2011 Payroll Tax Instruction - IRS Notice 1036 - John R. Dundon II, Enrolled Agent
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2011 Payroll Tax Instruction – IRS Notice 1036

2011 Payroll Tax Instruction – IRS Notice 1036

According to the IRS millions of workers will see their take-home pay rise during 2011 because the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 provides a two percentage point payroll tax cut for employees, reducing their Social Security tax withholding rate from 6.2 percent to 4.2 percent of wages paid.

Unbelievably this reduced Social Security withholding will have no effect on the employee’s future Social Security benefits.  The new law also maintains the income-tax rates that have been in effect in recent years.

Employers should start using the new withholding tables and reducing the amount of Social Security tax withheld as soon as possible in 2011 but not later than Jan. 31, 2011.

Notice 1036, contains the percentage method income tax withholding tables, the lower Social Security withholding rate, and related information that most employers need to implement these changes.

For any Social Security tax over withheld during January, employers should make an offsetting adjustment in workers’ pay as soon as possible but not later than March 31, 2011.

I recommend reviewing all workers w4 and 1099s annually. Check out:

W-4 forms.and/or Publication 919, How Do I Adjust My Tax Withholding?




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