2019 Social Security Benefits, Nanny Tax Threshold and New-Hire Reporting Program Outlined

Annual Payroll and Withholding Update Part 2 of 5

The social security annual earnings limit is increasing this year for those who have not reached full retirement age, and also for those who have. The nanny tax threshold and new-hire reporting program remain the same in 2019. Learn more below.

Social Security Benefits

You can continue to earn income while receiving full Social Security retirement benefits, provided your earnings do not exceed certain limitations.  The 2019 yearly earnings ceiling for individuals who have not reached normal retirement age will increase to $17,640. Benefits of $1.00 will be lost for every $2.00 earned in excess of the ceiling.

For recipients who reach normal retirement age in 2019, the earnings limit is $46,920 until the month the individual reaches normal retirement age.  Benefits of $1.00 will be lost for every $3.00 earned in excess of the ceiling.  Once you reach normal retirement age, you can collect full benefits, regardless of the amount of your earnings.

Nanny Tax Threshold

The 2019 annual earnings threshold above which an employer is required to pay FICA taxes and issue Form W-2 to domestic workers will be $2,100.  Form W-2 may not be issued to a household employee below this threshold amount, however the wages are subject to federal unemployment tax when more than $1,000 is paid to all household employees in any quarter of the year or the previous year.

Employers may have to satisfy their personal tax obligations by either increasing wage withholding or making estimated tax payments to prevent the application of underpayment penalties.

New-Hire Reporting Program for Missouri and Illinois

All employers must report information about any new employee to the appropriate state agency within 20 days of their date of hire.  (This is a federal regulation, and states may establish more stringent reporting requirements).  The new-hire reporting regulations were enacted to help state agencies enforce child support orders.

Your new-hire reports must contain the employee’s name, address, and Social Security number as well as your company’s name, address, and federal identification number.  To comply, you can file a Form W-4 or an equivalent form.  In Missouri, the penalty for non-compliance is $25, or if the failure is the result of a conspiracy between the employer and the employee, the fine will be $350.  In Illinois, the penalty for non-compliance is $15.

You can mail new hire reports on paper, or on magnetic media, report by fax, or file online.  For personnel employed in multiple states, you may choose one state where you have employees and report all new hires in that state.

Contact an Anders advisor with any questions on how these amounts affect you.

Read Part 1 of the Annual Payroll and Withholding Update.
Read Part 3 of the Annual Payroll and Withholding Update.
Read Part 4 of the Annual Payroll and Withholding Update.
Read Part 5 of the Annual Payroll and Withholding Update.