Payroll Tax Cut Extended for All of 2012
On February 22, 2012, the Temporary Payroll Tax Cut Continuation Act of 2011 was permanently extended for all of 2012. This extends the two percentage point payroll tax cut for employees, continuing the reduction of their social security tax withholding rate from 6.2 percent to 4.2 percent of wages paid through December 31, 2012. This reduced social security withholding will have no effect on employees’ future social security benefits.
As part of the legislation, the recapture provision, passed with the original legislation in December, will be repealed.
[Editor’s note: As soon as time permits, we’ll elaborate more on some of these hidden provisions. Business owners should be aware that the quarterly payroll forms have been changed in light of the above.]
In addition, the legislation signed by President Obama on February 22, 2012 reduces the number of weeks an individual may receive unemployment benefits from 99 weeks to 73 weeks for those living in states with an unemployment rate higher than the 8.3% national average.
For those in states with an unemployment rate under the national average, the number of weeks an individual may receive unemployment benefits will be reduced to as low as 40 weeks in some states. The legislation also includes a provision which allows states to drug-test unemployment beneficiaries, as well as a provision to prevent reductions in Medicare reimbursements for doctors.
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