logo

Date: December 31, 2010

Bulletin Number: 1050

line

Subject

Summary of Tax Related Changes for Tax Year 2011

Purpose

To inform agencies of the 2011 tax related changes.

Affected Employees

Employees receiving paychecks in 2011.

Effective
Date
(s)

Administration paychecks dated January 5, 2011
Institution paychecks dated  January 13, 2011

Social Security and Medicare

Effective in 2011 the tax rate for calculating the employee share of social security tax withholdings has been reduced to 4.2%. The employer tax rate remains 6.2% and the Social Security wage base limit for 2011 will also remain $106,800. 

To accommodate this change a new tax class has been established in PayServ, OASDI/ER.  The amount of the employer share of social security tax will be reflected under this tax class. The amount of the employee share will be reflected under the OASDI/EE tax class.   A new class was also established to reflect the employer share of Medicare withholdings (MED/ER) even though no change was made to the Medicare tax rate.  The new withholding classes will be displayed on the employee tax balance page and paycheck data in PayServ.   The OASDI/ER and MED/ER is for informational purposes and will not appear on employee check/advice statements.

Please note:   Per the IRS, the reduction in the tax rate for the employee share of Social Security taxes will have no effect on the employee’s future Social Security benefits.


Personal Exemptions

The value of one Annual Federal Withholding Allowance amount has increased to $3,700. 

Advance Earned Income Credit

Income Tax Credit) for additional information.



Withholding Rates

The Federal income tax withholding tax rates have changed for 2011.   The new withholding rates can be located in IRS Publication 15, Circular E, and Employer’s Tax Guide.  To access this publication, visit the Internal Revenue Service website at www.irs.gov and select  Forms and Publications>View online: Tax Publications>Publication 15

A change has been made to the calculation of withholding income taxes for Non-Resident Alien employees that have wages reportable on Form W-2.  This change is due to the elimination of the Making Work Pay credit.  Please see IRS Publication 15, Circular E for additional information.

The City of New York income tax withholding rates for individuals earning more than $500,000 have been revised to affect paychecks issued after January 1, 2011.  Please refer to Publication NYS-50-T for additional information.  The New York State, City of New York and City of Yonkers resident income tax withholding rates can be found in Publication NYS-50-T.  To access this publication, visit the NYS Department of Taxation and Finance website at www.tax.ny.gov and select Find Publications, regs & laws>Tax Type: Withholding >NYS-50-T.

OSC Actions

OSC will update PayServ with tax related changes for 2011.

Agency Actions Informational only.


Questions

Questions regarding this bulletin may be emailed to the Tax Administration and Compliance mailbox