Payroll in 2008: By the Numbers
In 2008, as every year, there will be changes in the numbers payroll practitioners work with.
There are new wage bases, new contribution limits, new salary limits, new exclusion limits, new allowance values, new tax rates, new tax brackets. Everything changes (except what doesn't), and the payroll professional has to have all the current figures at his or her fingertips.
Dealing with the numbers can be in fact mind-numbing, so for a little help here's a refresher on some of 2008's changed values.
The Basics
Some basic figures that all in payroll should be familiar with include:
- $102,000—the Social Security or OASDI (old-age, survivor, and disability insurance) wage base for 2008. The maximum amount an employee may have withheld for OASDI in 2008 is $6,324. The OASDI rate remains 6.2 percent (matched by the employer), while the Medicare rate stays at 1.45 percent (also matched).
- $3,500—the amount of one annual federal withholding allowance for 2008.
- $15,500—the limit for tax-deferred employee contributions to a Section 401(k) plan, Section 403(b) plan, or Section 457 plan for 2008.
- 50.5 cents per mile—the standard mileage rate, which employers may use to reimburse employees on a tax-exempt basis for the business use of their personal automobiles or to value the personal use by an employee of an employer-provided passenger car (first made available in 2008) valued at $15,000 or less.
- $115—the tax-exempt monthly amount an employer can provide to an employee under a qualified transportation fringe benefit plan either in the form of public transit passes or through a qualified van pool arrangement.
- $220—the tax-free monthly amount an employer can provide to an employee in qualified parking benefits. Employers also may offer a plan that allows employees to defer tax-free amounts (up to the limits) to pay for either transportation or parking benefits.
Other Important Numbers
- $5,250—the annual tax-exempt limit for employer-provided non-job-related educational assistance.
- $1,750—the maximum amount of advance earned income credit an employee (with at least one qualifying child) may receive in 2008. The employee also must be expected to earn less than $33,995.
- $11,650—the maximum amount of qualified adoption expenses an employee may exclude in 2008.
- $87,600—the maximum amount of foreign-earned income that a U.S. citizen or resident living and working overseas may exclude for tax purposes in 2008, provided the individual qualifies under Internal Revenue Code Section 911 requirements.
- $9.56—the daily withholding allowance amount for a nonresident alien in 2008. Employers must add a certain amount—depending on the payroll period—to a nonresident alien employee's wages before calculating income tax withholding.
- $1,100—the amount per employee that an employer may be charged for repeated or willful violations of the minimum wage and overtime requirements of the Fair Labor Standards Act. The penalty for violations of the child labor provisions of the law remains at a maximum of $11,000 per employee, according to the Department of Labor's Wage and Hour Division.
- $105,000—the minimum salary used to define a highly compensated employee under Internal Revenue Code Section 414(q)(1)(B) for 2008.
- $10,500—the maximum elective deferral an employee may contribute in 2008 to a savings incentive match plan for employees (SIMPLE plan). Employees age 50 and older may contribute up to $13,000.
- $500—the participation threshold for a simplified employee pension under Internal Revenue Code Section 408(k)(2)(C) in 2008.
- $46,000—the annual contribution limit for defined contribution plans in 2008, provided the annual compensation taken into consideration under the plan is no greater than $230,000.
- $185,000—the annual benefit limit for defined benefit plans for 2008.
- $90,000—the amount of compensation used to identify a control employee for fringe benefit valuation purposes.
- $345,000—the Section 401(a)(17) cost-of-living adjustment to the compensation limitation for 2008.
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