Beginning in 2011, taxpayers will no longer be able to make tax deposits (e.g. employment…
Under the 2010 Tax Relief Act employees will pay only 4.2% Social Security tax on wages up to $106,800 (which is the limit on taxable wages for Social Security tax purposes). The employer tax rate for Social Security remains unchanged at 6.2%.
Self-employed individuals will also benefit from this legislation. Self-employment income will only be subject to a 10.4% Social Security tax which is down two percent from 12.4% in prior years. The medicare tax still remains at 2.9% in 2011 for self-employed individuals.
Employers should be aware of the pending Jan. 31, 2011 deadline for implementing the new 2011 withholding tables and 4.2% employee Social Security tax rate brought about by this recent tax legislation. Employers should also note after implementing the new 4.2% rate, they should make an offsetting adjustment in a subsequent pay period to correct any Social Security tax over-withholding by Mar. 31, 2011.
If you have any questions regarding this topic feel free to call us today and let us help you.