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MASSACHUSETTS: Payroll law update, July-Dec. 2011

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in Office Management,Payroll Management

Income tax withholding. Massachusetts has retroactively adopted the federal tax exclusion rules for dependent health benefits. (Ch. 9. L. 2011)

According to technical guidance, Massachusetts employers that were noncompliant with state law by following the federal rules regarding dependent health benefits for state tax purposes in 2010 and 2011 aren’t required to take any action as a result of the statutory change.

Massachusetts employers that complied with state law during 2010 and most of 2011, taxed, withheld and reported amounts employees paid to cover their adult children. For 2010, those em­­ployers must file W-2c forms with the state to correct the overwithholding. Filing the W-2c forms with the Social Security Administration isn’t necessary. For the remainder of 2011, employers must adjust the amounts withheld for dependent health coverage. On 2011 W-2s, em­­ployers are expected to make the appropriate adjustments to exclude dependent health care from state wages. Employees who are overwithheld for 2011 will receive larger state tax refunds. (TIR 11-05)

Garnishment. The amount exempt from a creditor garnishment per week is the greater of 85% of the employee’s gross wages or 50 times the greater of the federal or state minimum wage. Previously, the amount exempt from a creditor garnishment was a flat $125. (Act 431, L. 2011)

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