Supervisors can help employees understand tax withholding questions
Tax regulation changes that went into effect in January impacted all employees' paychecks, resulting in less take home pay. Employees continue to have questions about why more taxes are being withheld and how to change their federal withholding.
The following tax regulations changes are responsible for the difference in pay:
- The 2011-12 temporary Social Security payroll tax reduction was not extended in 2013. The Social Security tax rate is now 6.2 percent, resulting in two percent less take home pay for all employees.
- Social Security tax wage ceiling increased to $113,700. Social Security taxes will be assessed against wages up to $113,700 and are not assessed for the remainder for the year after an individual reaches the wage ceiling. In January of the following year, Social Security taxation will recommence.
Example: Employee A made $200,000 in 2012. In September 2012, when Employee A's salary earnings reached $110,100, Employee A no longer paid the Social Security tax. This change in federal tax withholdings resulted in more take home pay. In January 2013, the Social Security tax was again withheld and will continue to be withheld until Employee A reaches the new max, $113,700.
- An Additional Medicare Tax of 0.9 percent was implemented and will now be assessed against wages in excess of $200,000.
- Income tax rates for single taxpayers earning above $400,000 and married couples earning above $450,000 increased to 39.6 percent.
Payroll advises employees who wish to change their withholdings to use the 2013 W-4 form available on the Tax Forms for Resident Employees Web page. Individuals and couples with multiple job; people who are having children, getting married, getting divorced or buying a home; and those who typically wind up with a balance due or large refund at the end of the year may want to consider submitting revised W-4 forms.
Questions may be directed to the Tax Department at email@example.com.
- Tax Department
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