basic calculations - virginia statewide payroll conference• calculations • regular rate of pay...

Basic Calculations

Agenda

• 2017 Limits.

• What is Regular Rate of Pay

• Calculations• Regular Rate of Pay with Non discretionary Bonus

• Regular Pay of Pay with Attendance Bonus and

Overtime

• Salaried Non-Exempt

• Salaried Non-Exempt with OT and Non discretionary

Bonus

• Gross-Ups

• Gross-Ups over $1 million dollars

• Group Term Life

2017 Limits

3

2017 Limits

Social Security

4

2017

OASDI

Wage Base

2017

Tax

Rate

Social Security

Employee Share$127,200 6.20%

Social Security Employer

Share$127,200 6.20%

Maximum Employee

Share$7,886.40

Maximum Employer

Share$7,886.40

2017 Limits

Medicare Tax

5

2017

Tax Rate

2017 Maximum

Tax W/H

2016

Tax Rate

2016 Maximum

Tax W/H

Employee Medicare Tax 1.45% N/A 1.45% N/A

Additional Employee

Medicare Tax on Wages

Paid Over $200K

0.90% N/A 0.90% N/A

Employer Medicare Tax 1.45% N/A 1.45% N/A

2017 Limits

6

Social Security/Medicare Threshold

• Domestic Employee Coverage

2017 - $2,000

• Election Workers

2017 - $1,800

2017 Limits

Retirement Plans

7

Qualified Benefit Plan 2017

Maximum limitation for

defined benefit plan$215,000

Maximum contribution

limitation for defined

contribution plan

$54,000

2017 Limits

Retirement Plans

8

Qualified Benefit Plan 2017

Elective deferrals for 401(k) $18,000

Elective deferrals for 403(b) $18,000

Elective deferrals for 457(b) $18,000

2017 Limits

Retirement Plans

9

Qualified Benefit Plan 2017

Elective deferrals for 408(p) $12,500

Catch-up (401(k), etc.) $6,000

Catch-up (SIMPLE) $3,000

2017 Limits

Retirement Plans

10

Qualified Benefit Plan 2017

Highly compensated employee $120,000

Annual compensation limit $270,000

Annual compensation limit

collectively bargained$270,000

2017 Limits

Retirement Plans

11

Qualified Benefit Plan 2017

Annual compensation limit for

certain governmental plans$400,000

Minimum annual

compensation amount SEP$600

2017 Limits

Adoption Assistance

12

Maximum exclusion for qualified adoption expenses

2017 - $13,570

A phase out of the amount excluded from gross

income begins

2017 - $203,540

Gross amount when exclusion is totally lost

2017 - $243,540

2017 Limits

Medical Flexible

Spending Accounts

13

Maximum employee contribution

2017 plan year- $2,600

Dependent Care

2017 plan year - $5,000

2017 Limits

Standard Mileage Rates

14

2017

Business .535

(53.5 Cents)

Charitable .140

(14 Cents)

Medical and

Moving

.170

(17 Cents)

2017 Limits

Federal Supplemental

Withholding Rates

15

Tax Type Tax Rate

Optional Flat Rate Method 25% (Up to $1 Million)

Mandatory Flat Rate 39.6% (Exceeds $1 Million)

Regular Rate of Pay

16

What is Regular Rate

of Pay?• It is the hourly rate determined by calculating

the total compensation earned for a workweek divided by the total number of hours worked

• Remember – there are exceptions to this

17

Nonexempt

Employees

Regular rate of pay has to be considered for all types of nonexempt employees:

• Paid hourly

• Paid Salary

• Paid commission

• Paid piece rate

18

What is Included in

Regular Rate of Pay?

• Base pay for all hours worked

• Nondiscretionary bonuses

• Production Bonuses

• Fair market value of noncash compensation

• Shift differential premiums

• On call pay

• Retroactive pay

19

What is Included in

Regular Rate of Pay?

• Supplemental disability payments

• Sick leave buyback payments

• Per diem pay

• All payments not specifically excluded by law

20

What is Excluded from

Regular Rate of Pay?

• Gifts

• Paid time Off• Vacation, holiday and sick pay for un-worked hours

• Reimbursed business expenses

• Discretionary Bonuses

• Volunteer work counted toward group’s bonus

21

What is Excluded from

Regular Rate of Pay?

• Employer benefit plan contributions

• Stock Options

• Overtime in excess of FLSA requirements

• Premium for extra days worked with qualifications

• Premium pay under a union contract for extra hours

22

What is Needed to

Calculate Pay?

• Hours worked

• Hourly rate

• Any additional payments / recordings

23

What About Multiple

Rates of Pay?

• Multiple rates in the same period• Regular rate of pay must be the weighted

average of all rates used

• Exceptions

• Can be the highest rate in the week

• Employer can always pay higher than FLSA requirements

24

Calculations

25

Calculation

Nonexempt

with Nondiscretionary Bonus

26

27

Calculation

Nonexempt

with Nondiscretionary Bonus

28

Calculation

Nonexempt

with Nondiscretionary Bonus

Tax Tables

One Withholding

Allowance Table

Percentage Method

Tax Table

30

Calculation

Nonexempt with

Nondiscretionary Bonus

31

Calculation

Nonexempt with

Nondiscretionary Bonus

Calculation

Nonexempt with

Attendance Bonus

32

33

Calculation

Nonexempt with

Attendance Bonus

Calculation

Nonexempt with

Attendance Bonus

34

Tax Tables

One Withholding

Allowance Table

Percentage Method

Tax Table

Calculation

Nonexempt

with Attendance Bonus

36

Calculation

Nonexempt

with Attendance Bonus

37

Calculation

Nonexempt – Salaried Employee

No Additional Earnings

38

Calculation

Nonexempt – Salaried Employee

No Additional Earnings

39

Calculation

Nonexempt – Salaried Employee

No Additional Earnings

40

Tax Tables

One Withholding

Allowance Table

Percentage Method

Tax Table

Calculation

Nonexempt – Salaried Employee

No Additional Earnings

42

Calculation

Nonexempt – Salaried Employee

No Additional Earnings

43

Calculation

Nonexempt – Salaried Employee

OT and Nondiscretionary Bonus

44

Calculation

Nonexempt – Salaried Employee

OT and Nondiscretionary Bonus

45

Calculation

Nonexempt – Salaried Employee

OT and Nondiscretionary Bonus

46

Tax Tables

One Withholding

Allowance Table

Percentage Method

Tax Table

Calculation

Nonexempt – Salaried Employee

OT and Nondiscretionary Bonus

48

Calculation

Nonexempt – Salaried Employee

OT and Nondiscretionary Bonus

49

Calculation

Nonexempt – Salaried Employee

OT and Nondiscretionary Bonus

50

Calculation

Nonexempt – Salaried Employee

OT and Nondiscretionary Bonus

51

Calculation

Nonexempt – Salaried Employee

OT and Nondiscretionary Bonus

52

Calculation

Nonexempt – Salaried Employee

OT and Nondiscretionary Bonus

53

Gross Ups

54

Gross Up usually refers to an employer

paying the taxes on behalf of the employee

on this income. This is typically considered

supplemental wages.

For example, if an employee is promised

$5,000 for a retention bonus, that is what

they are expecting to take home. So the

employer grosses up the wages to give the

employee the expected net payment.

55

Define Gross Up

What is Supplemental

Wages?

Supplemental wages are wage payments to anemployee that are outside of their regular pay.Supplemental wages may include, but are not limitedto bonuses, commissions, severance pay, awards,prizes, back pay, retroactive pay increases andpayments for nondeductible moving expenses.

56

Gross Up Calculator

57

58

Bonus

Gross Up Example

Total YTD Wages $100,000.00

Calculate: Net

Retention Bonus of: $20,000.00

Lives in a State with No Income Tax

59

Bonus

Calculating Gross- Up

Net Bonus $20,000.00

Divided by 67.35%

Grossed Up Amount $29,695.62

60

Bonus

Lets Check the Calculation

Grossed Up Amount 29,695.62$

Less:

Federal Supplemental Tax 25% 7,423.90$

Social Security Tax 6.20% 1,841.13$

Medicare Tax 1.45% 430.59$

Total 67.35% 20,000.00$

Grossing Up

Bonus over $1M

Gross Up Example

Total Wages YTD $1,135,000.00

Lives in a State with No Income Tax

We want to give Rention Bonus $250,000.00

Over $1 Million Dollar

Gross Up Calculator

62

Take 100%

Less:

Federal Supplement Rate for over $1 million in wages39.60%

Social Security Rate 0.00%

Medicare Rate 1.45%

Add'l Medicare Rate for wages over $200,0000.90%

Total 58.0500%

63

Over $1 Million Dollar

Gross Up

Calculating Gross- Up

Net Bonus $250,000.00

Divided by 58.05%

Grossed Up Amount $430,663.22

64

Over $1 Million Dollar

Gross Up

Lets Check the Calculation

Grossed Up Amount 430,663.22$

Less:

Federal Supplemental Tax 39.6% 170,542.63$

Social Security Tax 0.00% -$

Medicare Tax 1.45% 6,244.62$

Addt'l Medicard Tax 0.9% 3,875.97$

Total 67.35% 250,000.00$

Other

Calculations

Group Term Life

Insurance

Lets Calculate

• Deductions

– Pretax Deductions $168

(Includes medical,

dental and vision)

– Pretax 401k 12%

– GTL*

• 3x salary

• DOB 09/02/1972

• Annual Salary

– $120,000.00 (Paid Bi-

Weekly)

• Pay Date

07/10/2017

• Taxes

– Form W-4

• SINGLE, 1

Allowance

– Lives in a state with no

income tax

Group Term Life

Insurance

GTL Calculation

DOB 9/2/1972

Pay Date 7/10/2017

Coverage 3x salary

Salary 120,000.00$

times 3 360,000.00$

minus non taxable 50,000.00$

Amount of coverage that is imputable 310,000.00$

GTL Calculation

Units 310.00

Cost per Unit 0.15

Cost per Month 46.50

# of months 12

Annual Cost 558.00

# of pay periods 26

Cost per Pay Period 21.46

Imputable Coverage 310,000.00$

Divided by 1000 310

GTL Calculation

Units 310.00

Cost per Unit 0.15

Cost per Month 46.50

# of months 12

Annual Cost 558.00

# of pay periods 26

Cost per Pay Period 21.46

Imputable Coverage 310,000.00$

Divided by 1000 310

Lets Calculate

• Deductions

– Pretax Deductions $168

(Includes medical,

dental and vision)

– Pretax 401k 12%

– GTL*

• 3x salary

• DOB 09/02/1972

• Annual Salary

– $120,000.00 (Paid Bi-

Weekly)

• Pay Date

07/10/2017

• Taxes

– Form W-4

• SINGLE, 1

Allowance

– Lives in a state with no

income tax

Tax Tables

One Withholding

Allowance Table

Percentage Method

Tax Table

Taxable Wages and

Withholding

Federal Taxable Wages

Gross Wages 4,615.38$

W-4 Information Single/1

Withholding Allowance 155.80$

Pre Tax (Medical, Dental, Vision) 168.00$

Life Insurance (Monthly)

46.50 x 12 = 558.00/ 26 21.46$

Pre Tax 401 (k) Contribution 553.84$

$4615.38 X 12%

Federal Withholding :

Gross Wages 4,615.38$

GTL 21.46$

Withholding Allowance (155.80)$

Pre tax Deductions (Med/Den/Vis) (168.00)$

Pre Tax 401 (k) Contribuiton (553.84)$

Amt Subject to Withholding 3,759.20$

Federal Taxable Wages 3,759.20$

Excess (3,623.00)$

Sub Total 136.20$

Percentage to multiple 0.28$

Sub Total 38.14$

Amt to withhold 719.80$

Total Federal Income Tax to W/H 757.94$

Social Security

$4615.38+21.46-$168.00=$4468.84 X 6.2% 277.06$

Medicare

$4468.84 x 1.45% 64.79$

Calculate Take Home Pay

Gross Wages 4,615.38$

Federal Tax Withholding (757.94)$

Social Security Tax (277.06)$

Medicare Tax (64.79)$

Pre Tax Deductions (168.00)$

401(k) (553.84)$

Net Pay 2,793.75$

Question?

Contact

Information

Linda Dailey, CPP

linda.dailey@fairfaxcounty.gov