Employee Payroll Tax Deferral
On August 28, 2020, the IRS issued guidance that allows employers to defer the withholding and payment of the employee share of social security tax on applicable wages paid between September 1, 2020, and December 31, 2020.
Employers may, but are not required to, participate in the deferral. After an internal review, given this process currently is only a tax deferral and not a tax credit, The Catholic University of America has elected not to implement the deferral at this time. Employees will find the tax continues to be withheld from their paychecks.
403(b) contribution changes
The IRS and Social Security Administration announced cost of living adjustments applicable to dollar limitations for 403(b) retirement plans for tax year 2020. Many limits changed from 2019. The Social Security Wage base increased from $132,900 to $137,700. The 403(b) limit changed from $19,000 in 2019 to $19,500.00 for 2020. The "catch-up" limit also increased from $6,000 to $6,500.
To enroll or change your employee contributions, please complete the 403(b) Salary Reduction Form.
New IRS Form W-4
The IRS has released a redesigned Form W-4 Employee’s Withholding Certificate for the 2020 tax year.
Completing the 2020 W-4 is a complex process, particularly for married couples or individuals with multiple jobs or income streams. Please visit the IRS.gov/W4 website for documentation and a Tax Withholding Estimator (calculator) that can help you with the new Form W-4.
Members of the university community should know:
- Current employees may keep their existing W-4 in place if withholdings have been appropriate for the 2019 Federal tax year.
- New hires and current employees who require changes to withholding must complete the new 2020 Form W-4.
- Current Students and Non-Resident Aliens who claimed EXEMPT from Withholding must file a new 2020 Form W-4 if they expect to have zero Federal Tax obligation. They should write EXEMPT or NRA in space below Step 4(c) on the Form W-4.
- Any exempt filing will be changed to S-0.
Please read more about IRS Form W-4 changes for 2020.
Federal Annual Standard Deduction for 2020
- Married, Filing jointly or qualified widow(er): $24,800, up from 2019 $24,400
- Single or Married, Filing separately: $12,400, up from 2019 $12,200
- Head of Household: $18,650, up from 2019 $18,350
NOTE: The personal exemption for tax year 2020 remains at 0, as it was for 2019. This elimination of the personal exemption was a provision in the Tax Cuts and Jobs Act of 2017 for tax years 2018 through 2025.
Social Security Wage Base for 2020
- Social Security Taxable Wage Limit: $137,700, up from $132,900
- Social Security Tax Rate: 6.20%
- Maximum Social Security Tax: $8,537.40, up from $8,239.80
- Medicare Taxable Wage Limit: no limit
- Medicare Tax Rate: 1.45%
- Additional Medicare Employee Wage base: starts at $200,000
- Additional Medicare employee Tax Rate on over $200,000: 0.90%