans will increase to $20,500, up from $19,500. The catch-up contribution for employees ages 50 and older will remain unchanged at $6,500.

The 2022 monthly limit for qualified transportation fringe benefits and for qualified parking will increase to $280, up from $270. The 2022 health flexible-spending arrangement limit will increase to $2,850, up from $2,750.

2022 HSA Limits

Contribution and Out-of-Pocket Limits for Health Savings Accounts and High-Deductible Health Plans
2022 2021 Change
HSA Contribution Limit 

(employer + employee)

Self-only: $3,650

Family: $7,300

Self-only: $3,600

Family: $7,200

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: $7,050

Family: $14,100

Self-only: $7,000

Family: $14,000

Self-only: +$50

Family: +$100

IRS Extends ACA Form 1095-C Furnishing Deadline

The IRS has advised that employers can rely on proposed regulations automatically extending the deadline for employers to furnish Forms 1095-C to their employees. Employers now have until March 2, 2022, to furnish Forms 1095-C to their employees.

This extension will be automatic for future years.

Note that forms are still due to the IRS, if filed electronically, by March 31, 2022.

If you are using Viventium’s ACA service, the deadline for approving and submitting your forms is Friday, February 4, 2022.

2022 Minimum Wage

While federal minimum wage stays at $7.25, some states across the nation are increasing their minimum wage rates in 2022. For your convenience, we’ve compiled a list of the upcoming changes:

New York

The following is the schedule of rate increases:

Location 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 $15.00
Remainder of New York State $13.20*

* Annual increases for the rest of the state will continue until the rate reaches $15 minimum wage.

New York Fast Food Workers

Minimum wage for fast food workers in New York will remain at $15.00 per hour for all workers across the state.

The following states’ hourly minimum wages will increase effective January 1, 2022, unless otherwise noted:

 State 2022 2021
Arizona $12.80 $12.15
California $15.00 $14.00
Colorado $12.56 $12.32
Connecticut $14.00 on 7/1/22 $13.00 on 8/1/21
Delaware $10.50 $9.25
Florida $11.00 on 9/30/22 $10.00 on 9/30/21
Illinois $12.00 $11.00
Maine $12.75 $12.15
Maryland $12.50 $11.75
Massachusetts $14.25 $13.50
Michigan $9.87 $9.65
Minnesota $10.33 $10.08
Missouri $11.15 $10.30
Montana $9.20 $8.75
Nevada $10.50 on 7/1/22 $9.75 on 7/1/21
New Jersey $13.00 $12.00
New Mexico $11.50 $10.50
Ohio $9.30 $8.80
Oregon $13.50 on 7/1/22 $12.75 on 7/1/21
Puerto Rico $8.50 $7.25
Rhode Island $12.25 $11.50
South Dakota $9.95  $9.45
Vermont $12.55  $11.75
Virginia $11.00 $9.50 on 5/1/21
Washington $14.49  $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.

2022 State Wage Bases

States have begun releasing their 2022 SUTA wage bases. Below is a chart of the changes released so far.

State 2022 Wage Base 2021 Wage Base
Alaska $45,200 $43,600
Colorado $17,000 $13,600
Hawaii $51,600 $47,400
Idaho $46,500 $43,000
Iowa $34,800 $32,400
Kentucky $11,100 $10,800
Minnesota $38,000 $35,000
Montana $38,100 $35,300
Nevada $36,600 $33,400
New Jersey *see details below $39,800 $36,200
New Mexico $28,700 $27,000
New York $12,000 $11,800
North Dakota $38,400 $38,500
Oklahoma $24,800 $24,000
Oregon $47,700 $43,800
Utah $41,600 $38,900
Washington $62,500 $56,500

 

*New Jersey Details:

2022 2021
SUTA EE/ER $39,800 $36,200
FLI EE $151,900 $138,200
SDI EE $151,900 $138,200
SDI ER $39,800 $36,200
WFD ER $39,800 $36,200

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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