
Due to the fact that Congress just passed this extension, the IRS has given businesses until March 31, 2012 to comply with the 4.2% social security tax rate; however PEOs are already making the necessary changes to ensure that all of their client company employees receive benefit of the adjusted 4.2% tax rate starting at the first of the year.
Furthermore, Congress has included a new “recapture” provision, in which employees that are paid at least $18,350 during the period between January 1 and February 29, 2012 will be taxed at a higher rate. However this recapture tax will not affect these employee’s paychecks; instead these high wage earners will pay a tax adjustment when they file their income tax return in 2013.
As a service to employees, those needing assistance in determining W-4 withholdings can access the online IRS Tax Withholding Calculator by clicking HERE.
For more question regarding your company’s payroll administration and how a PEO can alleviate many of your employee administration headaches, contact an LL Roberts Group PEO Consultant (toll free) at 877.878.6463.