Fountain Hills Accountant Explains New Tax Laws for 2011

Fountain Hills Account Dan Kuchan Expains New Tax Laws for 2011

On December 17, 2010, Congress passes the Tax Relief, Unemployment

Insurance Reauthorization And Job Creation Act of 2010. According to

Fountain Hills CPA, Dan Kuchan this law temporarily reduces employee's

contributions to Social Security and extends unemployment insurance

assistance put in place to help job seekers caught up in the recession and

continues a number of other tax benefits.

Fountain Hills Account Dan Kuchan explains, the amount employers are required to withhold from employees paychecks

to fund Social Security will be reduced from $6.2% to 4.2%. This means

that an employer will need to adjust his computer withholding tables.

Changing these withholding depends on whether the employer has a

payroll service, a payroll program or simply uses the pay roll tables.

According to Fountain Hills Account Dan Kuchan, if an employee has a payroll service the payroll

company should changes it rates immediately.

If an employer uses the payroll tables, they should double check their

withholding amounts and consult with IRS publication 15. Payroll tables

are often updated by the IRS and in most cases can be relied upon to

provide the employer with the correct amounts to be withheld. Employer

can easily obtain Publication 15 by visiting the IRS website at www.irs.gov.

According to Fountain Hills Accountant, Dan Kuchan this decrease in

employee withholding is not to be confused with the rates that employers

must pay on the matching portion of Social Security. Kuchan says the

employer's portion of the Social Security will remain at 6.2%...

The following example illustrates this concept.

Under the old law, if an employee earns $100 in gross pay the employer

was required to withhold 6.2% for social security and 1.45% for Medicare

tax. This total is 7.65%. In this example, this will be $7.65 in taxes to be

taken out of the employee's paycheck. The employer was required to

match the withholding. This means that the employer had to put up $7.65 of

his own money.

Fountain Hills Account Dan Kuchan further explains that under the new law, if the employee had earned the same amount as

mentioned earlier, the withholding on the employees pay would be 4.2%

withheld instead of 6.2%. The Medicare portion of this would remain at

1.45%. In summary $5.65 of taxes would be withheld on the employees

pay.

The employers' portion of the matching would remain at 7.65. In summary,

the employer would withhold 5.65 from the employee and have to take

7.65 out of his pocket and put both of these amounts together to pay their

payroll obligation.

Fountain Hills Account Dan Kuchan has been a CPA in Fountain Hills Arizona for over 25 years