The OASDI taxable wage limit increases from $80,400 to $84,900. The tax rate remains 6.2% (with a matching employer contribution).
Medicare taxable wage limit remains unlimited and the tax rate remains 1.45% (with a matching employer contribution.)
The federal income tax exemption has increased from $2900 to $3000.
The federal income tax tables have also changed as of January 1, 2002.
The FUTA rate/limit remains unchanged.
For payments treated as supplemental wages, the flat rate decreases to 27.0% as of January 1, 2002. The prior flat rate of 28.0% decreased to 27.% on August 6, 2001.
There are many increased limits for employee contributions to qualified pension plans for the year 2002.
What Advanced Accounting users need to do to implement these changes:
(1) For every division, increase the social security medicare limit; also update your SUTA, workers compensation and state disability rates as of January 1.
(2) With the 2001 update, a new BKPRFTAX.B is provided which contains federal/state tax table updates and changes, however, if your "main" company is not installed in the same directory as your program files or if you use the multiple company feature of Advanced Accounting, your additional companies will not be updated. The easiest way to update those companies would be to copy the BKPRFTAX.B file to each of your companies. The 2001 installation program will actually do this for you. You will be asked if you wish to update the tax table file and if you indicate that you do, then all of your tax files will automatically be updated. If for some reason you do not (example: if you have entered in your own amounts and do not want those to be overwritten) then you would need to make the various rate changes on your own including changing the UT0 code in maintain tax tables, the USS and USM rate codes and the state codes pertaining to the states where you have employees. You would need to do this in EVERY company.
(3) Make any health insurance, retirement plan, cafeteria plan deductions, etc. that might change as of January 1.