As if you didn’t have enough to do getting W-2s out to employees — a new law has given you another Jan. 31 deadline.
Employers have until Jan. 31, 2011 to implement new withholding tables and the new 4.2% tax rate, under the new “Social Security tax holiday” put in place by the Tax Relief Unemployment Insurance Reauthorization & Job Creation Act of 2010.
While employees will only pay 4.2% in Social Security taxes (up to the 2011 wage base of $106,800), employers continue paying the full 6.2%.
Employers should also make adjustments in a later pay period if Social Security taxes were over-withheld (i.e., you didn’t implement the new tables by the first pay period of the year). This should be done as soon as possible, but no later than March 31.
This over-withholding may have occurred because of the tax tables’ late release. Normally, they come out in November, which gives Payroll people time to update their systems.
However, this year the tables were delayed until late December because of impending legislation.
You can get the new tax tables, as well as more info, here.
