December 20, 2007
THERE ARE CHANGES FOR 2008. PLEASE READ THIS LETTER CAREFULLY
This letter highlights some of the changes in federal and state payroll tax withholding rates for 2008 and 2007 year-end
reporting requirements, and gives you some information about reporting requirements. This letter is not intended to be
a comprehensive list of all reporting requirements.
NEW FORM I-9: A revised Form I-9 (Employment Eligibility Verification) has been released by the Department of
Homeland Security. This revised form (with Rev. date 06/05/07) is available at www.uscis.gov/i-9 and must be used
for new hires beginning December 26, 2007.
WITHHOLDING TAX RATES: The rates for FICA (Social Security and Medicare) remain the same but the wage base
for Social Security has increased. For California State Disability Insurance (SDI) the rate and wage base have both
increased. Details are found on the last page of this letter.
DEPOSIT REQUIREMENTS: The deposit rules for payroll tax payments remain the same for 2008. See the table in
this letter for details. Both the IRS and EDD encourage employers to make payments electronically. For details and
requirements, contact each agency. There is a list of contacts on the last page of this letter.
W-2’s: REPORTING: Requirements are similar to last year. Change for 2007: the location of the Social Security
Number on the form. California employers are NOT required to file State copies of Forms W -2. Prepare legible forms
using black ink. Be sure to use correct Social Security Numbers and names. You can verify this information online at
www.ssa.gov/bso/bsowelcome.htm MAILING DEADLINES: to employees, January 31, 2008; to Social Security
Administration, February 29, 2008 for paper filers, March 31, 2008 for electronic filers. Note: Electronic filing (not
magnetic media) is required if you have more than 250 W-2 forms. Get details at www.socialsecurity.gov/employer
or call 800-772-6270. Employers with 20 or fewer employees may complete W-2 forms online and submit them
electronically to Social Security Administration, using the site above.
“1099’s”: REPORTING: Information returns must be filed to report several types of payments made in the course of
your trade or business, including payments of more than $600 for services, attorney fees, rents and prizes, royalties or
broker payments of $10 or more (all reported on 1099-MISC), interest (1099-INT) and retirement, HSA and MSA plan
distributions (1099-R or 1099-SA). You must include your name and telephone number on these forms. REMINDER:
payments to corporations are generally exempt from 1099 reporting, but payments to corporations for legal services or
medical and health care must be reported. Penalties may be assessed for failure to file or for filing forms with incorrect
Taxpayer Identification Numbers. You can order the instructions and forms the IRS at www.irs.gov or by calling 800-
829-3676. MAILING DEADLINES: to recipients, January 31, 2008; to Internal Revenue Service, February 29, 2008.
Accurate preparation and timely filing and payment of employment tax returns is essential for all employers.
If you have any questions regarding this information, please contact our office at 858-268-3330.
Howard Silberman, An Accountancy Corporation
Certified Public Accountant
SUMMARY OF 2008 EMPLOYMENT TAX RATES
EMPLOYEE EMPLOYER WAGE MAXIMUM
WITHHOLDING TAXES BASE FOR YEAR
SOCIAL SECURITY 6.2% 6.2% $102,000 $6324.00
MEDICARE 1.45% 1.45% ALL WAGES UNLIMITED
FEDERAL INCOME TAX Use Circular E NONE
CALIFORNIA INCOME Use DE 44 Guide NONE
CALIFORNIA SDI .8% NONE $86,698 $693.58
FEDERAL UNEMPLOYMENT NONE .06 % $7000 $56.00
CALIFORNIA NONE RATE VARIES $7000 DEPENDS ON
UNEMPLOYMENT employers RATE
(SUI & ETT) notified in Dec
Self-Employment Tax 12.4% of all income 2.9% of all
(for individuals) up to $102,00 income
Standard rate for eligible 50.5 cents
business mileage per mile
INTERNET ADDRESSES & TELEPHONE NUMBERS FOR GOVERNMENT AGENCIES
AGENCY INTERNET ADDRESS TELEPHONE NUMBER
Internal Revenue Service (IRS) www.irs.gov 800-829-3676
Employment Development Department (EDD) www.edd.ca.gov 888-745-3886
Social Security Administration (SSA) www.ssa.gov 800-772-6270
Electronic Federal Tax Payment System (EFTPS) www.eftps.gov 800-555-4477
State Board of Equalization (BOE) www.boe.ca.gov 800-400-7115
Citizenship & Immigration Services (ICE) www.uscis.gov 800-375-5283
Department of Industrial Relations (DIR) www.dir.ca.gov 800-275-9243 (wage info)
PAYROLL TAX DEPOSIT REQUIREMENTS
Federal deposits are made on a monthly or semi-weekly basis, depending upon the amount of tax deposited in
prior years. Employers whose deposit frequency changes for 2008 were notified by IRS during December.
Rules are found in Circular E under “Depositing Taxes”.
California deposit frequency conforms to Federal, when PIT withholding is $400 or more.
Electronic Depositing is required for:
Federal: If the total of ALL of your federal deposits in 2006 was $200,000 or more, you MUST make
deposits in 2008 using the Electronic Filing System. Contact: www.eftps.gov or 1-800-555-4477
California: If your average EDD deposit during July 2006-June 2007 was $20,000 or more, you MUST make
2008 deposits using EFT system. Contact: www.edd. ca.gov or -1888-745-3886
INDEPENDENT CONTRACTOR REPORTING
California employers must file Form DE542 within 20 days of making payments of $600 or more for services to
individuals (sole proprietors) who will be receiving a Form 1099-MISC. For further details, refer to EDD’s
website www.edd.ca.gov or call 1-916-657-0529.