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Date: January 6, 2009

Bulletin Number: 966

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Subject

Summary of tax related changes for Tax Year 2010

Purpose

To inform agencies of the 2010 tax related changes.

Affected Employees

Employees receiving 2010 Form W-2 (Wage and Tax Statement)


Effective Date(s)

Administration paychecks dated January 6, 2010
Institution paychecks date January 14, 2010

Background

For 2010, changes have been made to:

  • Federal Income Tax Withholding Rates
  • Federal Earned Income Tax Credits
  • New York State Withholding Rates

Social Security and Medicare

The Social Security wage base limit for 2010 remains unchanged at $106,800.  There is no limit on the amount of wages subject to Medicare withholdings.  The Social Security tax rate of 6.2% and the Medicare tax rate of 1.45%  also remain the same.

Personal Exemptions The federal annual allowance amount remains unchanged at $3,650 for 2010.


Advance Earned Income Credit

Employees whose wages are less than $35,535 ($40, 545 for join filers) and who expect to have one (1) qualifying child may be eligible for an advance payment of Earned Income Credit (EIC).  The maximum credit is $1,830.  The new tables for calculating the credits are included in the IRS Publication 15, Circular-E, Employer’s Tax Guide.

Eligible employees must complete a new Form W-5, Earned Income Credit Advance Payment Certificate, each year.  Copies of the form may be obtained from the IRS website.

Refer to Payroll Bulletin No. 947 (Advance Earned Income Credit Payment) for specific instructions.

Withholding Rates

The Federal income tax withholding tax rates have changed for 2010.   The new withholding rates can be located in IRS Publication 15, Circular E, Employer’s Tax Guide.

The New York State and Yonkers income tax withholding rates for individuals earning more than $200,000 have been revised to affect paychecks issued after January 1, 2010.  Please refer to Publication NYS-50-T for additional information.

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.  Please see IRS Publication 15, Circular E for additional information.

The Federal income tax withholding rates can found in Publication 15, Circular E, 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

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.state.ny.us and select Find Publications, regs & laws > Tax Type: Withholding >NYS-50-T.

OSC Actions

OSC will update PayServ with tax related changes for 2010.

Agency Actions

Informational only.

Questions

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