February 21, 2012
Payroll Tax Cut Extended
I’m happy as I write today’s blog to say that I hope this may be my last blog in a long while on this topic. Who would’ve thought that something as benign as a social security withholding rate could create so much buzz.
Last Friday, Congress passed an extension of the payroll tax cut that will keep the social security withholding rate at 4.2% for the rest of 2012. President Obama has said he will sign the bill as soon as he returns home from a trip to the western U.S., so it looks like a done deal.
What You Need to Know
• All social security withholding for 2012 will be at the rate of 4.2%, subject to the annual maximum of $110,100. Essentially, we are back to “business as usual” – the end result being that this year’s withholding mechanics will be no different than any other year from a social security perspective.
• Since the social security withholding rate will be the same for the entire calendar year, any concern about monitoring the annual maximum on a manual basis (the issue being that with two different withholding rates in effect for a calendar year, the annual maximum would be virtually different for every employee) has been eliminated.
• While the social security rate for 2012 will be set at 4.2%, remember this is considered a temporary tax cut. As a result, the issue of withholding rates will rise again as we draw near 2013, because the payroll tax cut is now set to expire on 12/31/12.
Obama hasn’t signed the bill yet, but has stated that he will. So, it appears that, finally, we can put this issue to bed for now.
– Jennifer
NASPP “To Do” List
We have so much going on here at the NASPP that it can be hard to keep track of it all, so we keep an ongoing “to do” list for you here in our blog.
- Renew your NASPP membership for 2012 (if you aren’t an NASPP member, join today).
- Register for the NASPP’s newly updated online Stock Plan Fundamentals program.
- Submit your proposal for the 20th Annual NASPP Conference in New Orleans. All proposals must be submitted by March 2–NO EXCEPTIONS!
- Register for the 20th Annual NASPP Conference in New Orleans. The early-bird rate is only available until April 13.
- Submit your question for the NASPP’s upcoming Ask the Experts webcast on grant practices. All questions must be submitted by next Tuesday, February 28.
- Check out the NASPP’s Facebook and Twitter pages.
- Complete the Compliance-O-Meter quiz on Global Tax Withholding Procedures.
- Attend local NASPP chapter meetings in Austin, Phoenix, Sacramento, and the Twin Cities. Barbara Baksa, the NASPP’s Executive Director, and Larry Reynolds of E*TRADE will be presenting on cost-basis reporting at the Sacramento meeting. Be sure to say hello!