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PAYDAY Workforce Solutions Blog

Are So. Calif. Businesses Ready for the 2013 Payroll Tax Changes?

On Feb 18, 2013
Payroll Tax Changes 2013There was a lot of attention earlier this year when Congress made what was referred to by the press as a "fiscal cliff" deal. The deal included important tax changes which affect payroll deductions and increase the need for employers to use a payroll service solutions company.
Some of these changes have specific implications for business owners who are required to withhold funds from their payroll. Payroll service solutions can easily implement these changes for employers.

Some changes affect all workers. Others will only affect single people who earn over $400,000 or couples who earn more than $450,000. Here are the major changes in the law that everyone should be concerned with, particularly employers who will need to adjust their payroll withholding criteria. Payroll service solutions can help employers implement the new payroll withholding requirements.

Payroll service solutions company can aid employers

This increase can mean as much as $80 less that an employee will now be taking home on a monthly basis. A worker earning $50,000 will see their taxes increase by about $1,000 annually based on this change alone. Employers continue to pay 6.2 percent, the same they have paid for the last few years.

The change means that employers and employees each pay a maximum of $7,049.40. Payroll service solutions will automatically effectuate this change to employer's withholding requirements. The increase on the amount to be withheld may be as much as $2,425.20.

Employers must begin this payroll withholding by Feb. 15, 2013. Employers who use a payroll service solutions company will have the new calculations automatically prepared for them.

For single employees who annually earn more than $400,000 and married employees who earn over $450,000 a year, the tax rate has increased from 35 percent to 39.6 percent. All workers, but particularly workers in these income levels, should review their W-4 withholding form and consider revising it in order to avoid a large tax bill at the end of the year.

If you, as an employer, do not already use a payroll service solutions company, you should consider doing so. A payroll service solutions company like PAYDAY Workforce Solutions will ensure accurate application of the new payroll withholding tax laws and will provide you with accurate records. This relieves you of spending time studying new tax laws and simply hoping you interpret them correctly.

The work opportunity tax credit (wotc) provides benefits to business owners who hire individuals of a target group, including qualified u.s. veterans and those receiving temporary assistance to needy families (tanf). the wotc program provides a federal income tax credit against the wages paid to eligible target groups. the credit can be as high as $9,600 per qualified veteran for for-profit employers or up to $6,240 for qualified tax-exempt organizations, but the amount of the credit will depend on a number of factors, including the length of the veteran's unemployment before hire, the number of hours the veteran works, the hire date of the veteran, and the veteran's first-year wages. please see this link for more details: http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Expanded-Work-Opportunity-Tax-Credit-Available-for-Hiring-Qualified-Veterans

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