In conjunction with the Federal Government’s efforts to provide tax relief to the American worker, significant reductions in Social Security taxes are being passed on to “employees”.
On December 17, 2010, information was released by the IRS regarding 2011 “payroll tax cuts”. Throughout 2011, the “employee tax rate” for Social Security contributions will be 4.2%, however the employer tax rate for Social Security will remain unchanged at 6.2%. The maximum income subject to Social Security tax will also remain unchanged from 2010, at $106,800, but the maximum Social Security tax that can be withheld from an employee’s paycheck for 2011 will be lowered to $4,485.60 in accordance with the 4.2% tax rate. Furthermore, the Employee and Employer Medicare tax factor will be unchanged at 1.45% with no maximum cutoff. Because the tax information has been released at a late date, the IRS has given businesses until January 31, 2011 to comply with the new 4.2% Social Security tax rate.
If you currently utilize the services of a PEO, please contact your Payroll Associate. IF you are interested in learning more about how a PEO can assist your company with Payroll, HR, Benefits, Risk Management or other employee administration matters please contact the LL Roberts at 877.878.6463.