Expiration of 2-Percent Payroll Tax Reduction
We talked about this in previous editions of this video blog. But many people have overlooked this topic. I have talked with both employers and employees over the last couple of weeks who failed to consider this change.
On January 1, 2013, the 2% temporary reduction in the payroll tax that was in effect in 2011 and 2012 expired. The social security tax reverted back to 6.2%. This was never intended to be a permanent change. But rather a short-term method to put additional money in employees pockets to stimulate spending.
If you are an employer, you should verify that your payroll software was updated for this change.
If you are an employee, you should check your paystub to confirm this was changed by your employer.
If you are self-employed, this will need to be taken into account when figuring your 2013 estimated tax payments.
Disclaimer: The items included in the Tax Tip Tuesday Video Blog are informational only and are not meant as tax advice. Consult with your tax advisor to determine how any item applies to your situation. IRS Circular 230 disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advise contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.
