Articles

IRS Revises Publication 1494 to Adjust Levy Tables for TCJA Changes

Article from the American Payroll Association:

 

On May 1, the IRS issued a revised Publication 1494, Tables for Figuring Amount Exempt From Levy on Wages, Salary, and Other Income, with updated amounts that reflect changes made by Public Law 115-97, known as the Tax Cuts and Jobs Act (TCJA). The tables show the amount of an employee’s income that is exempt from a notice of levy used to collect delinquent tax in 2018. The 2018 Publication 1494 was originally issued on December 31, 3017.

Standard deduction increase led to changes

The TCJA eliminated the personal exemption claimed by taxpayers for themselves and their spouse and dependents for 2018-2025, and nearly doubled the standard deduction in 2018 to $24,000 for married individuals filing jointly, $18,000 for head-of-household filers, and $12,000 for all others. These amounts will be adjusted for inflation beginning in 2019.

The IRS had to refigure the amounts in the tables to take into account the significant increase in the standard deduction when calculating the amount of wages exempt from a federal tax levy. The TCJA says that the calculation of the weekly exempt amount will be the total of $4,150 (as adjusted for inflation after 2018) multiplied by the number of the taxpayer’s dependents for the taxable year, plus the standard deduction, divided by 52.

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IRS Grants Transition Relief for Health Savings Account Contributions

Article from the American Payroll Association:

On April 26, the IRS announced transition relief for employers that sponsored Health Savings Account (HSA) qualified plans for their employees in 2018. The maximum HSA contribution limit for individuals with a family high-deductible health plan (HDHP) remains at the original 2018 level of $6,900 instead of the Tax Cuts and Jobs Act (TCJA) level of $6,850 [Rev. Proc. 2018-27].

Why do employers need relief?

The TCJA changed the Consumer Price Index used to determine inflation adjustments, which resulted in the IRS publishing a revised procedure to account for a lower 2018 maximum HSA contribution limit for individuals with a family HDHP from $6,900 to $6,850 ($50 difference). The change was applied retroactively to January 1, 2018 (see Rev. Proc. 2018-18, 2018-10 IRB 392).

APA along with other stakeholders requested the HSA relief because of unanticipated administrative and financial burdens. The revised IRS procedure includes an explanation on how to treat excess contributions for 2018.

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