It has only been a month since the new federal Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act was signed into law, but the new tax cut rates are already in effect…and employers must race to adjust their payrolls.
As of January 1st, the Social Security Tax withholding rate has been reduced from 6.2% of an employee’s earnings to 4.2%. The burden of adjusting these rates falls solely on employers, who must adjust their payroll systems by January 31, 2011 in order to comply with the new federal rates.
Employers must also reimburse workers for any withholding in excess of 4.2% incurred prior to updating their systems. The deadline for reimbursement is March 31, 2011. Instructions and new tax-withholding tables can be accessed on the IRS government website at www.irs.gov.
Source: Pittsburgh Post-Gazette