payroll deduction changes in 2009

Continuing our theme of processing payroll for year end and preparing for 2009 I thought I would post a quick reminder to review payroll source deduction limits.

What’s new in Canada payroll per Canada Revenue Agency (”CRA”)?

Annual employment insurance to be deducted from employee pay is $731.79 in 2009 (up from $711 in 2008) and the maximum annual canada pension plan amount is $2,118.60 in 2009 (up from $2,049 in 2008).  To be clear, the rate at which these amounts are contributed did not change it was the earnings limits that increased which then increased the amount to contribute.

In addition you should also review income tax rates, both federally and provincially, for 2009.

If you are new to payroll or are not using a payroll service, the CRA website is a fantastic resource.

In the United States you need to review at a federal level your social security and medicare taxes as well as federal unemployment tax (”FUTA”).  The Internal Revenue Service (”IRS”) has a website to help decipher the federal rules and regulations.

For 2009, the federal rates did not change: 6.2% for social security, 1.45% for medicare, 0.8% for FUTA*.

Again, review income taxes at both the state and federal.

* when offset by state unemployment payments - the Federal rate is actually 6.2%.

There was talk that the FUTA rate might drop from 6.2% to 6.0% in 2009 but the Emergency Economic Stabilization Act kept the rate as is until the end of 2009.

And, of course, there is always the employer portion of the above taxes.  Seriously, why aren’t you considering payroll services?