Purpose

To notify agencies of tax-related changes for 2009.

Affected Employees

Employees meeting the criteria as explained in this bulletin

Effective Date(s)

New tax withholding rates will be reflected in Administration paychecks dated January 7, 2009 and Institution paychecks dated January 15, 2009.

Background

For 2009, changes have been made to:

• Federal Income Tax Withholding Rates and Allowance Amounts
• Social Security/Medicare Taxes
• Federal Earned Income Tax Credits
• Qualified Parking Benefits
• Qualified Transit Pass
• Mileage Rates

Tax Rates

The change to the Federal income tax withholding rates and allowance amounts will result in a small decrease in the amount of withholding tax.

There are no changes to New York State, City of New York and City of Yonkers resident income tax withholding rates. These withholdings are calculated using the NYS Department of Taxation and Finance rates in effect since 2006.

To obtain a copy of Publication 15, Circular E, Employer’s Tax Guide, visit the Internal Revenue Service website at www.irs.ustreas.gov and select More 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 obtain a copy of this publication, visit the NYS Department of Taxation and Finance website at www.tax.ny.gov and select Publications and Bulletins>Tax Type: Withholding >NYS-50-T.

Personal Exemptions (Federal)

The personal and dependency exemption amount has increased to $3,650 for 2009.

Social Security and Medicare Taxes

The Social Security wage base limit for 2009 has increased to $106,800 (formerly $102,000). There is no limit on the amount of wages subject to Medicare tax. The Social Security tax rate of 6.2% and Medicare tax rate of 1.45% remain the same.

Federal Earned Income Tax Credits

Employees whose wages are less than $35,464 ($38,584 if married filing jointly) and expect to have one (1) qualifying child may be eligible for an advance payment of Earned Income Credit (EIC), with a maximum credit of $1,826. 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. 864 (Advance Earned Income Credit Payment) for specific instructions.

Qualified Parking Benefits

The maximum amount allowed as exclusion from gross income for qualified parking benefits will be $230 per month in 2009.

Qualified Transit Pass

The maximum amount allowed as exclusion from gross income for qualified transportation benefits is $120 per month in 2009.

Mileage Rates

The standard mileage rate applicable for 2009 under the cents-per-mile rule to compute the value of personal use of a vehicle provided to an employee is 55.0 cents per mile.

OSC Actions

OSC has updated PayServ with the tax-related changes for 2009.

Agency Actions

Informational only.

Questions

Questions may be e-mailed to the Payroll Deductions mailbox.