When your company joins Justworks, it’s important to pay attention to your allowances, additional withholding amounts, and filing status while setting up your account. Those settings, among other factors, will directly impact how taxes are applied to your paychecks through Justworks.
Account Settings - Address & Tax Information
Since taxes are applied based on where you live and work, it’s important to enter your home address here accurately while creating your Justworks profile:
On the next page of the enrollment flow, you’ll be prompted to enter your allowances and withholdings status. You can also designate an additional withholding amount to be withheld from regularly scheduled salary and wage payments.
If you’re unsure about how to calculate your allowances, you can refer to IRS Form W-4.
Once your enrollment is complete, you can change these settings at any time from your Account Settings tab. It’s important to note, though, if you want your paychecks to remain largely consistent with what you experienced on your old provider, when transitioning to Justworks, your allowances and withholdings should closely match the ones you had previously.
If you’re looking to have a different amount of allowances or additional withholdings for your state than you’ve entered for federal taxes, please reach out to our Customer Success team for the proper forms.
Benefits + Company Contributions
It’s also possible that your Justworks paychecks look different than the ones from your previous provider because of your company’s benefits offerings.
If you’ve enrolled in more pre-tax benefits through Justworks than you had previously (for example, you’ve enrolled in Medical, Dental, and Vision plans now but only were enrolled in Medical previously), the total amount you’ll have deducted from each paycheck and your total taxable wages will likely be different.
Furthermore, if the cost of the benefits and/or what your company may be contributing towards benefits has changed, this likely will result in a change in your taxable wages.
Your taxable wages may also be impacted by ancillary benefits, 401(k) deferrals, or transit deductions. Depending on how much you are having taken out per paycheck or per month, your taxable income may increase of decrease from what you had through a previous provider.
There are three pay frequencies that Justworks companies can be on:
- Semimonthly - Employees are paid on the 15th and last business day of the month (or closest previous business day to each), 24 times a year.
- Biweekly - Employees are paid every other Friday for the two work weeks prior, 26 times a year (biweekly pay periods may span over two calendar years)
- Weekly- Employees are paid each Friday for the work week prior, 52 times a year (weekly pay periods may span over two calendar years)
*non-exempt employees cannot be on the semimonthly frequency on Justworks.
If you notice slight changes to your gross and/or net pay once your company has fully onboarded, be sure to check your company’s pay frequency.
Wage Bases - Social Security & Medicare
Depending on the amount of taxable wages you earned prior to when your company switched to Justworks, you may see a difference in your withholdings for Social Security. This is because the 2019 Social Security Wage Base is $132,900, so once you've earned that taxable amount in one year, you will not have to continue to contribute to Social Security until the calendar turns to the next year.
However, there is no such base for Medicare. In fact, an additional .9% gets added to the standard 1.45% Medicare taxes once an employee has received more than $200,000 in taxable wages within one calendar year.
If you move to Justworks mid-year, and your admin did not provide us with year-to-date payroll reports, you may see Social Security tax withheld even if you have satisfied the base while on your previous provider. You may also see that regular amount for Medicare applied, if you’ve received over $200,000 in the calendar year prior to moving over to Justworks. Any underpayment or overpayment of Social Security and/or Medicare should be reconciled at the individual level, when you file your taxes for the preceding year in the spring.
Keep in mind that if your company does start on Justworks on January 1st, your first paycheck will include the above taxes, which you may have hit the base for through your previous provider.
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, legal or tax advice. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal or tax advisor.