Payroll Tax Holiday Extended…Again
On February 22, 2012, President Obama signed the Middle Class Tax Relief and Job Creation Act of 2012 (P.L. 112-96). This law extends the 2% point payroll tax “holiday” through December 31, 2012. As a result, for 2012, employees will pay only 4.2% Social Security tax on wages up to $110,100 (wage base for 2012). The employer rate of 6.2% remains unchanged.
This Social Security payroll tax holiday was initially only applicable for the 2011 tax year and expired December 31, 2011. About that same time, President Obama signed a temporary 2-month extension of the holiday through February 29, 2012 (see Temporary Extension of Reduced Social Security Tax Rates from the January 2012 Benefit Beat).
The IRS has recently released a revised Form 941, Employer's Quarterly Federal Tax Return, for reporting the newly extended payroll tax “holiday” through 2012.
The information contained in this Benefit Beat is not intended to be legal, accounting, or other professional advice, nor are these comments directed to specific situations.
As required by U.S. Treasury rules, we inform you that, unless expressly stated otherwise, any U.S. federal tax advice contained in this Benefit Beat is not intended or written to be used, and cannot be used, by any person for the purpose of avoiding any penalties that may be imposed by the Internal Revenue Service.