January 11, 2013
Payroll Tax Holiday Expired January 1
|See how provisions of the American Taxpayer Relief Act of 2012 will affect your ag operation in this CropWatch article.|
While it was not part of the American Taxpayer Relief Act of 2012, there is an important expiration that anyone with employees needs to know.
For the past two years, we have had a Payroll Tax Holiday that reduced the amount of Social Security tax being witheld from paychecks from 6.2% to 4.2%. This, combined with the 1.45% of Medicare tax, changed the FICA tax withholding from the traditional 7.65% to 5.65%. Starting with paychecks on Jan. 1, 2013, this withholding amount needs to return to 7.65%.
If you did not make this adjustment, you have until the end of March to correct your mistake. You do not want to ignore this for an entire year as penalties and interest will be assessed.
Also, the self-employment tax that had been reduced 2% to 13.3% returned to 15.3% January 1, 2013.
Manager, Nebraska Farm Business, Inc.