The Temporary Payroll Tax Cut Continuation Act of 2011
Posted on Tue, Jan 24, 2012
Although the combined tax rate for Social Security Taxes and Medicare Taxes remained 15.3 percent from 2011 to 2012, the actual rate to be collected and paid remains dynamic due to passage of the Temporary Payroll Tax Cut Continuation Act of 2011, which temporarily extends by two months the 2-percent tax cut previously granted to employees. As the Internal Revenue Service noted in December 23, 2011, press release, “Employers should implement the new payroll tax rate as soon as possible in 2012, but not later than Jan. 31, 2012. For any Social Security tax over-withheld during January, employers should make an offsetting adjustment to workers’ pay as soon as possible but not later than March 31, 2012.”
To further complicate matters for those who must plan for payroll accounting, Congress is currently debating a “full-year extension of the payroll-tax cut” for the remainder of 2012. It is therefore essential that employers stay up-to-date with payroll tax changes, including those represented by such temporary measures as the Temporary Payroll Tax Cut Continuation Act of 2011. Small business owners should rely on a professional, comprehensive payroll solution to stay up-to-date with these and other payroll tax changes.