Holiday cheer is in the air! With the holiday season in full swing, we at Wisdom want to gift you some time saving information on payroll changes happening in the New Year. Keep reading and make sure to bookmark this post for details you will need for 2020!
Withholding changes:
The IRS has released a NEW W-4 form to go into effect on January 1st, 2020. New employees and employees seeking to adjust their withholding in 2020 must do so using the new form provided by the IRS. The new form drops the word “allowances” and uses “certificate” in its place and was created in conjunction with the Tax Cuts and Jobs Act which affected filers for the 2018 tax season.
The new W4 form was created with the ultimate goal of tax payers withholding properly so as to neither owe the IRS nor be owed by the IRS come April.
A few things to note :
For individuals who work two or more jobs, the forms help accurately calculate taxes for all earnings instead of according to individual earnings.
For two-earner households, those who opt to check the applicable box in Step 2, “c,” both earners should check the box but only one needs to continue filling out Steps 3 and 4 of the form.
Step 4b asks for “deductions other than the standard deduction.” This is asking for individuals to enter their expected deductions over the standard deduction amount ($12,400 individual, $18,650 head of household, $24,800 married filing jointly for 2020) not total deductions.
Fair Labor Standard Act changes:
Churches should be aware that the FLSA salary threshold (for executive, administrative and professional exemptions) has increased for 2020 from $455 per week ($23,660 annually) to $684 per week (35,568 annually). For many churches this would seem to affect their ability to pay employees a salary under $684 per week. There is good news though!
First, Clergy are not covered by the FLSA. Clergy are neither exempt nor non-exempt in the FLSA definition of the law but instead are not covered at all by the law. This essentially means that regardless of the type of work, amount of pay or type of pay, clergy are not affected by the FLSA.
Second, for employees who are not clergy and therefore covered by the law, employers are not prohibited from paying a salary as long as it does not violate either minimum wage laws or the FLSA overtime requirements. This is where an option called “Fixed Salary for Flexible hours” comes into play. This option allows employers caught by the FLSA salary threshold to continue paying employees via these “fixed salaries” provided two requirements are still met:
Minimum wage is still paid for all hours worked:
At all points their compensation (salary) must meet the minimum wage for all hours worked. If at any point their hours worked drops their pay below the minimum pay requirements they will be owed the difference.
Employees who work overtime are paid for ALL hours worked:
If at any point an employee is owed overtime, regardless of their salary compensation they should be adequately compensated at an overtime pay rate.
Both of these requirements mean that churches who choose to utilize the Fixed Salary for Flexible Hours option will need to implement a time keeping option of some kind. For more information on Fixed Salary for Flexible Hours see our previous blog post here.
State changes:
Churches should also check to see if their state has any changes starting January 1, 2020. Specifically, many states are experiencing increases in their minimum wage. Wisdom has put together a list of those states changing their minimum wage. Make the switch to Wisdom Payroll to stay on top of these changes, or check these changes with your payroll company to see if you need to increase your hourly payroll rates.
With Christmas approaching and New Years quickly following it is easy for changes like this to get lost. Make a list, check it twice and then let us know how Wisdom Payroll can partner with you come 2020!