‘Why is my paycheck suddenly smaller?!’
Prepare yourself and the Payroll department for the complaints now.
Reason: Congress let the temporary Social Security payroll-tax cut expire – which means employees’ payroll tax rate will (once again) be 6.2%, up from 4.2%.
Employees who followed the fiscal cliff drama know this. But the majority, who don’t have a clue what FICA stands for, won’t.
All they’ll notice is that their paychecks are smaller. In fact, the Tax Policy Center reports that employees making between $30,000 and $200,000 a year in salary will be hit harder than those earning more than $200K.
Workers in the $30K-200K range will see their paychecks shrink by as high as 1.7%, as much as $1,784 annually.
Head off their complaints now
Your best bet: Let employees know about the change now.
Consider sending an email about the SS tax change. Let employees know that federal law requires the company deduct 2% more for Social Security taxes.
You can also link this Wall Street Journal calculator that shows how much more you’ll pay based on your salary. As an example, a household that earns $50,000 a year in salary (pre-tax) will pay $1,000 more in taxes in 2013.
- Share on
Free Training & Resources
White Papers
Provided by UJET
Further Reading
We’re huge fans of TED Talks. We love how powerful TED Talks strip away all the distractions and focus on the essence of one idea....
Whether payroll professionals use the most current Excel in Microsoft 365 or an earlier version, they’ll never find enough time to us...
Paying employees by direct deposit is convenient for all involved. But a recent court case is a reminder that funds could end up in cybercr...
IRS gave an update on several initiatives that have been in the works longer than expected. The Service’s latest goals are contained i...
IRS told one employer that payments made to employees under its fixed-indemnity health insurance policy were subject to federal income, FIC...
A new opinion letter looked at whether one company needed to add bonuses into its overtime calculations under federal law. The answer fr...
