Enter your email address below
to sign up for our

FREE Newsletter,
The Payroll Advi$or!

2013 Brings New Tax Rates

…But the general mass (hysteria) media is full of misinformation.

Now that falling off the “Fiscal Cliff”  has been delayed and Washington has come up with new tax rates for 2013 and beyond, we all need to take a deep breath, and check the facts regarding those new tax rates…especially the media. There is so much misinformation in the “Press”. We have seen articles in national newspapers noting that high wage earners will see their “payroll” taxes increase by 4, 5, 6, even 7 thousand dollars!  ”Everybody will see their taxes increase by thousands”, so-called journalist decry. This is just not the case. Here are the facts…..

In late 2010, the Obama administration proposed, and Congress supported a temporary 2% reduction in the social security (payroll) tax, from 6.2% to 4.2%. This reduction went into effect in 2011. The reduction was extended for all of 2012. Why Washington ever reduced the revenue, by hundreds of billions of dollars, for a so-called safety-net savings program that is broke and going broker, we will never know.  But in the deal reached for 2013, this payroll tax reduction was canceled. Thus all employees, no matter what income bracket, will see an increase in their social security (payroll)  taxes of 2% as the rate goes back to the 6.2% rate that existed in 2010 and 20 years prior.  For those employees earning $35,000, this means a tax increase of $700, $50,000 – $1,000, 75,000 – $1,500… you get the picture. However the social security (payroll) tax caps out at a maximum wage if $113,700 in 2013, up from $110,100 in 2012. This means that, as a result of this payroll tax adjustment back to pre-existing rates, the highest payroll tax increase an individual earning $113,700 or more can realize is $2,274.  This is the most an employee can see their “payroll” taxes increase. We are not saying this is not a lot of money..it is. We are just pointing out that it is not the 4 ,5, 6, 7 thousand dollar increase denoted by many in the mass media.

We have been working with the new 2013 withholding tax tables just released by the IRS. For the most part, those individuals earning $200,000 or less a year, which is most of us, will see little if any change in their income tax withholding.  However, after $200,000 ($250,000 married), a new Obamacare tax of .9% will kick in. It will be added to the Medicare tax rate. (There is also a new Obamacare tax increase on investment income.) The new law also introduces a new tax bracket of 39.6% for those wages earned in excess of $400,000 ($450,000 married).

Thus while all Americans will see an increase in their social security (payroll) taxes due to the cancellation of this temporary rate reduction, only high wage earners (the 1% percenters) should see an increase in their income withholding taxes.  Now lets hope Washington can do something on the spending side!

Posted in News
“We have been using Time & Pay for a number of years. Their customer service is outstanding. I would recommend their products and services to anyone looking to get the most out of the payroll process and stay compliant with federal and multi-state payroll regulations.”
-M W – Royal Brass, Knoxville, TN

“We find your integrated timekeeping and payroll easy to use and more accurate than the time sheets we were using. My time is now freed up to take care of my patients and other aspects of my business. Thanks for making the transition to outsourcing my payroll easy and cost effective.”
-B W – Westmoreland, DDS, Johnson City, TN

A while back, the state came to our office to audit our payroll records. When the auditor found out Time & Pay did our payroll, she stopped, packed her briefcase and informed us there was no need for the audit. She was very confident we were compliant.
-K B – GR&P Co. Bristol, TN

Time & Pay is a  godsend for a small business like mine. I no longer have to worry about paying my employees or my payroll taxes accurately or on time!  Time & Pay takes care of everything for me!
-B M – Stellar Studios, Johnson City, TN

“We had been doing our payroll in-house. When we reviewed your products and services, we found them to be both affordable and cost-effective. The transition to Time & Pay went very smoothly. We are very confident our payroll tax issues and confidentiality issues are now a thing of the past.”
-S T – D & S Dental, Johnson City, TN

“As a former customer of one of those big national firms, not only does Time & Pay perform better in the payroll processing area with better products and services, but you are also way ahead of them in the customer service area. It is a pleasure working with your staff knowing that any help we need is readily available.”
-C – Comprehensive Community Services, Johnson City, TN

“Time & Pay does a great job handling both our corporate and independent store accounts. The flexibility of their on-line capabilities gives us the information we need when we need it. Their response to our diverse needs has been excellent.”
-B G – HobbyTown USA, Omaha, Nebraska

“Having Time & Pay as a payroll service has been a wonderful partnership. Their customer service, punctuality and attention to detail have surpassed our expectations and we are glad to have them as a partner in conducting all of our payroll functions. I would highly recommend their services to companies, large and small.”  
-T W – Little Things, LLC, Chattanooga, TN

“From the start, Time & Pay has worked with us in many aspects of payroll and HR as we have grown from a single facility to a multi-state operation. They have allowed us to concentrate on that expansion while they have focused on keeping us compliant with payroll and timekeeping regulations. There customer service is exemplary! They are great to work with.”
-J G – Prime Choice Foods, Denver, CO

“Opening up a large retail operation, the last thing I wanted to concern myself with was payroll and all the compliance hassles. Time & Pay takes care of all my payroll needs. With their services, my payroll worries are eliminated. We would recommend your services to any one.”
-D K – DW Express LLC, Bristol, VA

5-27-2015

IRS and Justice Dept Announce Payroll Tax Crackdown

The IRS and the Justice Dept announced plans to step up their crackdown on employers that do not send withheld payroll taxes to the federal government as required. Officials emphasized that there would be no special exception if employers use … Continue reading

READ MORE

5-20-2015

Labor Dept Submits New OT Regulations

The Labor Dept recently announced that they have submitted their newly proposed overtime regulations for salaried employees to the Office of Management and Budget. As you may recall, in March of 2014,  President Obama issued an Executive Order the intent … Continue reading

READ MORE

5-4-2015

Treasury Dept. Considers Reduced Threshold for W-2 E-Filing

The Government Accountability Office has recommended that the required threshold for electronic filing of W-2′s be reduced to between 5 and 10 forms per year. The current threshold is 250 forms. All businesses filing 250 W-2′s or more must file … Continue reading

READ MORE

Find us on Facebook! Find us on LinkedIn! Follow us on Twitter!
Independent Payroll Providers Association Member            Registered IRS E-Filer

Website designed and developed by Stellar Studios