Social security wage base increase and Earned Income Tax Credit Reminder
2014 Social Security
For 2014, the social security wage base increases to $117,000 for a maximum tax of $7,254, an increase of $204.60 for both employees and employers. The FICA tax rate is still 6.2% for both employees and employers.
As in prior years, there is no limit to the wages subject to the Medicare tax; therefore all wages are still subject to the 1.45% tax. Wages paid in excess of $200,000 will be subject to an extra 0.9% Medicare tax that will only be withheld from the employees' wages. Pacific will not pay the extra Medicare tax. Please refer to www.SSA.gov for additional Medicare tax information.
Earned Income Tax Credit
In compliance with California law, employers are required to notify all employees of the Earned Income Tax Credit Information Act/Federal Earned Income Credit (EITC).
Based on your annual earnings, you may be eligible to receive the earned income tax credit from the federal government. The earned income tax credit is a refundable federal income tax credit for low-income working individuals and families. The earned income tax credit has no effect on certain welfare benefits. In most cases, earned income tax credit payments will not be used to determine eligibility for Medicaid, supplemental security income, food stamps, low-income housing or most temporary assistance for needy families' payments.
For tax-year 2011 and beyond, there will be no more advance payment of the earned income tax credit. Eligible individuals will still be able to claim it on their personal income tax returns, but University of the Pacific will no longer advance a portion of it with each paycheck. Even if you do not owe federal taxes, you must file a tax return to receive the earned income tax credit. For information regarding your eligibility to receive the earned income tax credit, contact the Internal Revenue Service at 1.800.829.3676 or through its website at www.IRS.gov.
For additional information, the following IRS links are provided for your convenience:
- Employees: http://www.irs.gov/individuals/article/0,,id=150557,00.html
- TaxProfessionals: http://www.irs.gov/individuals/article/0,,id=150528,00.html
- Internal Revenue Service: www.irs.gov