Now that Congress decided not to extend the payroll tax holiday that applied in 2011 and 2012, but did add a new tax bracket of 39.6% for high-income taxpayers starting this year, withholding rules for 2013 are a new ballgame.
Here’s what to do if you do payroll in-house:
- The IRS has released new withholding tables for 2013. Use them as soon as possible, but no later than February 15, 2013.
- If you used 2012 tables for any pay periods in 2013, you may not have withheld enough FICA tax from employees. (For 2013, the Social Security portion of FICA is 6.2% on taxable compensation up to $113,700.) You must make the appropriate adjustment no later than March 31, 2013.
Bottom line: Employees don’t have to do anything as a result of the new law. However, they may want to file new W-4s with you to adjust their withholding allowances.