SR 09-02 Dated 01/09 |
STATE OF NEW HAMPSHIRE
INTER-DEPARTMENT COMMUNICATION
DFA SIGNATURE DATE: |
November 3, 2008 |
FROM: |
OFFICE OF THE DIRECTOR, DFA Terry R. Smith |
AT (OFFICE): |
Division of Family Assistance |
TO: |
DFA Supervisors |
SUBJECT: |
Release of 2009 Withholding Rates for FICA (Social Security) and FIT (Federal Income Taxes); Federal Minimum Wage; Income Ceilings for FICA Taxes |
EFFECTIVE DATE: |
January 1, 2009 |
SUMMARY
This SR releases the annual updates to the:
· withholding rates for FICA (Social Security) and FIT (Federal Income Tax); and
· FICA income ceiling.
FICA and FIT withholding rates are allowed in determining self-employment income for all programs and nursing facility and HCBC employment expense disregards. Employment expense disregards are based on allowable FIT and FICA withholding deductions.
POLICY
FICA (Social Security)
· The FICA withholding rate for both employees and employers remains 7.65%. This subdivides into 6.20% for the Social Security (OASDI) share and 1.45% for Medicare’s (HI) portion.
· Self-employed individuals pay a FICA withholding rate of 15.3%. These individuals may deduct from income tax one half of the 15.3% paid for the year as a business expense. The actual rate becomes 7.65% after the deduction.
· For employees and employers, the Medicare portion of the FICA rate is 1.45% on 100% of earned income; for a self-employed individual, the rate is 2.9% on 100% of earned income.
These percentages have not changed in recent years.
FICA Income Ceiling
· The income ceiling subject to the full FICA withholding rate increased from $102,000 to $106,800.
· There is no ceiling to the amount of gross earned income from which Medicare may be withheld.
FIT (Federal Income Tax)
District Offices use IRS Circular E to determine the applicable federal income tax (FIT) withholding rate. Although the federal withholding rate is not expected to change this year, the ceiling on the maximum amount will increase January 1, 2009, making the 2008 Circular E obsolete. Copies of the January 2009 IRS Circular E will be sent to each District Office under separate cover when they are received from the IRS.
Federal Minimum Wage
The Federal minimum wage remains at $6.55 per hour. This rate became effective July 24, 2008.
POLICY MANUAL REVISIONS
Revised Family Assistance Manual Topics
PART 601, TABLE H Federal Information, Taxes, Income Ceilings, and Minimum Wage Standards
Revised Adult Assistance Manual Topics
Section 603.03 Employment Expense Disregard
Revised Food Stamp Manual Topics
PART 601, TABLE H Federal Information, Taxes, Income Ceilings, and Minimum Wage Standards
IMPLEMENTATION
All policy changes in this SR are effective January 1, 2009.
CLIENT NOTIFICATION
No client notification is required as the information is for agency staff use.
TRAINING
No training is planned or necessary.
DISPOSITION
This SR may be destroyed or deleted after its contents have been noted and the revised manual topics released by this SR have been posted to the On-line manuals.
DISTRIBUTION
This SR will be distributed according to the electronic distribution list for Division of Family Assistance policy releases. This SR, and revised On-Line Manuals, will be available for agency staff in the On-Line Manual Library, and for public access on the Internet at http://www.dhhs.nh.gov/DHHS/DFA/LIBRARY, effective December 8, 2008.
This SR, and printed pages with posting instructions, will be distributed under separate cover to all hard copy holders of the Adult Assistance, Family Assistance and Food Stamp Manuals.
DFA/KD:s