Mark E. Gunnison, CPA  *  Neil K. Johannes, LTP	www.GnJpc.com
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MEMORANDUM

2010 Payroll and Reporting Information

1. Social Security and Medicare Taxes:

The tax rates for social security and medicare taxes have remained unchanged as well as the social security wage limit. For social security, the rate is 6.2% (.062) on a wage limit of $106,800 (maximum deduction of $6,621.60). For medicare, the rate is 1.45% (.0145) on all earnings. These rates apply to both employee and employer.

2. Withholding and Deposit Requirements:

You should receive the 2010 Circular E, Employer's Tax Guide, in January. This booklet includes the updated 2010 Federal withholding tax tables and gives additional information about deposit rules and other tax information. Pending a public vote on House Bill 2649, which would raise the tax rate on higher income levels, Oregon has decided to delay the decision on whether or not to update withholding tables until February 2010. For now, continue using the 2007 Oregon tax tables which can be found online at www.oregon.gov/DOR/BUS/index.shtml.

Both your Federal and Oregon payroll taxes can be deposited electronically using the internet or telephone. If you are interested, contact our office or find out more at www.eftps.gov for Federal info and www.oregon.gov/DOR/ESERV/eft.shtml for Oregon.

3. Federal Employment Taxes:

The FUTA tax deposit threshold has remained at $500 for 2010. FUTA tax is deposited quarterly when the cumulative tax liability exceeds the $500 threshold amount. The FUTA rate of .08% (.008) and the $7,000 wage limit have not changed.

4. State Employment and Transit Taxes:

The wage limit for Oregon unemployment taxes has increased to $32,100 for 2010. The tax rate depends on your unemployment claim experience. You should have received a rate notice from the Employment Department. The Tri-Met tax rate increased to .006818 for 2010, Lane County has increased to .0066.

5. Worker's Compensation Assessment:

For 2010, the worker's compensation assessment rate has remained at 2.8 cents per hour worked by each employee. One-half of this amount, or 1.4 cents (.014) per hour, should be deducted from the employee's wages. This assessment is reported and paid quarterly with the Oregon Combined Payroll Tax Report.

6. Minimum Wage Requirements:

The Oregon minimum wage has remained at $8.40 per hour for 2010, and will be adjusted annually for inflation by September 30 of each year for the following calendar year

7. Form W-4:

All new employees should fill out a Form W-4 when they start work. Employees who claim to be exempt from income tax withholding must fill out a new Form W-4 each year by February 15. The IRS no longer requires employers to send copies of Forms W-4 claiming more that 10 allowances or certain Forms W-4 claiming exemption from withholding unless requested by the IRS. However, Oregon does still require employers to send copies of Forms W-4 to the Oregon Department of Revenue if the employee claims more than 10 allowances or exemption from withholding.

8. Form I-9:

You must obtain INS Form I-9 (Employment Eligibility Verification) from each new employee, generally within three days of the date of employment. This form is then retained for the longer of three years or for one year after the person's employment is terminated. Refer to the "Handbook for Employers" for instructions and information about the form.

9. Information Returns:

A reminder that every person engaged in a trade or business is required to file an information return (Form 1099) each calendar year to report certain payments made in the course of such trade or business to another person for rents, interest, fees, commissions, services and other income payments totaling $600 or more (except amounts reported on Form W-2). IRS Package 1099 gives instructions and additional information on filing requirements.

10. New Hire Reporting Form:

All employers are required to file a "New Hire Reporting Form" with the Oregon Department of Justice no later than 20 days after the date the employer hires or rehires an employee.